As with the recent guidance provided by the states of California and Washington, Nebraska has provided an information guide regarding charge card purchases by federal government employees. When the federal government is the direct purchaser of any taxable property or services, the sale is exempt. Federal government employees with centrally billed charge cards that contain an appropriate prefix and sixth digit may use the documented transaction as the exemption certificate instead of completing a Nebraska resale or exemption certificate. Purchases by federal government employees’ that are not centrally billed in total to the federal government are taxable, even if the employee is reimbursed for the expenses while conducting official business for the federal government.
For purposes of this discussion, “centrally-billed accounts” are charge card accounts where the entire balance is centrally billed to, and paid directly by, the federal government. “Individually-billed accounts” are charge card accounts billed directly to the employee, even if the employee is later reimbursed by the federal government. “Integrated billing” is a method of billing charge cards which allows the financial institution issuing the credit card to bill more than one party under one account.
GSA SmartPay 3 Purchase, Fleet, and some Travel charge cards are issued under contract with the United States General Services Administration (GSA). In Nebraska, only charge card purchases where the entire balance is centrally billed to the federal government agency are exempt from sales tax. Purchases made with charge cards which are individually billed or which use an integrated billing method are taxable. An exemption certificate cannot be issued with the use of credit cards which are individually billed or which use an integrated billing method since the transaction is taxable as a purchase by the employee, not the federal government.
For a listing of which GSA SmartPay 3 charge cards (including the appropriate prefix and sixth digit) can and can’t be used for sales tax exempt purchases in Nebraska, see the Nebraska DOR information guide. (Information Guide 6-494-2009, Nebraska Sales Tax Guide for Charge Card Purchases by United States (Federal) Government Employees, Nebraska Department of Revenue, November 29, 2018)