Employee recalculation requirement for tax incentives advanced

Lawmakers gave first-round approval Feb. 19 to a proposal intended to ensure that Nebraska companies do not lose certain tax incentives when they spin off part of their business operations.

Elkhorn Sen. R. Brad von Gillern, sponsor of LB954, said that when companies sign agreements to receive incentives under the Nebraska Advantage Act, they agree to add new workers and maintain the number of jobs they have in Nebraska the year before their application.

He said LB954 would apply when a taxpayer that has signed an agreement under a specific project category sells a part of their business operations to another entity.

The bill would require the state Department of Revenue to recalculate the taxpayer’s base-year employees by subtracting the number of employees at the sold business operation from the number of base-year employees calculated prior to the sale.

The recalculation would not be allowed if the business that was sold ceases operations within two years after the sale or if the primary business purpose of the sale was to close a location. The provision would apply to agreements entered into after Dec. 31, 2016.

Von Gillern said the change would ensure companies are not punished for making “sensible and practical” business decisions while still creating and maintaining jobs in Nebraska.

LB954 advanced to select file on a vote of 29-1.