Neb. Taxpayers Won't Have To Repay Incentives Due to Virus

By Asha Glover
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Law360 (April 24, 2020, 8:15 PM EDT) -- The Nebraska Department of Revenue has said that taxpayers receiving tax benefits as a part of the state's economic development incentive program will not have to repay those benefits if they fail to meet certain requirements due to COVID-19.

Project-holders that fail to meet required levels of employment or investment by the end of the attainment period due to the novel coronavirus will not be required to repay all or a portion of property tax incentives, the Nebraska Department of Revenue said in a general information letter sent Wednesday. Neither will those that fail to maintain those levels for the entire entitlement period, the department said. 

"To demonstrate that failure to maintain levels was caused by the triggering event, a project-holder must provide evidence that its failure was the direct result of forces beyond its control including, but not limited to, a government order to cease or reduce operations, or a directed health measure that prevented the business from continuing its usual operations," the department said.

Under the Nebraska Advantage Act , businesses must repay all or a portion of tax incentives earned if the project-holder does not meet the required employment or investment levels or fails to maintain those levels during the entitlement period, according to the department. Exceptions are if the failure to maintain those levels results from an act of God or national emergency, the department said. 

To avoid repaying the incentives, project-holders must demonstrate that they failed to maintain employment and investment requirements as a result of the national emergency President Donald Trump declared on March 13 in response to the coronavirus pandemic, according to the letter.

A project-holder will not be eligible for relief if a decision is made to reduce the workforce rather than use a paid ready-to-work program, nor will it be sufficient to demonstrate that the emergency declaration simply made maintaining requirements less profitable, the department said. The length of time the relief applies will depend on the project-holder's ability to show that the pandemic continued to prevent it from maintaining employment and investment levels, according to the letter. 

Two organizations, the Tax Foundation and Good Jobs Now, and Nebraska Gov. Pete Ricketts did not immediately respond to requests for comment Friday.

--Editing by Neil Cohen.

For a reprint of this article, please contact reprints@law360.com.

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