Nebraska LB 1310: Adopt the Advertising Services Tax Act and eliminate certain sales and use tax exemptions

Bill Text

LEGISLATURE OF NEBRASKA
ONE HUNDRED EIGHTH LEGISLATURE
SECOND SESSION
LEGISLATIVE BILL 1310

Introduced by Albrecht, 17.
Read first time January 17, 2024
Committee: Revenue
A BILL FOR AN ACT relating to revenue and taxation; to amend section1
77-3005, Reissue Revised Statutes of Nebraska, and section 77-382,2
Revised Statutes Cumulative Supplement, 2022; to adopt the3
Advertising Services Tax Act; to eliminate certain sales and use tax4
exemptions; to harmonize provisions; to provide an operative date;5
to repeal the original sections; to outright repeal section6
77-2704.38, Reissue Revised Statutes of Nebraska; and to declare an7
emergency.8
Be it enacted by the people of the State of Nebraska,9
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Section 1. Sections 1 to 5 of this act shall be known and may be1
cited as the Advertising Services Tax Act.2
Sec. 2. For purposes of the Advertising Services Tax Act:3
(1) Any term shall have the same meaning as used in Chapter 77,4
article 27, except as otherwise defined in the Advertising Services Tax5
Act;6
(2) Advertising services means all services, including digital7
advertising services, directly related to the creation, preparation,8
production, or dissemination of advertisements. The term includes, but is9
not limited to, layout, art direction, graphic design, mechanical10
preparation, production supervision, placement, and rendering advice to a11
client concerning the best methods of advertising that client's products12
or services. The term also includes online referrals, search engine13
marketing and lead generation optimization, web campaign planning, the14
acquisition of advertising space in the Internet media, and the15
monitoring and evaluation of website traffic for purposes of determining16
the effectiveness of an advertising campaign. The term does not include17
web hosting services and domain name registration or the services of a18
news media entity;19
(3) Assessable base means the portion of gross advertising revenue20
that is derived from sales to customers in Nebraska which are delivered21
or provided to a location within Nebraska according to the sourcing rules22
in subsections (2) and (3) of section 77-2734.14. A digital advertising23
service shall be deemed to have been provided within Nebraska if it is24
received on a user's device having an IP address located within Nebraska;25
(4) Digital advertising services means advertising services on a26
digital interface. The term includes advertisements in the form of banner27
advertising, search engine advertising, interstitial advertising, and28
other comparable advertising services;29
(5) Digital interface means any type of software, including any part30
of an Internet website or application that a user is able to access;31
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(6) Gross advertising revenue means income or revenue from1
advertising services sourced to the United States using the sourcing2
rules described in subdivision (3) of this section before any expenses or3
taxes, computed according to generally accepted accounting principles;4
(7) IP address means a unique string of characters or other5
identifier assigned to each device connected to a network for6
communication;7
(8) News media entity means an entity engaged primarily in the8
business of news gathering, reporting, or publishing articles or9
commentary about news, current events, culture, or other matters of10
public interest. The term does not include an entity that is primarily an11
aggregator or republisher of third-party content;12
(9) Person has the same meaning as in section 77-2701.25;13
(10) Reporting period means the calendar year on which a report is14
based; and15
(11) User means a person or individual who accesses a digital16
interface with a device.17
Sec. 3. (1) A tax is imposed on a person that is subject to the18
Internal Revenue Code or a group of persons subject to the Internal19
Revenue Code that are part of the same unitary group or would otherwise20
be members of the same unitary group, if incorporated, that are doing21
business in Nebraska and whose combined gross advertising revenue exceeds22
one billion dollars.23
(2) The rate of the tax imposed under this section is seven and one-24
half percent of a person's assessable base for the reporting period.25
Sec. 4. The provisions of sections 77-2714 to 77-27,135 relating to26
deficiencies, penalties, interest, the collection of delinquent amounts,27
confidentiality, refunds, and appeal procedures for the tax imposed by28
section 77-2734.02 shall also apply to the tax imposed by section 3 of29
this act.30
Sec. 5. The Tax Commissioner may adopt and promulgate rules and31
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regulations necessary to implement, administer, and enforce the1
Advertising Services Tax Act.2
Sec. 6. Section 77-382, Revised Statutes Cumulative Supplement,3
2022, is amended to read:4
77-382 (1) The department shall prepare a tax expenditure report5
describing (a) the basic provisions of the Nebrask