What is Nexus?You'll need to collect sales tax in Nebraska if you have nexus there. There are two main ways that sellers can be tied to a state when it comes to nexus: physical, or economic.
Physical nexus means having enough tangible presence, or activity in a state to merit paying sales tax in that state.
Economic nexus means passing a states' economic threshold, for total revenue, or the number of transactions in that state.
Calculating Nexus in Nebraska
A physical nexus means your business has a real, tangible presence in Nebraska. If any of these sound like your business, you've got a physical nexus in Nebraska and need to collect and remit sales tax. This could be:
- Owning or renting spaces like offices, warehouses, or stores.
- Having employees or contractors in the state, be it full-time or part-time.
- Selling products or services in person, maybe at trade shows or fairs.
- Keeping inventory in the state, possibly using a fulfillment center.
Economic nexus is all about your sales numbers. Cross these thresholds, and you'll need to get a Nebraska sales tax permit and start collecting and remitting sales tax. Since January 1, 2019, Nebraska has set these rules:
- You hit over $100,000 in gross sales, or
- You make 200 or more separate sales transactions in Nebraska during a calendar year.
This kicks in when your business is linked to another entity in Nebraska that helps boost your sales. If you've got these kinds of connections in Nebraska, collecting sales tax might be on your to-do list. It could be:
- A parent, sibling, or subsidiary company in Nebraska.
- An agent or rep working in the state for you.
Click-through nexus happens when you've got an online affiliate in Nebraska who sends customers your way through a website link or other online methods. Nebraska doesn't have specific laws for this yet, but these arrangements could still create an affiliate nexus.
Selling on big online platforms like Amazon, eBay, or Etsy? Since April 1, 2019, Nebraska asks these marketplaces to handle sales tax if they've got a physical, economic, or affiliate nexus in the state. If your marketplace does the tax collecting for you, you might not have to worry about it yourself.
Hire a pet sitter in Nebraska, and it’s taxable. Pet care gets a fiscal companion.
Sales Tax Registration in Nebraska
How to Get Your Nebraska Sales Tax Permit
Let's walk through the steps to get your permit:
- Collect Your Info: Before diving in, make sure you've got all this handy:
- Your business name, address, and contact details.
- Your Social Security number (SSN) or Employer Identification Number (EIN).
- What type of business you're running (like a sole proprietorship, partnership, or corporation).
- Your North American Industry Classification System (NAICS) code.
- When you plan to start business activities in Nebraska.
- A quick description of what you're selling or the services you're offering.
- How much sales tax you think you'll be collecting each month.
- Fill Out the Nebraska Tax Application: Jump onto the Nebraska Department of Revenue website and grab Form 20. You can fill it out online or download it and send it by mail or fax.
- Submit Your Application: If you're doing it online, just send it through electronically. For the paper route, mail or fax it to: Nebraska Department of Revenue PO Box 98903 Lincoln, NE 68509-8903 Fax: (402) 471-5927
- Wait for Your Permit: After they process your application (up to 10 business days online, or about 4 weeks for paper forms), they'll mail your sales tax permit and rate charts to your business address.
Cost of Registering for a Nebraska Sales Tax License
Great news – it's free to register for a Nebraska sales tax permit!
Federal Tax ID for Nebraska Sales Tax License
You'll need a Federal Tax ID Number or EIN. Don't have one yet? You can easily apply for it on the IRS website.
Other Nebraska Registrations to Consider
Depending on what your business does, you might need to register with a few other places in Nebraska:
- Nebraska Secretary of State: This is for corporations, LLCs, and other business entities.
- Nebraska Department of Labor: If you've got employees, you'll need to sort out unemployment insurance and workers' comp coverage here.
- Nebraska Department of Economic Development: Looking for business incentives or assistance? This is your go-to.
Guide to collecting sales tax in Nebraska
Is Nebraska an Origin or Destination Sales Tax State?
Nebraska is all about destination-based sales tax. This means you collect sales tax based on where your customer is, not where your business hangs its hat. So, for every taxable sale in Nebraska, make sure you're collecting tax at the rate that matches your customer's location.
What Sales are Subject to Sales Tax in Nebraska?
In Nebraska, you'll be collecting sales tax on:
- Tangible stuff like appliances, electronics, and furniture.
- Fashion items like clothing and accessories.
- Pre-written computer software.
