Legislative Bill 208, approved by the Nebraska governor on February 25, 2025, will go into effect three months after the legislature adjourns. This bill expands confidentiality protections for sales tax records and affects Streamlined Sales Tax compliance, certified service provider (CSP) fees and zip code-based tax collection.
Under prior law, disclosing confidential taxpayer information was a misdemeanor if you were a state tax official, employee of the tax commissioner, state treasurer or worked for the Department of Administrative Services. The passage of L.B. 208 now applies the privacy restrictions to any person, including third parties, external consultants, auditors, or contractors, prohibiting them from disclosing confidential tax information.
Additionally, the law clarifies that sellers using a CSP to handle their Nebraska sales tax obligations cannot claim Nebraska’s 3% collection fee on the first $5,000 remitted each month if the SST Agreement already compensates the CSP. This agreement ensures sellers do not receive duplicate compensation for tax collection services. The bill allows taxpayers to deduct and withhold 3% of the first $5,000 remitted each month for collection costs.
The bill also incorporates updates to Nebraska’s ZIP code-based tax collection rules in alignment with the Streamlined Sales and Use Tax Agreement. If a seller only obtains a five-digit ZIP code, they must apply the highest tax rate within that ZIP code. If the seller has access to the complete nine-digit ZIP code, they may use the lowest tax rate applicable to that precise location. This change intends to reduce the under-collection of sales tax when multiple tax jurisdictions exist within a single ZIP code area. However, sellers relying on five-digit ZIP codes may overcharge customers if a lower tax rate applies in part of that ZIP code.
Nebraska will continue to provide and maintain an official sales tax jurisdiction database, which includes:
Sellers and Certified Service Providers relying on Nebraska’s official database for tax rate determination will be protected from liability if errors in the state’s data lead to incorrect tax rates. Furthermore, the bill addresses bad debt deductions for sales and use taxes, allowing retailers to claim deductions for bad debts written off as uncollectible. Procedures for claiming refunds on overpaid sales and use taxes are detailed, including the requirement to file claims within specific timeframes.
Under the Local Option Revenue Act, the bill includes provisions for the administration and boundary changes for local sales and use taxes, ensuring accurate tax rate application. It sets annual limits for various tax credits, including those for food donations and childcare, with specific amounts allocated each fiscal year. The Nebraska Legislature adjourns June 9, 2025, so the bill is expected to be effective as of September 7, 2025. (L.B. 208, Nebraska Legislature, February 25, 2025, effective September 7, 2025)