Section 77-27, 188 of the Enterprise Zone Act specifies that a qualified business, under provisions of the Employment Expansion and Investment Incentive Act, may be allowed an enhanced credit against taxes imposed by the Nebraska Revenue Act of 1967 for locating and investing in an Enterprise Zone, while employing zone residents. The amount of the credit, not to exceed seventy-five thousand dollars, shall be:
Improvements to real property and tangible personal property which are depreciable under the Internal Revenue Code are included in determining average investment. Land, vehicles, planes, or railroad rolling stock are excluded. Rental or leased property: the value of property rented is calculated as the annualized rent of the property multiplied by eight.
To determine overall investment, use the total of the value of all property used or available for use on the last day of the taxable year. Value of property equals the tax basis before any allowance for depreciation. The net investment requirement is met when the investment on the last day of the taxable year exceeds the investment on the first day of the taxable year and the average investment in Nebraska during each of the three preceding taxable years by at least $75,000.
Credits are not allowed for acquisition of a going concern unless the purchaser adds investment and employees at the qualifying levels.
How Can the Credits be Used?
Credits are used against income tax liability of the taxpayer, but may not, in any taxable year, exceed $75,000. Refunds of sales and use taxes paid on the taxpayer's purchases may be filed quarterly with proof of payment of tax. Upon receipt of contractor certification, a taxpayer will be allowed a refund of sales and use taxes, which the contractor has paid, on tangible personal property incorporated as an improvement to the real estate owned by the taxpayer. With permission of the State Tax Commissioner and contractor certification, the taxpayer may presume that 50 percent of the cost of the improvement was for materials on which the tax was paid and which were incorporated into the project.
Can the Credits be Carried Over?
Credits not used in the first year may be carried over and used against liabilities incurred in the next five taxable years. Failure to maintain required levels of investment and employment for at least two years after creation of the credits will result in recapture of allowed benefits and loss of carryovers.
Are Non-Local Incentives Available?
The Nebraska Legislature encourages the targeting of funds from federal programs, including Community Development Block Grants (CDBG), the Job Training Partnership Act, Community Services Block Grants, federal highway funds, or other federal funds received by the state for designated enterprise zones. In addition, local governments are encouraged to seek designation of enterprise zone areas as community development areas under the Community Development Assistance Act.
Any business interested in applying for benefits under the Enterprise Zone Act is encouraged to contact:
Andrew G. Baird, II, President
Grand Island Area Economic Development Corp.
P.O. Box 1486
Grand Island, NE 68802-1486
Nebraska Department of Economic Development
P.O. Box 94666
Lincoln, NE 68509-4666
Nebraska Department of Revenue
P.O. Box 94818
Lincoln, NE 68509-4818