A required tax that is often overlooked by both businesses and individuals is the Nebraska consumer’s use tax. The use tax is a complement to the state and local sales tax. Sales tax is collected and remitted by the seller or provider of goods, services, and other transactions that occur in Nebraska. Use tax, on the other hand, is generally remitted to the Nebraska Department of Revenue by the purchaser of taxable transactions where no sales tax is collected. Common scenarios where the use tax applies are:
- Items purchased on the Internet without payment of Nebraska sales tax;
- Items purchased out-of-state and delivered to a home or business in Nebraska without payment of Nebraska sales tax; and
- Items or taxable services purchased in Nebraska without payment of appropriate sales tax.
Use tax generally does not apply when Nebraska sales tax has been paid, when the transaction is exempt from sales tax, or for transactions where sales tax has been properly paid in another state.
Businesses can register for the use tax by filing Nebraska Tax Application Form 20. Businesses can then report use tax by filing either “Nebraska and Local Sales and Use Tax Return, Form 10” or “Nebraska and Local Consumer’s Use Tax Return, Form 2.” Individuals must report and pay use tax by filing “Nebraska and Local Individual Consumer’s Use Tax Return, Form 3.” The filing frequency can be monthly, quarterly, or annually depending on the entity or individual’s annual use tax liability.
Given that the use tax is a self-reporting tax, it is often easy to ignore. Penalties exist, however, for failing to timely file a use tax return. Additionally, interest accrues on all unpaid use taxes. Due to the growing market of online vendors selling goods without collecting sales tax, states are increasing efforts to enforce the use tax.
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