A Nebraska sales tax exemption certificate allows eligible businesses or organizations to buy certain goods without paying state sales tax, as long as they meet Nebraska’s strict requirements. Proper certificate management is essential; missing or incomplete documents can lead to failed audits, penalties, and tax bills

Commenda offers a straightforward solution for Nebraska sales and use tax exemption certification. By automating certificate management, Commenda enables businesses to maintain compliance, reduce administrative workload, and operate more efficiently.

This blog will explain who qualifies for a Nebraska sales tax exemption certificate, how to apply, common mistakes to avoid, and how automation can streamline certificate management. 

What Are Exemption and Resale Certificates?

Businesses and organizations use exemption and resale certificates to avoid paying sales tax on eligible purchases legally. While both types of certificates allow for tax-exempt transactions, they apply in different purchase scenarios and to different buyers. 

Distinguishing between them is a key part of staying compliant with Nebraska sales tax rules, especially regarding the state of Nebraska sales tax exemption certificate management.

The following are the two certificates:

  • A resale certificate is used by businesses that purchase items to resell them.
  • An exemption certificate is used by qualified entities (like certain nonprofits or government agencies) that are legally exempt from paying sales tax on specific purchases.

To obtain a Nebraska sales tax exemption certificate, you must complete Form 13, Nebraska Resale or Exempt Sale Certificate. The form and instructions are available on the Nebraska Department of Revenue website.

The following table provides an overview of the differences between the certificates:

Certificate Type Purpose Common Users Example Use Case Tax Treatment
Resale Certificate Buy goods for resale without sales tax Wholesalers, retailers, resellers A Nebraska retailer buys apparel to resell in the store Tax is collected when the item is sold to the end customer
Exemption Certificate Buy goods tax-free due to the exempt status State agencies, qualifying nonprofits, and government A state university in Nebraska purchases lab supplies for research No tax collected on qualifying purchases

Exemption Types Recognized in Nebraska 

Nebraska recognizes several types of exemptions supported by a Nebraska sales tax exemption certificate. Qualifying businesses and organizations can avoid state and local sales tax on eligible purchases if documentation is complete and valid.

1. Governmental Entities

Nebraska and federal agencies are fully exempt from sales and use tax on official purchases. This includes state, county, city, township, and federal entities, as well as natural resource districts.

The following are key points to note regarding this exemption:

  • No exemption ID number needed for most units
  • Only applies to official business purchases
  • Public housing authorities included

2. Intended Use Exemptions

This category covers purchases where the specific intended use of the item renders it exempt from sales tax. Examples include certain manufacturing inputs, agricultural chemicals, and items used in specific exempt activities.

The following are key points to note regarding this exemption:

  • The purchaser must specify the exact intended use on Form 13.
  • A description of items purchased must be provided.
  • Common examples include repair parts for agricultural machinery and certain manufacturing supplies.
  • Agricultural producers can claim an exemption for repair parts used in commercial agriculture.

3. Qualified Nonprofit Organizations

Only specific nonprofit organizations that have received a Nebraska exempt organization certificate of exemption qualify for this category. The sales tax exemption certificate that Nebraska provides to these organizations allows tax-free purchases for organizational use.

The following are key points to note regarding this exemption:

  • Must have a valid exemption number (05-XXXXXXX).
  • Limited to official nonprofit activities.
  • Qualified: licensed Nebraska hospitals, skilled nursing/assisted living facilities, agencies for the blind, and licensed child-care/placing agencies.

4. Manufacturing Machinery and Equipment

Manufacturers engaged primarily in manufacturing activities can claim exemption for machinery and equipment used predominantly in manufacturing processes. This exemption supports Nebraska’s manufacturing sector development.

The following are key points to note regarding this exemption:

  • Must be used more than 50% of the time in manufacturing activities.
  • Requires detailed records of manufacturing versus non-manufacturing use.
  • Includes repair parts, installation, and maintenance services.
  • A person must derive the majority of revenue from manufacturing sales.

5. Occasional Sales

This category covers one-time sales of used business or farm equipment that are exempt if used as a depreciable asset for over one year and tax was paid originally.

The following are key points to note regarding this exemption:

  • Seller fills out and gives Form 13 to the buyer
  • Buyer keeps the certificate for audit

6. Common or Contract Carrier Exemption

This exemption is for businesses operating vehicles, watercraft, or aircraft primarily as common or contract carriers. Qualifying carriers are exempt from sales tax on both the vehicles themselves and certain parts.

The following are key points to note regarding this exemption:

  • Requires a properly completed Nebraska sales tax exemption certificate (Form 13).
  • The certificate for this use is valid for five years and must be renewed.
  • Documentation proving predominant carrier usage may be required during an audit.

7. Agricultural Exemption

Nebraska law provides sales tax exemptions for depreciable agricultural machinery, equipment, and key consumables used in commercial agriculture.

