Frequently Asked Questions
F.A.Q.
Qualify
What happens if an applicant for the Economic Redevelopment Areas level exceeds $1 Million of qualified investments?
While a business can invest over one million dollars, they cannot earn credits for any investment over one million dollars.
How long do the benefits last?
As soon as employment and investment levels are met in the Ramp-up Period, the Performance Period (earning of credits) begins. The Performance Period is the year during which the required increases in employment and investment were met or exceeded and each year thereafter until the end of the sixth year after the year the required increases were met or exceeded. Credits are allowable in each year of the performance period that you are at or above the required levels.
For example: if you apply for imagiNE and meet the minimum requirements in 2021, your performance period will begin in 2021 and end on December 31st, 2027. After the performance period, you have 3-years to use any unused credits.
Does the entire investment requirement need to be made in the first year?
The entire investment requirement does not need to be met in the first year. The investment may be made over the course of the Ramp-up Period.
What is year of qualification?
The year of qualification is the year in which the minimum requirements for your application level are met.
F.A.Q.
Earn
When should we hire our new employees? How long do the employees have to be employed?
Your "Ramp-Up Period" starts immediately after your application date and lasts until the end of the fourth year after your application date. Any FTE added after your application date counts toward your employment requirements. You have your entire Ramp-Up Period to reach your employment levels. Once your employment and investment levels are met, you enter your performance period. FTE's must be maintained for all years of your performance period.
What is an equivalent employee (FTE)?
An equivalent employee is defined as the number of employees computed by dividing the total hours paid in a year by the product of forty times the number of weeks in a year. Only the hours paid to employees who are residents of this state shall be included in such computation. A salaried employee who receives a predetermined amount of compensation each pay period on a weekly or less frequent basis is deemed to have been paid for forty hours per week during the pay period.
Example: Total Hours Paid to NE residents = 10,400 FTE=10,400/2080
HOW DO I KNOW IF MY INVESTMENT IS QUALIFIED?
You can find a comprehensive list of Revenue Rulings Issued by the Tax Commissioner here.
What is a base year employee?
A base year employee is defined as any individual who was employed in Nebraska and subject to the Nebraska income tax on compensation received from the taxpayer or its predecessors during the base year and who is employed at the qualified location or locations. Base year employees do not need to be Nebraska residents to be counted as base-year employees.
Can employees working remotely qualify as new FTEs?
Yes, as long as they are working in Nebraska from their residence on tasks interdependent with the work performed at the project and meet all imagiNE FTE requirements.
F.A.Q.
Use
HOW DOES THE BASE AUTHORITY AFFECT MY ABILITY TO CLAIM IMAGINE INCENTIVES?
The base authority means the total amount of refunds and credits that may be approved in any calendar year, and no refunds may be paid, and no credits may be used in any calendar year in excess of the base authority for such calendar year.
For more information on the ImagiNE Nebraska Act base authority, review Neb. Rev. Stat. § 77-6839.
FORM 1107N: IMAGINE NEBRASKA ACT INCENTIVE COMPUTATION
Who Must File:
Any taxpayer who has submitted an ImagiNE Nebraska Act (Act) application must file a Form 1107N with supporting schedules and submit supporting Excel workbooks, for each year beginning with the year the application was filed through the expiration of all tax incentives earned under the Act.
If there is more than one agreement holder during the calendar year, a Form 1107N for the entire year must be filed by the taxpayer that is the agreement holder as of December 31.
When to File:
The Form 1107N and supporting schedules will be filed as an attachment to the taxpayer’s Nebraska income tax, financial institution, or partnership return for each year beginning with the year the application was filed through the expiration of all tax incentives earned under the Act.
For all years other than the qualification year, Form 1107N for the calendar year must be filed with the taxpayer’s return for the taxable year which includes December 31 of the year reported.
The taxpayer may file the Form 1107N reporting the initial attainment of minimum levels to the Department of Revenue prior to filing the income tax return for the year levels were met. The form must be included with the applicant’s first filing for benefits. If changes were made to the initial filing, provide an explanation of the changes made on Form 1107N, Page 2 Section 1.
Failing to complete the Form 1107N will be considered a violation of the terms of the agreement and will be grounds for delay, termination of benefits, or recapture.
If the taxpayer uses any credits on Form 1107N, they must file an ImagiNE Nebraska Act Payment of Fees for Benefit Use, Form 1107F, and remit the 0.5% fee for using credits.
Where to File:
The Form 1107N and supporting schedules will be filed as an attachment to the taxpayer’s Nebraska income tax, financial institution, or partnership return.
The Form 1107N, supporting schedules and detailed employment and investment workbooks must also be uploaded to Department of Revenue’s secure file sharing system. See the ImagiNE Nebraska page on the Department of Revenue website.
