Property Tax Incentive Act Credit Bill Advances
From General File on 45-0 Vote!
Today in the Nebraska Legislature, Legislative Bill 181 advanced from General File on a 45-0 vote! The bill is now in Enrollment and Review (E&R), where it will be checked for technical and grammatical accuracy. LB 181 will remedy challenges created with the Nebraska Property Tax Incentive Act Credit, which was included in LB 1107 in 2020. LB 181 would do the following:
As we understand the legislation, for school taxes paid by a pass-through entity during 2020:
- The pass-through entity has the option to distribute the credits to partners/shareholders under the existing laws.
- Alternatively, a pass-through entity may choose not to distribute the credits on the 2020 tax return and will instead carryover that credit to the 2021 tax year.
- On the 2021 tax return, the pass-through entity will receive a refund at the entity level for the credit attributable to tax paid during 2020 where the credit was not distributed to partners/shareholders with the 2020 tax return.
For school taxes paid by a pass-through entity during a tax year beginning in 2021 or later:
- All pass-through entities will claim a refund at the entity level attributable to the school tax paid during the tax year. The credits will not be distributed out to any partners/shareholders on their individual 1040N.
- For pass-through entities that opted not to distribute credits to their partners/shareholders for tax paid during 2020, the pass-through entity will receive a refund at the entity level with the 2021 tax return for tax paid in both 2020 and 2021.
Next Steps for LB 181
From E&R, the bill will go to Select File, which provides for a second required debate on the bill. After Select File, the bill will be sent to E&R again to be rechecked and then reprinted for Final Reading. After the Legislature passes a bill on Final Reading, it goes to Governor Ricketts for consideration.
The Governor has five days, excluding Sundays, to decide what to do with the bill. If the Governor signs the bill or declines to act on it, the bill becomes a state law.