The following are key points to note regarding this exemption:

  • Must be depreciable with a useful life of over a year.
  • Certificate required at purchase; proof of commercial use may be needed.
  • No special permit required unless audited.

All exemption certificates must be properly completed and given to the seller at purchase. Sellers must keep certificates on file for audits; forms and rules for each exemption are available from the Nebraska Department of Revenue.

State-Specific Requirements for Exemption Certificates in Nebraska

A Nebraska sales tax exemption certificate allows eligible buyers to make tax-exempt purchases under state law. To be valid, it must be properly completed and kept on file by the seller for audit purposes. Incomplete or missing certificates may result in tax liability and penalties.

Note: For those who are wondering, ‘What is a Nebraska sales tax exemption certificate?’ It is Form 13, the Nebraska Resale or Exempt Sale Certificate, approved by the Nebraska Department of Revenue.

Required Information on a Buyer-Specific Nebraska Sales Tax Exemption Certificate

To be valid, a Nebraska sales tax exemption certificate must include:

  • Seller Info: Name and address as registered with the Nebraska Department of Revenue.
  • Buyer Info: Legal name and full address (no P.O. Box).
  • Sales Tax Permit: Nebraska permit number (01-XXXXXXX). If unavailable, provide reason or out-of-state permit and state.
  • Certificate Type: Indicate single-use (with invoice/PO number) or blanket (valid until revoked).
  • Exemption Type: Check resale (Section A) or exempt sale (Section B), with exemption reason or category listed.
  • Exemption Basis: Brief description (e.g., “nonprofit hospital”).
  • Signature: Authorized signature, printed name, title, and date.
  • Expiration: Include date or note indefinite validity for blanket certificates.

For the official form and instructions, see Nebraska Form 13

Certificate Validity and Renewal Requirements

Nebraska recognizes two certificate formats:

  • Single-purchase certificates: Expire after the specific transaction and require a new certificate for each exempt sale.
  • Blanket certificates: Stay valid until the purchaser revokes them in writing.

Specific exemptions may have a statutory expiration:

  • Common or contract carrier exemption certificates expire every five years and require renewal via Form 5, Nebraska Exemption Application.
  • All other blanket certificates remain valid until revoked, but sellers should periodically verify the continued accuracy of purchaser information.

Electronic vs. Paper Submission

  • Nebraska accepts both original signed paper certificates and electronic copies (PDF), as long as all required elements are present.
  • Sellers may adopt electronic certificate management systems, but must ensure each certificate contains all required elements and is readily retrievable for audit.
  • Certificates are not filed with the Department; they are retained by the seller for at least three years after filing the related return; longer if under audit or review.

For complete instructions, download Form 13 and view the Nebraska Administrative Code, 316 Neb. Admin. Code Ch. 1, § 014.

Common Pitfalls and Compliance Risks

Using a Nebraska sales tax exemption certificate comes with strict responsibilities. Inaccurate or incomplete handling of these certificates can result in serious compliance issues for both buyers and sellers.

Below are key areas where businesses frequently fall out of compliance:

  • Expired Certificates: Do sales tax exemption certificates expire in Nebraska? Generally, most Nebraska certificates (resale or exempt sale) do not expire and remain valid until revoked or revoked in writing. The main exception: common or contract carrier certificates expire every five years and must be renewed.
  • Missing or Incomplete Information: Certificates missing key details, such as signature, permit number, or exemption reason, are invalid and can lead to audit rejection. Every field must be properly filled out
  • Incorrect Use by Ineligible Buyers: Only certain entities qualify for an exemption; if a non-eligible business uses a certificate (e.g., a for-profit using a nonprofit certificate), it is not valid and can trigger stiff tax penalties.
  • No Description of Goods or Services: Vague descriptions like “miscellaneous items” can void the exemption. A clear, item-specific description must be included.
  • Unchecked Blanket Certificates: Blanket certificates should be periodically reviewed. Outdated or invalid certificates may expose the seller if the buyer’s exemption status changes.
  • Retention Failures: Sellers are required to keep certificates for at least three years after the filing date, or longer if under audit. Lack of records can lead to full tax liability.

A Possible Scenario of Poor Certificate Management in Practice

A Nebraska hardware supplier accepted a resale certificate from a customer in 2017 and continued making tax-free sales without checking its status. During a 2024 audit, officials found the certificate expired in 2022 because the seller failed to renew or verify it; they were assessed back taxes, interest, and penalties.

To help reduce the risk of similar errors, businesses can refer to detailed waiver requirements, tax categories, and audit considerations in this guide to Sales Tax Exemptions.

Best Practices for Managing Exemption Certificates

Accepting a Nebraska sales tax exemption certificate correctly helps reduce audit risks and tax liabilities. Following consistent procedures ensures valid documentation is always on file.