How to Amend:
When correcting a prior year’s filing, complete Form 1107N, revise the supporting schedules, and attach to an income tax return, financial institution, or partnership return. Form 1107N for multiple years may be attached to a single tax return. Workbooks must be uploaded by using Department of Revenue’s secure file sharing system.
FORM 1107F: IMAGINE NEBRASKA ACT PAYMENT OF FEES FOR BENEFIT USE
Who Must File:
Every ImagiNE Nebraska applicant must remit the 0.5% fee associated with the use of credits.
Also, every ImagiNE Nebraska Act applicant who holds a Direct Pay Permit claiming a sales and use tax exemption of property must report the value of the exemption claimed and remit the 0.5% fee associated with the sales and use tax exemption.
The applicant must have filed Form 1107N showing minimum investment and employment levels have been attained for a previous year prior to claiming the exemption. This form does not exempt an Option 2 or 3 contractor from Nebraska and local sales and use taxes paid or remitted on purchases of building materials.
When to File:
If the taxpayer uses any credits on Form 1107N, they must file an ImagiNE Nebraska Act Payment of Fees for Benefit Use, Form 1107F, and remit the 0.5% fee for using credits.
If the return is for fees related to income tax use, distributions, income tax withholding, or loan repayments, the form is due on the same date as the return on which credits are claimed.
If the return is for fees related to the sales tax exemption, it is due on or before the 20th day of January.
Where to File:
The Form 1107F must be filed with Form 1107N and supporting schedules as an attachment to the taxpayer’s Nebraska income tax, financial institution, or partnership return.
FORM 7-I: TAX INCENTIVE CLAIM FOR REFUND OF SALES AND USE TAX
Who May File:
A refund claim (claim) can be filed by a taxpayer who has qualified under the following acts:
- ImagiNE Nebraska Act;
- Nebraska Advantage Act;
- Employment and Investment Growth Act (LB 775);
- Nebraska Advantage Research and Development Act (R&D);
- Nebraska Advantage Rural Development Act; and
- Urban Redevelopment Act.
A separate form must be filed for each type of claim (direct, credit, and aircraft) and each tax incentive act. A direct claim can also be filed by the owner of a building leased to a qualified company under either the ImagiNE Nebraska Act, Nebraska Advantage Act, or LB 775 for sales tax paid on the construction and improvements to the building.
Foreign adversarial companies are ineligible to receive benefits from Nebraska tax incentive programs including filing this claim.
Review a list of Nebraska sales tax exemptions here.
When to File:
A claim must be filed within the statute of limitations period. This is generally the latest of the following periods:
- Three years from the 20th day of the month following the close of the period for which the payment of tax was made,
- Six months after a deficiency determination issued by the Nebraska Department of Revenue becomes final,
- Six months after the date of payment with respect to such determination,
- A period for which a Nebraska Extension of Statute of Limitations, Form 872N has been given, or
- Within three calendar years after the end of the year the required levels of employment and investment are first met (ImagiNE Nebraska Act, Nebraska Advantage Act, and LB 775).
Where to File:
A claim for a sales and use tax refund must be filed with the Nebraska Department of Revenue, PO Box 98903, Lincoln, NE 68509-8903.
The listing that supports the refund claim and electronic images of the invoices can be provided by mail or by Department of Revenue’s secure file sharing system.
The claim may be faxed to 402-471-5927 if there is limited documentation submitted to support the claim. Limited documentation means a maximum of 20 pages by fax, which includes the form, claim listing, invoice copies and other documentation.
MUNICIPALITY SALES AND USE TAX DISCLOSURE FORM
Who May File:
All taxpayers who have signed an Employment and Investment Growth Act agreement, a Nebraska Advantage Act agreement, or an ImagiNE Nebraska Act agreement are eligible to file this form.
This form allows taxpayers to disclose to affected municipalities, pursuant to Nebraska Revised Statute 77-27,144, the maximum sales and use tax refunds and exemptions that the qualifying business is eligible to receive under the Employment and Investment Growth Act, the Nebraska Advantage Act, or the Nebraska ImagiNE Act.
The form can be found at ImagiNE’s website on the Documents page.
When to File:
Taxpayers shall provide the information to the municipality on or before June 30 of each year.
Where to File:
Taxpayers shall provide the information to any municipality that has adopted the local option sales and use tax under the Local Option Revenue Act and to which the qualifying business has paid such sales and use tax.
JOB TRAINING, RECRUITMENT, AND CHILDCARE REIMBURSEMENTS
Who May File:
Any taxpayer who has a completed ImagiNE Nebraska Act agreement that has incurred qualifying expenses subject to reimbursement indicated in Neb. Rev. Stat. § 77-6832 may file a reimbursement request with the Department of Economic Development.
When to File:
The taxpayer may file a reimbursement request during the performance period once the initial attainment of minimum levels were met.
