Telecomm Occupation Tax Decreases

Earlier this year, the Nebraska State Legislature passed LB (Legislative Bill) 1023 which lowers the telecommunication occupation tax that can be collected from five to four percent. That four percent will begin with the 4th quarter 2024 gross sales reporting. According to the Nebraska Revenue Services, “To generate revenue, any class of city may collect a “privilege or license tax” on an occupation or business within its boundaries. This is commonly referred to as an occupation tax. The tax must be applied uniformly and fairly to the types of businesses on which it is imposed. The most common types of businesses affecte d are hotel operators, car rental companies, telecommunications providers, restaurants, and bars.”LB 1023 was sponsored by Senator Lou Ann Linehan (R-District 39) and, per the Statement of Intent, was introduced because,“The Tax Cuts and Jobs Act (TCJA) temporarily eliminated the factory tax by creating the immediate cost recovery for investments in business machinery and equipment. This provision expired under federal tax law beginning Jan. 1, 2023, reverting Nebraska businesses to amortizing these costs, effectively raising taxes on critical investments needed to grow Nebraska’s economy and invest in our workforce. LB1023 will keep this provision in place. This is not a tax cut or increase as it will remain in the state tax baseline. However, it will allow for Nebraska to remain competitive for new capital investments. In a memorandum to Fairbury Mayor Spencer Brown and the Fairbury City Council, City Clerk Erin Reimer wrote, “To remain compliant, the City of Fairbury will need to adhere to the adopted LB1023 and consider approval of Ordinance 3126-Telecommunication Occupation Tax.” At a meeting on Tuesday, November 5, the Fairbury City Council voted first to suspend the rules that required three readings of Ordinance 3126, which reduces the tax five to four percent. The city council then voted unanimously to adopt Ordinance 3126.

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