Ethanol Inputs Exempted From Nebraska Sales and Use Taxes

Lawmakers passed a bill May 20 containing several sales and use tax exemptions, including one for inputs used to manufacture ethanol.

Under Legislative Bill 595, introduced by Thurston Sen. Joni Albrecht, state sales and use taxes may not be imposed on the gross receipts from the sale, lease or rental of — and storage, use or other consumption in Nebraska of — all catalysts, chemicals and materials used in the process of manufacturing ethanol and the production of coproducts.

The bill also includes provisions of LB 672, introduced by Sen. Dave Murman of Glenvil, that define agricultural machinery and equipment for the purposes of an existing sales and use tax exemption.

Under LB 595, agricultural machinery and equipment are defined as tangible personal property used directly in cultivating or harvesting a crop, raising or caring for animal life, protecting the health and welfare of animal life or collecting or processing an agricultural product on a farm or ranch.

The definition includes header trailers, head haulers, header transports and seed tender trailers.

Also included in LB 595 are provisions of LB 182, introduced by Elkhorn Sen. Lou Ann Linehan. They exempt from state sales and use taxes the gross income received from the lease or use of towers or other structures primarily used in conjunction with the furnishing of internet access service, agricultural GPS locating services or certain over-the-air radio and television broadcasting.

Finally, under provisions originally introduced by Linehan in LB 350, the proceeds of sales and use taxes imposed on the sale or lease of motorboats, personal watercraft, all-terrain vehicles and utility-type vehicles will be credited to the state Game and Parks Commission Capital Maintenance Fund until 2027 rather than 2022.

Sen. Machaela Cavanaugh of Omaha questioned why the Legislature would approve a measure that will reduce tax revenue when senators blocked her LB 376, which would have supplemented existing services for children with developmental disabilities in Nebraska, partly due to its cost. Cavanaugh filed a motion to recommit LB 595 to the Revenue Committee, which she later withdrew.

After two hours of debate on final reading, Albrecht filed a motion to invoke cloture, which ceases debate and forces a vote on the bill and any pending amendments. It succeeded on a vote of 42-0. Thirty-three votes were needed. Senators voted 45-0 to pass LB 595.

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