WHICH GOODS AND SERVICES ARE TAXABLE?
Determining whether or not the products or services your company sells are taxable in Nebraska is the first step in sales tax compliance.
Traditional Goods or Services
Goods that are subject to sales tax in Nebraska include physical property, like furniture, home appliances, and motor vehicles.
Medicine, groceries, and gasoline are all tax-exempt.
Some services in Nebraska are subject to sales tax. For a detailed list of taxable services view Sales Tax Frequently Asked Questions through the Nebraska Department of Revenue.
The Nebraska Department of revenue has also published a comprehensive guide to sales tax exemptions and exclusions.
Digital Goods or Services
A digital good or service is anything electronically delivered, such as an album downloaded from iTunes or a film purchased from Amazon.
Nebraska requires businesses to collect sales tax on the sale of digital goods.
HOW TO REGISTER FOR NEBRASKA SALES TAX
If you determined that you need to charge sales tax on some or all of the goods and services your business sells, your next step is to register for a seller's permit. This allows your business to collect sales tax on behalf of your local and state governments.
In order to register, you will need the following information:
- Personal identification info (SSN, address, etc.)
- Business identification info (EIN, address, etc.)
- Business entity type
- Accounting basis (cash, accrual or other) and period (fiscal year, calendar year, etc.)
- Description of your business and/or products
Save Money with a Resale Certificate
With a resale certificate, also known as a reseller's permit, your business does not have to pay sales tax when purchasing goods for resale.
COLLECTING SALES TAX
After getting your seller's permit and launching your business, you will need to determine how much sales tax you need to charge different customers. To avoid fines and the risk of costly audits, it's important for business owners to collect the correct rate of sales tax.
When calculating sales tax, you'll need to consider the following kinds of sales:
- Store Sales
- Shipping In-State
- Out-of-State Sales
For traditional business owners selling goods or services on site, calculating sales tax is easy: all sales are taxed at the rate based on the location of the store.
Here's an example of what this scenario looks like:
Mary owns and manages a bookstore in Fremont, Nebraska. Since books are taxable in the state of Nebraska, Mary charges her customers a flat-rate sales tax of 7.0% on all sales. This includes Nebraska’s state sales tax rate of 5.5% and Fremont's city sales tax rate of 1.5%.
The state of Nebraska follows what is known as an origin-based sales tax policy. This means that long-distance sales within Nebraska are taxed according to the address of the seller. This policy applies to state, county, and city sales taxes.
Consider the following example:
Steve runs his own business selling electronics on eBay out of his home in Grand Island, Nebraska. A customer living in Lincoln Nebraska finds Steve’s eBay page and purchases a $350 pair of headphones. When calculating the sales tax for this purchase, Steve applies the 5.50% state tax rate for Nebraska plus 1.75% for Lincoln’s city tax rate. At a total sales tax rate of 7.25%, the total cost is $375.38 ($25.38 sales tax).
Nebraska businesses only need to pay sales tax on out-of-state sales if they have nexus in other states. Nexus means that the business has a physical presence in another state.
Common types of nexus include:
- A physical location, such as an office, store, or warehouse
- An employee who works remotely or who is a traveling sales representative
- A marketing affiliate
- Drop-shipping from a third party seller.
- A temporary physical location, including festival and fair booths.
FILE YOUR SALES TAX RETURN
Now that you’ve registered for your Nebraska seller's permit and know how to charge the right amount of sales tax to all of your customers, you are all set to file your sales tax return. Just be sure to keep up with all filing deadlines to avoid penalties and fines.
Recommended: Hiring a business accountant can help your business file tax returns as well as issue payroll and manage bookkeeping. Schedule a consultation with a business accountant today to save thousands of dollars on your taxes.
How to File
Nebraska requires businesses to file sales tax returns and submit sales tax payments online.
How Often Should You File?
How often you need to file depends upon the total amount of sales tax your business collects.
- Annual filing: If your business collects less than $75 in sales tax per month then your business should elect to file returns on an annual basis.
- Quarterly filing: If your business collects between $75 and $250 in sales tax per month then your business should elect to file returns on a quarterly basis.
- Monthly filing: If your business collects more than $250 in sales tax per month then your business should file returns on a monthly basis.
Note: Nebraska requires you to file a sales tax return even if you have no sales tax to report.
All Nebraska sales tax return deadlines fall on the 20th day of the month, unless it is a weekend or federal holiday, in which case the deadline is moved back to the next business day.
Annual filing: January 22
- Q1 (Jan. - Mar.): Due April 20
- Q2 (April - June): Due July 20
- Q3 (July - Sept.): Due October 22
- Q4 (Oct. - Dec.): Due January 22
Monthly filing: The 20th of the following month, or the next business day, e.g. April 20 for the month of March, or May 22 for the month of April.
Penalties for Late Filing
Nebraska charges a late filing penalty equal to 10% of the tax that is due on the tax return or $25; whichever is greater.
Nebraska charges a late payment penalty equal to 10% of the tax that is due on the tax return or $25; whichever is greater. This penalty is only applied If the business files the return on time but neglects to pay the balance in total.
The state assesses the unpaid tax with a compounded interest rate of 9% per year or 0.75% per month or partial month for any unpaid tax or penalty.
Nebraska Helpful Resources
Nebraska Customer Service Number:
1 - 402 - 471 - 5729