Common Sales Tax Mistakes and NE Update

With the new year, now is a great time to review your sales tax to avoid common mistakes. Below are four things you should check regularly to ensure you comply with state regulations.

1. Review Your Local Tax Rates

Nebraska updates local tax rates each quarter. If you missed an update, you could potentially be charging the wrong rate to your customers and must cover the variance yourself on your next filing. You can stay up to date with tax rate changes through the Nebraska Department of Revenue’s website.

2. Verify Invoices

Set aside time to review purchase invoices to ensure you paid sales tax properly. Any invoice without sales tax should be reviewed further to determine if use tax needs to be remitted. If so, report those invoices on your next filing. If you are unsure about the taxability of an item, it is important that you reach out to your accountant for assistance.

3. Think About Changes in Your Business

Did you add or change locations? Add a service line? Register in a new state? All these changes, and many more, have sales tax implications to consider. Sales tax can get complicated when considering location since there are different rules for each state. Be sure to consult with your accountant to ensure you are reporting properly.

4. Understand Sales Tax Law Changes

Lastly, every year Nebraska changes something within the sales tax law. Recently, these three items changed most:

• The sale/lease/rental of and the storage/use/other consumption of residential water services is now exempt.
• Gross income received from leasing/using towers and other structures used in conjunction with providing internet access services, agricultural GPS locating services, or FCC license over-the-air radio and television broadcasting is no longer included in the definition of gross receipts.
• Sales of catalysts, chemicals, and materials used in manufacturing ethyl alcohol and its coproducts are exempt.

In summary, sales and use tax can be challenging to manage, but doing so properly will pay off in the long run. Be sure to utilize your accountant. They follow tax regulations regularly and can ensure your business remains compliant. If you have questions or want to discuss your sales tax situation further, please contact us. You can also learn more about our state and local tax services by visiting our website or reading our blog.