Nebraska Provides Guidance Document on Use Tax

The Nebraska Department of Revenue (DOR) released guidance on the handlings of use tax in the state regarding remitting use tax, exemptions, interest, and penalties. Use tax is used to complement sales tax, and together they ensure consistent taxation of sale, lease, rental, storage, use, distribution, or other consumption of tangible personal property and certain specified labor and services.

Use tax remittances are paid by the purchaser to the Nebraska DOR using one of two returns. Businesses with sales tax permits may use Nebraska and Local Sales and Use Tax Return, Form 10 to report use tax. Individuals may report their use tax liability using Nebraska and Local Individual Use Tax Return, Form 3.

All transactions with proper payment of sales tax are exempt from use tax. All transactions that are exempt from sales tax are also exempt from use tax. Additionally, the following situations are exempt from use tax:

• When property from a taxable transaction was first used for its intended purpose in another state (does not apply to motor vehicles, motorboats, or airplanes)
• When property from a taxable transaction is only stored temporarily in the state (if the business does not have any functions or collect sales tax in the state)
• When building materials are taken from inventory to a construction product outside the state (if the business does not have any functions or collect sales tax in the state)
• When purchases are made from “commissaries, base exchanges, ships’ stores, or voluntary, unincorporated organizations of personnel of any branch of the Armed Forces of the U. S. by any person authorized to make these purchases.

(Nebraska Use Tax Information Guide, Issued March 2021)