Nebraska Q/A

posted Jan 31, 2011, 10:46 AM by Wayne Culp   [ updated Nov 23, 2011, 8:19 PM by Wayne Culp ]

See the response in red from the NE Department of Revenue:

  • As you know we are in the business of filing income tax returns.  The addition of line 37 may cause  problems in the timely filing in that this is the first time that line 37 appeared on the form. The instructions imply that Form 3 can only be used if you owe tax in more than one jurisdiction.  I ask that we be able to give the taxpayer a Form 3 if they think they have something to report but  did not bring the documentation with them. Otherwise they will have to delay the filing of both the federal and state returns (for as long as it takes them to find the documentation). I talked to two people in the department recently and when I explained the situation they indicated that it would be OK to use Form 3.

If someone is filing their 1040N individual income tax return and fails to bring their individual use tax information with them, they can report their use tax obligation on the form 3 at a later date.

  • Suppose this is the first time the taxpayer has heard of this Use tax. Are they liable for prior years' tax as well?  If so, how many years would be involved and how is this to be reported? What, if any, are the penalties for late payment of this tax?

If there was a filing requirement for use tax for prior years there is still a reporting requirement of the unpaid tax.

The statute of limitations for use tax is 3 years from the filing date or filing of the return, 5 years on unreported use tax.

Currently there are no penalties assessed in late filing of individual use tax.


  • If this is the first time, 2010 tax return, a taxpayer reports information on the Use tax, will the reporting, in of itself, cause the department to audit the 2010 return or the taxpayer's reporting or non reporting of the Use tax in prior years?

No, by someone reporting individual use tax for the first time will not cause the Department to conduct a audit.

  • The instructions for line 37 state the "Use tax is due on all taxable purchases when Nebraska and any applicable local sales tax is not paid."  Could you better define what "taxable purchases" includes? 

Anything that would be subject to sales tax would also be subject to use tax. The only difference between sales and use tax is who remits the tax. The seller of a taxable item collects the proper sales tax where the user pays the use tax.

Consumer’s use tax is a complement to the state and local sales tax. Consumer’s use tax is due only if the state and/or local sales tax was not paid. It is imposed at the same rate and on the same transactions as the sales tax. If the local sales tax is not properly paid on the original purchase, the local consumer’s use tax is owed.

  • The Second sentence of the instructions state, "You may owe use tax if you have not paid the Nebraska sales tax or any applicable local local sales tax on purchases delivered into Nebraska from out-of-state, mail order, or Internet sellers."  In what instance(s) would you not be required to pay the tax? 

Example: Purchases of a non taxable items such as food (steaks, fruit or candy)

  • Is a use tax filing required in the case of a person purchasing goods in Nebraska in a  jurisdiction where the local use tax is lower than the jurisdiction in which they reside? Can this be reported on line 37? If not, how is this to be reported?

No, there would be no reporting requirement in the example where a item is purchase in Nebraska and the tax rate where they purchased the item is less than where they reside.

I have been informed by department employees that if a purchase is made in another state where the use tax is lower than the use tax in Nebraska I would owe Nebraska use tax.  Is this correct? If yes, can this reported on Line 37? If not, how is this to be reported?

Nebraska sales tax rate is equal to the Nebraska use tax rate. If there is credit for tax that was properly paid to another state this amount of the credit and amount due will need to be reported on the Form 3.

  • Specifically, are gasoline purchases excluded from the use tax? I searched the internet to find out if there are sales taxes on gasoline and found the following:


There is a sales tax on gasoline in the states that have sales tax, according to the Federation of Tax Administrators. However, some states include gas sales tax into the price at the pump.

Read more: Is there sales tax on gasoline? | Answerbag

  • It would seem to me if you bought gasoline at a station in another state where the sales tax is less than Nebraska's tax you would owe a Use tax.  How one would figure that would be difficult at best.

Gasoline is not subject to Nebraska sales & use tax. Motor fuels in Nebraska are subject to Nebraska motor fuel tax.

The is a information guide available on our website titled Nebraska consumers use tax.