Nebraska Sales and Use Tax on Short-Term Rentals: New Guidance by the Nebraska Department of Revenue

By Ryan Coufal

Earlier this year Nebraska LB 284 passed into law requiring remote sellers—those without a physical presence—whose retail sales exceeded $100,000 in the previous year or current calendar year or if the seller made 200 or more separate Nebraska retail sales transactions in that same time frame, to obtain a sales tax permit from the Nebraska Department of Revenue (DOR) and begin collecting and remitting Nebraska and local sales tax.  Included with the online retail sales were sales made Multivendor Marketplace Platforms (MMP), or online marketplace facilitators.  Remote sellers selling through MMP’s must file sales tax returns reporting all of their Nebraska sales, but are relieved of the duty to collect and remit the sales tax on sales facilitated by the MMP if the MMP reports and remits the tax to the DOR.

Recently, the Nebraska DOR provided guidance on sales and use tax collection for remote sellers and MMPs which transact sales regarding Short-Term Lodging and Rentals in General Information Letter (GIL) 1-19-1.  The GIL clarifies that beginning on April 1, 2019, MMPs which facilitate short-term rentals must obtain sales and lodging tax licenses and begin collecting and remitting these taxes on the sales they facilitate, much like MMPs facilitating retail sales.  Additionally, the MMP is to complete the MMP Lodging Tax Worksheet-Breakdown by County with the Nebraska and County Lodging Tax Return (Form 64) to report the lodging tax by each county for sales facilitated in Nebraska.  Hotel or tourist home owners who provide short-term lodging and rentals are relieved of the duty to collect and remit the sales and lodging taxes on sales facilitated by an MMP if the MMP reports and remits the taxes themselves to the DOR, however, any sales and lodging not facilitated by an MMP must still be reported by the short-term rental provider themselves.

Per the Nebraska Revenue Act, a retailer or seller of lodging is defined as any person who, directly or indirectly, rents or leases property for a profit or gain when the transaction is subject to the sales tax, including sales facilitated by an MMP.[1]  The GIL indicates that travel agents who do not publish room availability and rates on behalf of hotels or tourist homes are generally not considered MMPs. This helps clarify a travel agent from a more well-known MMPs, such as Airbnb.

[1] Neb. Rev. Stat. §§77-2701.07, 77-2701.13, 77-2701.16, 77-2701.32 and 77-2701.36; see also Neb. Rev. Stat. §§77-2701.25, 77-2701.31, and Nebraska Sales and Use Tax Regulations 1-004.02C.

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New Nebraska Law’s Impact on Filing Requirements for Corporations and Partnerships

LB 512 signed into law on May 30^th, 2019, requires all S Corporations, limited liability companies, and partnerships with Nebraska source income to file a Nebraska return for all tax years beginning on or after January 1^st, 2019.

Previously, S Corps, LLCs, and partnerships had to file a Nebraska income tax return if they had nonresident owners and were apportioning income.

The Nebraska Department of Revenue (DOR) encourages all S corporations, limited liability companies, and partnerships to e-file their pass-through entity returns. A Nebraska state ID is required when e-filing a pass though entity return.

A pass-through entity without an assigned Nebraska identification number will need to apply for a number before e-filing a 2019 Nebraska tax return. If your business does not have a Nebraska Tax ID Number, follow the link below to the Nebraska Department of Revenue to register your business.

http://www.revenue.nebraska.gov/electron/online_f20.html

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New Nebraska Tax Credit for Volunteer Emergency Responders

In an effort to aid in the recruiting and retention of volunteer emergency responders, volunteer firefighters, and volunteer rescue squad members, Nebraska passed LB 886, known as the Volunteer Emergency Responders Incentive Act. By enacting this law, volunteer first responders are potentially eligible for a $250 refundable tax credit.

To qualify for the tax credit, the volunteer must be an active rescue squad member, active volunteer firefighter, or active emergency responder. To meet the activity requirements, the law uses the point system currently in place, requiring the volunteer to acquire 50 points out of a potential 100 in the given year. These points are awarded based upon the volunteer responding to emergency calls, participating in training, and other similar activities.

The point system will be maintained by each volunteer department, which will annually certify a list of volunteers meeting the points threshold to the Nebraska Department of Revenue. Starting with the second year that a volunteer is certified on the list, the volunteer can claim the $250 refundable tax credit.

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Nebraska Bill Recognizing Fantasy Sports Fails to Pass

by M. Tom Langan, II

A bill seeking to recognize fantasy sports as a game of knowledge and skill (and not illegal gambling) failed to pass through the Nebraska Legislature.  In addition to permitting fantasy contests for cash prizes, LB862 would have required fantasy contest operators to register with the Department of Revenue and implement certain safeguard features, such as preventing employees from participating and/or sharing confidential “insider” information.  The bill was met with heavy opposition and was indefinitely postponed on April 20, 2016 leaving the legal status of fantasy contests for cash prizes uncertain in Nebraska.

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New Identity Safeguards for 2016 Tax Returns (State and Federal)

For 2016, the Internal Revenue Service (IRS) and the Nebraska Department of Revenue (DOR) are taking steps to reduce tax-related identity theft, which has become a growing issue. For example, in 2013, the IRS identified almost $30 billion of fraudulent refund requests. While most of the efforts at the IRS will be invisible to the taxpayer, new login steps for e-filers of federal returns will likely be noticeable.

On the state level, each state is taking different procedures to prevent tax-related identity theft. In Nebraska, the DOR will request further information from taxpayers who elect to use the e-filing system. The DOR will ask for a driver’s license or similar state issued ID card during the e-filing process. This additional identity information is voluntary and a tax return will be processed if it does not contain this information, however, it may take longer to process in order to ensure that the return is not fraudulent.

When filing, if the IRS or DOR notes that you have filed more than one tax return, or the records indicate work income from an employer you did not perform work for in the tax year, or you somehow have an abnormal taxing event, steps should be taken to determine whether you are a victim of tax-related identity theft, to prevent further damage.

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