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Nebraska’s Manufacturing Exemption Expanded

  • Mar 18, 2014 | Gail Cole

 Manufacturers in Nebraska may be eligible for a sales tax refund.

The Nebraska Supreme Court issued a ruling last week that will broaden sales tax exemptions for manufacturers. As a result, Nebraska Department of Revenue will likely owe sales tax refunds to numerous manufacturers doing business in the state.

The Department of Revenue had long interpreted the law to exempt equipment used only in the direct manufacturing of products. As a result, it ordered Kerford Limestone to pay back sales tax on equipment used primarily to grade roads and maintain rock piles.

Kerford challenged the department, arguing that “the integrity of [their] product depended upon keeping rocks sorted according to their sizes.” As a result, “the motor grader fell within the definition of manufacturing machinery and equipment in § 77-2701.47(1)(d ). As such, under § 77-2704.22, Kerford was entitled to an exemption from sales and use tax on the purchase of the motor grader.” Ultimately, the high court agreed.

According to Tax Commissioner Kim Conroy, manufacturers have three years to seek a sales tax refund. Written application forms must be submitted (Omaha.com).

Of the ruling on Kerford Limestone Co. V. Nebraska Department of Revenue et al., Tax Commissioner Conroy admitted that state revenue will be impacted, “[W]e just don’t know what that impact would be now.”

Managing sales tax and sales tax exemptions is critical to the success of any business. An automated sales tax solution provides peace of mind.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.