State & Local Tax

LB 312: What Is It and How Does it Work?

Stacy Watson, Tax & Consulting Shareholder

October 26, 2016

LB 312: What Is It and How Does it Work?

Nebraska businesses have a great incentive program available to them through the Nebraska Advantage Act, or LB 312. This program was created to encourage certain Nebraska businesses that expand their current investment and employment by providing credits and refunds to offset income, sales/use or withholding taxes depending on your application type. Take a moment to learn whether your business qualifies for LB 312, what you need to know about the application process, and how to prepare yourself for potential audits of your business.

What Businesses Qualify for the Credit?

Currently, the businesses that most often qualify for the credits found in LB 312 include the following:

Business Headquarters
Manufacturers
Software Developers
Data Centers
Financial Institutions
Telecommunications Companies

There is one major catch to this list, however. While this list may seem relatively short and confined to only these six business types, companies should explore whether or not they can more broadly define their own activities to fit into a qualified category.

When & How to Apply

Regardless of how you are planning to use the benefit provided by LB 312, you need to apply before starting any new project, whether that’s your business moving from one building to another, expanding a current building, or building new. If you do not apply prior to the beginning of the project, you cannot receive the tax benefit. An important part of the application process is to be sure that you are describing your business accurately. The reason for this is because you want to be sure that you are putting your business in the best position to receive any and all benefits or credits. You want to be sure to describe exactly how your business falls into any of the categories previously listed. If you don’t, your chances of being approved may diminish. You will also want to show that you are expanding any investment you’ve put into your business, which would go on your depreciation schedule or qualified leases and have proof of new employment. These two pieces help show the Nebraska Department of Revenue that your business is expanding and will be able to use LB 312 to your benefit.

What Are the Potential Credits?

Prior to 2006, the state of Nebraska only allowed credits to be used toward offsetting state income tax or sales/use tax. Beginning in 2006, businesses could begin to use these credits against employees withholding tax. This is a great option for companies that have a large number of employees but don’t sell enough to be approved for the benefits otherwise. Be sure of what credit amount you’re applying for, though. Lutz has worked with different businesses that have applied for credits of $300,000 to nearly $3 million.

Prepare for an Audit

After you’ve put together your application and sent it off for approval, be prepared for the fact that the Nebraska Department of Revenue will perform an in-depth audit of your business. It's important to understand that the audit can take up to 18 months to complete and that you won't begin receiving credits until the audit process has been completed. Applying for LB 312 can be complicated and getting it right is crucial. With extensive experience with LB 312, Lutz can help your business throughout the entire process.

Maximizer, Activator, Communication, Achiever, Strategic

Stacy Watson

Tax & Consulting Shareholder

Stacy Watson, Tax Shareholder, began her career in 1994. A recognized authority on state and local taxation, she has become a key voice in Nebraska's legislative landscape, serving as tax policy chair for the Nebraska Chamber of Commerce and influencing regulations that impact businesses statewide.

Specializing in sales and use tax analysis, legislative review, and international tax matters, Stacy provides strategic guidance to clients across a wide range of industries. She blends her technical expertise with actionable insights to help clients navigate complex nexus issues and evolving requirements. Stacy values crafting tax policy that benefits both businesses and the communities they serve.

At Lutz, Stacy exemplifies the firm’s “say it straight” philosophy by delivering clear, direct advice on even the most intricate tax challenges. Her ability to simplify complex issues and provide practical solutions has earned her the trust of clients managing multi-jurisdictional tax concerns and navigating legislative changes.

Stacy lives in Omaha, NE, with her family. Outside the office, she enjoys traveling, cooking, wine, and reading.

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About

LB 312: What Is It and How Does it Work?

What Businesses Qualify for the Credit?

When & How to Apply

What Are the Potential Credits?

Prepare for an Audit

Stacy Watson

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