Nebraska’s Manufacturing Exemption Expanded
- Mar 18, 2014 | Gail Cole
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.”
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