Where to File:
Reimbursement requests should be filed through the ImagiNE Centurion Application Portal, which can be found at ImagiNE’s website on the Apply page.
Log in or create an account and select “Submit A Reimbursement” to begin the reimbursement process.
The ImagiNE Nebraska Act Job Training Expense Reimbursement Template format can be found at ImagiNE’s website under Forms and Instructions.
ALL OTHER IMAGINE NEBRASKA ACT FILING FORMS
View a comprehensive list of Department of Revenue ImagiNE forms and affiliated workbooks here.
CAUTION: Legislative Bill 644 (codified as Neb. Rev. Stat. § 77-3,114) prohibits foreign adversarial companies from receiving benefits under an incentive program of the State of Nebraska, including the ImagiNE Nebraska Act. Prior to applying, please see the ImagiNE Foreign Adversarial Memo, found on our Guidance Documents page. Applicants meeting the definition of foreign adversarial company will not be approved.
F.A.Q.
Apply
When will applications for ImagiNE Nebraska be accepted?
Applications are accepted now. However, the earliest application date is 1/1/2021. To apply, go to https://imagine.nebraska.gov/apply/.
HOW DOES THE BASE AUTHORITY AFFECT MY IMAGINE APPLICATION?
Applications shall not be approved under the ImagiNE Nebraska Act that would include refunds or credits in the calendar year in which the base authority is projected to be exceeded.
Applications that are not approved because the base authority will be placed on a wait list in the order in which they were received and will be given first priority once applications may again be approved. Applications on the wait list retain the same application date and base year as if they had been approved within the time.
What documents do I need for the application?
Only the online application is required to receive your application date. More information will be requested after the application is submitted. To see a PDF of the online application click here. Only online applications submitted via https://imagine.nebraska.gov/apply/#StartYourApplication will be accepted.
Can I still apply for Nebraska Advantage?
Nebraska Advantage sunsets to new applications on 12/31/2020
Is there help available with the application process if I need it?
Absolutely! Please do not hesitate to contact the Nebraska Department of Economic Development at DED.ImagiNE@nebraska.gov
F.A.Q.
Other
WHERE CAN I FIND ANNUAL REPORTS FOR IMAGINE?
I RECEIVED A LETTER STATING AN IMAGINE AGREEMENT WAS EXECUTED IN MY MUNICIPALITY, WHAT IS THIS?
You have received a Municipality Notification Letter! Pursuant to Neb. Rev. Stat., § 77-6828 (2), The Department of Economic Development is required to disclose, to any municipalities in which project locations exist, the approval of an application and the execution of an agreement.
The Municipality Notification Letter is a notification that an Applicant has listed the municipality or city as a potential project location in an Application and Agreement under the ImagiNE Nebraska Act.
For example, a city will often see an increase in sales tax or use tax receipts in years preceding a refund claim (up to seven years before a refund claim is filed). If there is a significant and unexplained increase in your local sales and use tax receipts, the increase may be the result of a new incentive project. This project may impact local revenue in the event that a refund claim is filed, and a significant portion of these remittances could involve a qualifying incentive project.
WHERE CAN LOCAL MUNICPALITIES GET INFORMATION ON SALES AND USE TAX REIMBURSEMENTS?
A list of frequently asked questions about local governments and tax incentive programs can be found here.
Additional questions should be directed to the Department of Revenue:
Nebraska Department of Revenue
PO Box 94818
Lincoln, NE 68509-4818
402-471-5729
800-742-7474 NE and IA
Contact Us
HOW CAN LOCAL MUNICIPALITIES IDENTIFY ELIGIBLE IMAGINE PROJECTS?
Once you have identified a project in your city, contact the project business and discuss any potential refund claims. Eligible ImagiNE projects can be identified through received Municipality Notification Letters or through the Nebraska Tax Incentives Annual Report.
ARE IMAGINE PROJECTS STILL ELIGIBLE FOR REIMBURSEMENT OF LOCAL MUNICPALITY SALES AND USE TAX IF THEY ARE OUT OF CITY LIMITS?
Yes, a tax incentive refund can significantly reduce or even eliminate city sales tax receipts for a single month or multiple months, even if their qualified location is outside of the city limits, so long as they have paid your city sales and use tax during their agreement.
For example, a business can have a project in another community but file a refund claim for sales taxes paid to businesses in your city that are attributable to its project (in the case that the business paid sales tax on the items it purchased in your community, the business could be entitled to a refund for taxes paid in each city for a qualifying project).
WHAT IF AN IMAGINE PROJECT MOVES OUT OF MY MUNICIPALITY?
A business may relocate at any time. However, there will only be a refund of sales and use taxes paid to the city for taxes previously remitted to the same city.
For example, in the case that a business would move their qualified location to another municipality, the Department of Revenue will only make a deduction for taxes actually paid in each community.
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