Current through September 17, 2024
089.01 The sale, purchase, use, or other
consumption of electricity, coal, gas, fuel oil, diesel fuel, tractor fuel,
gasoline, coke, nuclear fuel, butane, and compressed fuel that includes
compressed natural gas and liquefied petroleum gas (propane) may be exempt from
the sales and use tax.
089.01A If more than
50% of the amount purchased is used or directly consumed in processing,
manufacturing, refining, generation of electricity, irrigation or farming, or
by any hospital the purchase of the fuels listed above is exempt.
089.02 The following definitions
and guidelines are to be applied in determining the percentage of exempt energy
consumption:
089.02A Processing or
manufacturing is defined as an action or series of actions performed upon
tangible personal property, either by hand or machine, which results in that
tangible personal property being reduced or transformed into a different state,
quality, form, property, or thing. Processing includes grain drying and feed
grinding in a commercial facility, and the freezing of food products.
Processing or manufacturing does not include repairing property, building
erection, cold storage of food products, or the preparation of food for
immediate consumption.
089.02B
Refining is defined as the action or process of removing impurities from crude
or impure materials, such as glass, metal, sugar, and petroleum products.
Refining includes the extraction of gas and petroleum products.
089.02C Irrigation is defined as the
application of water to lands for the raising of agricultural crops.
089.02D Farming is commercial agriculture,
which is the business of producing food products, or other useful and valuable
crops, or raising animal life. The crops or animal life can either be sold or
used by the grower. Commercial agriculture includes commercial production in
greenhouses, nurseries, tree farms, sod farms, and feedlots. Commercial
agriculture does not include storage of crops off the farm or in commercial
elevators, or animal life in stockyards or sale barns. Energy consumed by
on-farm grain storage and processing is considered to be consumed in
farming.
089.02E Gas is defined as
those gases that are burned for energy or oxygen used in welding or cutting
metals.
089.03 When
determining the percent of exempt use, energy consumed directly in processing,
manufacturing, refining, generation of electricity, irrigation, or farming, as
defined in this regulation, is used in a qualified use. Energy consumed in
heating, cooling, or lighting that portion of the facility directly used in
processing, manufacturing, refining, irrigation, or farming, is considered to
be for a qualified use. If the purchaser properly determines that more than 50
percent of the energy charge through a single meter is consumed for a qualified
use, the entire billing for that meter is exempt from the sales and use tax.
However, if the purchaser determines that 50 percent or less of the energy
charge through a single meter is consumed for a qualified use, he or she cannot
issue an exempt certificate on that meter billing. The entire charge (qualified
and nonqualified use) is taxable.
089.03A For
purposes of determining the usage percent, a one-year period of consumption
will be required. New customers may project their anticipated
consumption.
089.03B The use of
separate energy meters is acceptable for establishing exemptions within a
single facility; however, the taxability of the entire billing for that meter
is dependent upon the total energy usage through that meter.
089.04 Fuels commonly used to
propel motor vehicles, such as fuel oil, diesel fuel, tractor fuel, and propane
are subject to either diesel or compressed fuel tax or sales tax, depending
upon their usage.
089.04A At the time fuel
oil, diesel fuel, tractor fuel, or propane is placed in a bulk tank which is
designed or equipped to fuel vehicles, fuel oil, diesel fuel, tractor fuel, or
propane is taxed or exempted under the diesel or compressed fuel
rules.
089.04B Fuel oil, diesel
fuel, tractor fuel, or propane which is exempt from the sales tax at the time
of purchase becomes subject to the consumer's use tax only when consumed for
purposes other than for irrigation of crops or to propel any vehicle such as a
tractor, fork lift, grader, or bulldozer. This fuel may qualify for exemption
under paragraph
089.01A.
089.04C All fuel oil, diesel fuel, tractor
fuel, or propane placed in a bulk tank which is not designed to fuel motor
vehicles, is taxed or exempted under the sales and use tax
regulations.
089.05 The
procedure for claiming an exemption from sales and use tax except those claims
set forth in sections
089.05A and
089.05B must be
supported by properly completing the Nebraska Energy Source Exempt Sale
Certificate, Form 13E.
089.05A The exempt
sale of diesel or compressed fuel placed in a bulk tank designed or equipped to
fuel vehicles does not need to be supported by a certificate of exemption when
the quantity purchased and the other records maintained support such exempt
sale.
089.05B Diesel fuel that is
placed into a supply tank connected to stationary equipment used to irrigate
crops is exempt from sales and use tax. Such sales do not need to be supported
by a certificate of exemption when the quantity purchased and the other records
maintained by the seller support such exempt sale.
089.05C Compressed natural gas or liquefied
petroleum gas (propane) that is placed into a supply tank connected to
stationary equipment used to irrigate crops is taxable unless the purchaser
issues to the seller a Nebraska Energy Source Exempt Sale Certificate, Form
13E.
089.05D An electricity or gas
services public utility with a formal classification of usage that reasonably
reflects the actual use by the customer, and such usage is for an exempt
purpose, does not need to accept an exempt sale certificate from each customer
account in the classification. This provision is not to be construed as
relieving the consumer of liability for the applicable tax on any such
usage.
089.05E Persons furnishing
electricity and gas services as public utilities may elect to assume or absorb
the applicable sales tax or may elect to pass the tax to the final consumer in
the same manner as all other retailers. If the vendor elects to assume or
absorb the tax, the utility vendor will remit the applicable tax directly to
the Department of Revenue based upon the total charges made to the ultimate
consumer. All billings to the ultimate consumer shall contain a statement to
the effect that no tax is being collected for customers who are exempt or that
the tax has been assumed or absorbed by the vendor for taxable
customers.
089.05F In the event the
vendor of utility services elects to pass the applicable tax to the final
customer, the tax shall be separately stated on all billings; provided, that in
lieu of separately stating the tax, the Department of Revenue hereby authorizes
the vendor to include a statement on all billings to the effect that the total
charge includes sales tax. The gross receipts will be factored to determine the
proper amount of tax.
