Should you collect sales tax in Nebraska?
Sales tax is levied on the retail sale of tangible personal property to your customers, including leasing or renting. However, you will collect the sales tax if you determine the nexus in Nebraska. A nexus is a presence that may come physically or economically.
A physical nexus is typically created when your business has a store, warehouse, or office location in Nebraska. An economic nexus is intertwined when you cross paths with threshold limits as already stipulated by the state. These thresholds can be on a revenue or some other transactional basis.
Let’s explore if your business has a Physical nexus in Nebraska.
A physical nexus is integrated when your business is engaged in the following in Nebraska:
- Servicing tangible personal property in Nebraska.
- Maintaining, occupying or using a place of business or an office in Nebraska.
- Employing or retaining any contractor, including an agent, representative, or salesman, by whatever name is called, engaged in activities relating to selling, delivering, installing, or taking business orders.
- Having a stock of goods in Nebraska.
Is it constituting an Economic nexus in Nebraska?
You are required to comply with and register under sales tax rules if you are a remote seller (i.e., you don’t have a physical presence in the state) and your business sales in Nebraska exceed $100,000 during the current or previous calendar year or if you make 200 or more separate retail transactions or deliveries into the state.
You may also refer to the Nebraska Revenue Department advisory to know more about business activities that may create an economic nexus within the state.
How can you Register for Sales tax in Nebraska?
To get a sales tax permit in Nebraska, you need to apply online. Otherwise, you can submit the licensing application using Form 20 and send it to their mailing address.
Additionally, before applying for a new tax account number, make sure you have the following information handy:
- FEIN and Social Security numbers of all officers, partners or owners.
- Address details (physical and mailing).
- Business incorporation dates in Nebraska.
- Contact information.
- Nature of business.
Is your product or services liable to Sales tax in Nebraska?
Tangible Property: Sales tax in Nebraska is imposed primarily on the retail sale of tangible personal property, such as Furniture, giftware, toys, etc.
Services : Although the services are not subject to sales tax in Nebraska, a few exceptions include service or labour costs leading to the creation of tangible personal property, pest control, security services, etc. For more information, click here.
Digital Product: Nebraska charges sales tax on digital products. So, if you sell digital products such as software, streaming services, e-books, etc., you need to collect sales tax. Please see the Nebraska Revenue Department advisory on the taxability of digital transactions.
SAAS: SAAS is software that allows users to connect to the cloud and use it over an internet connection. It is non-taxable in Nebraska. Click here for the official guidance on computer software.
The state provides certain exemptions from the sales tax levy, such as food for home consumption, prescription drugs, newspapers/ magazines, and manufacturing equipment. To see what exemptions are covered, please click here.
You can also visit the Nebraska Department of Revenue website for more concise information about each aspect of Nebraska’s taxability.
How should you collect and calculate state taxes in Nebraska?
Collecting and computing accurate sales tax to be remitted to the state may involve stratospheric efforts, especially when you are not Nebraska-based. The sales tax is destination-based in Nebraska, which means you must collect taxes on tangible property sold to buyers based in Nebraska.
Complexities involved where you have a business nexus even if not in the state. Any default may lead to severe concerns, penalties, or fines by the state. That is what TaxDo is here for you! Our specialized sales tax calculator and professional services will simplify your job and lighten your compliance burden.
Nebraska’s base sales tax rate is 5.5%, followed by the local tax rates, which vary by city and municipality. Click here for the city-wise sales tax rates (including local rates).
Below is the simple formula you can use to calculate your sales tax collection on each merchandise sold:
Sales Tax collectable = Sale value * (5.5% plus local tax rate)
Do you need to collect sales tax on Shipping Charges?
Shipping charges can be delineated separately in the sale invoice raised to the customer or dissipated within the selling price of the items sold. Whatever the case, you’ll need to collect the sales tax on the total value, including shipping charges. However, if the product you are selling is exempt from sales tax, the shipping charges associated with the product will also be exempt.
Suppose you sell a combination of taxable and non-taxable items, and shipping charges are paid collectively for both items; you must apportion the shipping charges between taxable and exempt items and should charge sales tax on a taxable portion of the shipping charges. Here is what the Nebraska Department has to say on shipping charges.
How should you file sales tax in Nebraska?
There are multiple options available to you for reporting your sales tax.
E-file: You can e-file your return using Nebraska Form 10.
File by Mail or In-person: Complete Form 10 and mail it to their address or submit it in person.
Filing frequencies and due dates
Based on your reported sales tax or estimated taxable sales, the Nebraska Department of Revenue assigns you a filing frequency, which can be Monthly, Quarterly, or Yearly. According to your filing frequency, the due date for filing sales tax would be the 20th Day of the month following the relevant reporting period.
Note: If the due date is a holiday or weekend, the next business day would be considered the final due date. For more information, refer to the Nebraska Department of Revenue webpage.
Are there any fines or penalties for default in filing or paying sales tax?
The state levies a penalty of 10% of sales tax, subject to a minimum of $25. The penalty applies to both non-payment of tax and late filing of returns. In addition to the penalty, an interest of 3% p.a. will be charged on late tax payments.
However, assigning your tax burden to TaxDo would not result in you paying any penalty or interest. We will adhere to the due dates. Please review the guidelines provided by the Nebraska Department of Revenue on sales tax penalties. For interest, please visit this link.