Understanding the Nebraska Use Tax

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.

© 2012 Parsonage Vandenack Williams LLC

For more information, contact info@pvwlaw.com

Requirements to Comply with Nebraska Sales and Use Tax

The state of Nebraska has both a sales and use tax.  Sales tax generally applies to transactions within Nebraska.  On the other hand, the use tax applies when you purchase goods in another state for use in Nebraska and there is no sales tax on those goods when purchased. An example of the use tax applying is in out-of-state Internet or catalog purchases where the vendor does not charge any sales tax.

If you or your company performs services or sells goods subject to the sales tax, or if you become subject to the use tax, you are required to report and remit both taxes to the Nebraska Department of Revenue.  To do so, you must first obtain a sales tax permit.  A permit may be obtained by submitting a Nebraska Tax Application Form 20.  After obtaining the permit, you then begin reporting sales and use tax by filing Nebraska Tax Form 10.  Form 10 must be filed monthly, quarterly, or annually based on the amount of states sales tax collected and use tax owed.

© 2012 Parsonage Vandenack Williams LLC

For more information, contact info@pvwlaw.com