- Cars, trucks, and trailers.
- Repair and maintenance services.
- Tickets to fun events and entertainment.
Is Software as a Service (SaaS) Taxed in Nebraska?
Most of the time, SaaS (Software as a Service) gets a pass on sales tax in Nebraska. It's usually not taxed because it's not a tangible thing. But, there are exceptions! If SaaS is all about gaming or entertainment, or if it includes any electronically delivered software, it might be taxable.
What is Exempt from Nebraskane Sales Tax?
Some items get to skip the sales tax in Nebraska, like:
- Prescription meds and some medical supplies.
- Groceries and food for munching at home.
- Farming equipment and machinery.
- Manufacturing machines and equipment.
- Newspapers and magazines.
- Stuff for schools, churches, and learning or worship.
Who is Eligible for Nebraska Sales Tax Exemptions?
Certain groups and folks can dodge sales tax, including:
- Nonprofits like schools, churches, and charities.
- Government bodies, from local to federal.
- Resellers and wholesalers who have a Nebraska resale certificate.
- Manufacturers buying gear for their production process.
What To Do If Your Customer is Exempt from Sales Tax in Nebraska?
If your customer is tax-exempt, grab a filled-out Nebraska Exemption Certificate, Form 13, from them. Keep this form safe to show why you didn't collect tax on that sale.
What if You Lose a Nebraska Sales Tax Exemption Certificate?
Oops! If a certificate goes missing, ask your customer for another one quickly. Keeping accurate, up-to-date records of these forms is super important to avoid any tax troubles. Regularly check and refresh your exemption certificates to make sure they're still good to go.
Candy is taxed in Nebraska unless it contains flour. Nebraska's sweet tooth has a floury caveat.
Steps for Filing a Nebraska Sales Tax Return
Your filing frequency in Nebraska depends on how much tax you're collecting. Here's a quick rundown:
- Monthly Filing: This one's for you if your annual tax liability is $3,000 or more. Just remember, it’s due by the 20th of the following month.
- Quarterly Filing: If you’re in the $900 to $3,000 range annually, you'll file quarterly. These are due by the 20th of the month after the quarter ends.
- Annual Filing: If your annual tax is less than $900, then you file annually, with everything due by January 20th of the following year.
Remember, staying on top of these deadlines is key to avoiding any penalties.
What If a Filing Date Falls on a Weekend or Holiday?
If your filing deadline falls on a weekend or holiday, Nebraska's got you covered – the due date shifts to the next business day.
How to File a Nebraska Sales Tax Return
Filing your Nebraska sales tax return is easy-peasy:
- Gather Your Sales Records: Round up all your taxable sales, tax-exempt sales, and any exemptions you've collected.
- Figure Out the Local Tax Rates: Break down the sales tax for each jurisdiction using Nebraska's Tax Rate Finder.
- File Your Return: Pop onto the Nebraska Department of Revenue's e-file system to submit electronically, or use Form 10 for a paper return. Make sure everything's spot-on before you send it off.
- Pay Your Sales Tax: If you’re e-filing, use the e-pay system to pay online. For paper returns, a check or money order works.
Penalties for Late Filing in Nebraska
Missed a deadline? Here’s what you might face:
- Late Filing Penalty: The greater of 10% of the tax due or $25.
- Late Payment Penalty: 5% of the unpaid tax each month, maxing out at 25%.
- Interest: This kicks in on any unpaid tax and adds up at a rate set by Nebraska law.
Sales Tax Incentives in Nebraska
Nebraska loves to encourage growth and development! To see if these fit your business, head over to the Nebraska Department of Economic Development website. Check out these incentives:
- Nebraska Advantage: Get sales tax refunds and exemptions for job creation, R&D, and expansion projects.
- Nebraska Manufacturing: Offers exemptions for manufacturing machinery and equipment, and refunds on energy used in manufacturing.
- Nebraska Investment: Provides exemptions for significant investments like facility construction or expansion.
The Kintsugi White-Glove Promise
Companies love Kintsugi for its fast responses and quick resolution of your most time-sensitive sales tax issues.
EFFICIENCY & TIME SAVINGS
Kintsugi’s in-house sales tax experts use over 300,000 business rules to stay up-to-date on regulatory changes.
Kintsugi has your back in case of audits and will fully cover all penalties due to filing inaccuracies.