Neb. Admin. Code § 316-24-333 — Sales Factor; Sales Other Than Sales of Tangible Personal Property in Nebraska; Services

333.01 Services. Sales of services are attributable to Nebraska if the service, when rendered: 333.01A Relates to real property located in Nebraska; 333.01B Relates to tangible personal property located in Nebraska at the time the service is received, even if the buyer is located in another state; 333.01C Is provided to an individual physically present in Nebraska at the time the service is received; or 333.01D Is provided to a buyer engaged in a trade or business in Nebraska and the service relates to a part of the trade or business that is operated in Nebraska. It is presumed that a service provided to a buyer operating in Nebraska relates to a part of the trade or business that is operated in Nebraska. 333.01D(1) If the service relates to a part of the trade or business that is operated both within and outside Nebraska, the sales are sourced to Nebraska in proportion to the use of the service in Nebraska and the use of the service everywhere for the tax period calculated using any reasonable method. 333.01D(2) For purposes of Reg-24-333.01D(1), operating or engaged in a trade or business in Nebraska means having property, payroll, or customers in Nebraska. 333.01D(3) Services which relate to a product of the buyer are considered used by the buyer at a location without considering where the customers of the buyer are located. Services that relate to the buyer as a trade or business are considered used by the buyer at multiple locations where the buyer operates its trade or business. 333.01D(4) For example: 333.01D(4)(a) If the service is a payroll service and the buyer only has employees in Nebraska, the receipts from providing that service are entirely attributable to Nebraska. However, if the buyer has employees in multiple states, the receipts from providing the service to the buyer could be attributed to Nebraska in proportion to the number of employees in Nebraska. 333.01D(4)(b) If the service contributes to finishing a product that the buyer produces only in Nebraska, the receipts from providing the service are entirely attributable to Nebraska even if the product is sold outside Nebraska. 333.01D(4)(c) If the service is advertising services that will be broadcast in many states, the sales could be attributed to Nebraska in proportion to the market in Nebraska relative to the market in all states. 333.02 Application Services. Sales of application services are attributable to Nebraska if the buyer uses the application service in Nebraska. The application service is used in Nebraska if the buyer: 333.02A Is an individual, and his or her billing address is in Nebraska; or 333.02B Is a business entity, and uses the application service in a trade or business in Nebraska. 333.02B(1) If the buyer uses the application service within and outside Nebraska, these sales are attributed to Nebraska in proportion to the use of the application service in Nebraska and the use everywhere for the tax period, calculated using any reasonable method. 333.02B(2) If the location of use of the application cannot be determined, the sale of an application service is in the state from which the order was placed in the regular course of the buyer's business. 333.02B(3) If that location cannot be determined, the sales are attributable to the buyer's billing address. 333.03 Communications Company. The sales of a communications company other than sales of tangible personal property are attributable to Nebraska if: 333.03A The income-producing activity is performed in Nebraska; or 333.03B The income-producing activity is performed both within and outside Nebraska and a greater proportion of the activity is performed in Nebraska than in any other state, based on costs of performance. 333.04 Reasonable Method. To be a reasonable method of calculation, the method must be applied in a consistent manner to determine what amount of the service or application is received or used in Nebraska. 333.04A The method must be supported by the service or application provider's business records at the time the service is received. 333.04B The method used must be described by the taxpayer. (Neb. Rev. Stat. § 77-2734.14. December 27, 2015.)