  • Collect at Time of Sale: Always secure the completed certificate before the transaction. Missing forms can result in the full tax being assessed during an audit.
  • Use Nebraska’s Official Form: Only accept Form 13. Avoid using forms from other states, like Montana.
  • Store Digitally: Keep scanned or electronic copies in a searchable system. Nebraska requires sellers to retain records for at least 3 years.
  • Track Expiring Certificates: Certificates like those for common or contract carriers expire every five years. Set renewal reminders.
  • Review Regularly: Run internal audits to identify expired, incomplete, or incorrect certificates.

To answer a common question, ‘How do I get a Nebraska sales tax exemption certificate?’, buyers must complete Form 13 and provide it to the seller.

The Nebraska sales tax rate is important to know, as errors or missing exemption documentation mean you could owe the full tax amount and any penalties if audited.

How Commenda Simplifies Exemption Certificate Management

Managing exemption certificates manually is time-consuming, prone to mistakes, and risky under Nebraska’s compliance standards. Commenda simplifies the process, making it easier to collect, validate, and manage each Nebraska sales tax exemption certificate with minimal effort. Here’s how Commenda delivers value:

  • Automated Collection: Certificates are requested automatically at checkout or procurement, so every Nebraska sales tax exemption certificate is always obtained at the right moment.
  • Instant Validation: Key certificate details, such as names, tax ID, exemption reason, and signature, are verified in real time, reducing mistakes and audit issues.
  • Centralized Digital Storage: All certificates are securely stored online for quick, audit-ready access, aligning with the record retention required by Nebraska.
  • Expiration Tracking & Renewal Alerts: Commenda monitors certificate dates and sends renewal reminders, preventing the use of expired or outdated certificates.
  • Compliance Dashboards: Dashboards spotlight missing, incomplete, or invalid certificates, making it easier to stay compliant and avoid penalties.
  • System Integration: Commenda connects with popular ERP and e-commerce software, supporting a smooth workflow without manual duplication.

With our global sales tax platform, Nebraska businesses can manage Nebraska sales tax exemption certificates with confidence, clear organization, and full state compliance, making every transaction and audit smoother.

Getting Started with Commenda in Nebraska

Getting started with Commenda is straightforward and built for businesses that manage Nebraska sales tax exemption certificate requirements. Whether you sell wholesale, operate retail locations, or handle multi-jurisdictional sales, Commenda helps you stay compliant with Nebraska-specific rules from the start. Here’s how to begin:

  • Create Your Commenda Account: Sign up and choose settings that match your business model, volume, and exemption certificate needs.
  • Connect Your Systems: Integrate Commenda with your ERP, sales, or e-commerce platform to automate exemption certificate collection and validation.
  • Upload or Request Certificates: Import your current certificates or send real-time requests to customers as transactions occur.
  • Enable Nebraska-Specific Compliance: Commenda auto-applies Nebraska requirements, including Form 13 formatting, field validation, and rules on when a Nebraska sales tax exemption certificate expires.
  • Monitor & Maintain: Use built-in dashboards, expiration tracking, and compliance alerts to stay audit-ready and organized.

Still wondering whether Commenda is the right fit? Book a demo or speak with our tax compliance team to see how Commenda simplifies Nebraska exemption certificate workflows.

FAQs: Exemption Certificates in Nebraska

Q. What are the specific documentation requirements for exemption certificates in Nebraska?

Certificates must include buyer and seller info, exemption reason, purchase type, tax ID (if applicable), and a valid signature.

Q. How do I know if a buyer qualifies for an exemption under Nebraska tax law?

Check the buyer’s type of organization (e.g., nonprofit hospital, government) and activity. Review qualifying entities in the Sales Tax Exemption Guide.

Q. Does Nebraska require periodic renewal or revalidation of exemption certificates?

Most do not expire, but those for common or contract carriers must be renewed every five years. See the Carrier Exemption Info.

Q. Can I accept out-of-state resale or exemption certificates in Nebraska?

Yes, if the buyer provides their home state’s ID number and the purchase qualifies under Nebraska law. Out-of-state vendors must still complete a valid Form 13.

Q. What happens if I can’t obtain a certificate before a sale?

The sale is taxable until a valid certificate is received. Nebraska allows corrections only if documents are secured promptly. Delayed collection may result in tax liability.

Q. How does Nebraska handle drop shipment transactions involving resale certificates?

Nebraska allows out-of-state retailers to provide their home state resale number on Form 13.

Q. What are the penalties for exemption certificate errors in Nebraska?

Improper use or acceptance may result in a $100 fine or ten times the owed tax, whichever is greater, and possible Class IV misdemeanor charges. 

Q. Can I automate certificate collection and validation to meet Nebraska audit standards?

Yes. Solutions like Commenda automate validation, track expirations, and securely store certificates, helping comply with Nebraska’s three-year record retention.

Q. What is exempt from sales tax in Nebraska?

Common exemptions include resale items, manufacturing machinery, qualifying nonprofits, agricultural inputs, and government purchases. For a full list, consult the Nebraska Department of Revenue.