Incentive program recalculation requirement approved

A measure intended to ensure that Nebraska companies do not lose certain tax incentives when they spin off part of their business operations received final approval from lawmakers April 9.

LB954, sponsored by Elkhorn Sen. R. Brad von Gillern, applies to companies that have met employment and investment requirements under Tier 6 of the Nebraska Advantage Act.

If a company sells or transfers part of its business to another entity, the state Department of Revenue is required to recalculate the company’s base-year employees by subtracting the number of employees at the sold or transferred business operation from the number of base-year employees calculated prior to the sale or transfer.

The recalculation would not be allowed if the business operations that were sold or transferred cease operations within two years after the sale or transfer or if the primary business purpose of the sale or transfer was to close a location.

Any credits or other incentives generated prior to a sale or transfer will not be recalculated.

LB954 applies to agreements entered into after Dec. 31, 2016.

The bill passed on a vote of 44-3.