77-2701.31. Retail sale or sale at retail, defined.

Retail sale or sale at retail means any sale, lease, or rental for any purpose other than for resale, sublease, or subrent.

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Annotations

This section does not exclude from taxation material necessary to or consumed in the manufacturing process but which does not actually enter into the final product as an ingredient or component part. Property that is necessary for production but which does not become an ingredient or component part of the product sold is taxable. This section does not exclude from taxation material necessary to or consumed in the manufacturing process which incidentally becomes incorporated into the finished product and which is not an essential ingredient or component of the finished product because such material is not an ingredient or component part of property manufactured, processed, or fabricated for ultimate sale at retail. Lackawanna Leather Co. v. Nebraska Dept. of Rev., 259 Neb. 100, 608 N.W.2d 177 (2000).

A contractor who incorporates live plants, including sod, into real estate is a retailer for sales tax purposes. Only contractors, not retailers, are allowed to elect their taxation scheme. George Rose & Sons v. Nebraska Dept. of Revenue, 248 Neb. 92, 532 N.W.2d 18 (1995).

Tangible personal property which is purchased and originally used for a different purpose than as an essential ingredient or component part of steel manufacturing, but which is later used as an ingredient or component part of the steel only after its use for its original purpose has been exhausted, should be subject to sales and use tax. Nebraska's statutory scheme does not exclude from taxation material necessary to or consumed in the manufacturing process but which does not actually enter into the final product as an ingredient or component part. To prevent double taxation, Nebraska provides exemptions from the sales and use taxes for materials that enter into and become an ingredient or component part of a product manufactured, processed, or fabricated for ultimate sale at retail. Interstate Printing Co. v. Department of Revenue, 236 Neb. 110, 459 N.W.2d 519 (1990).

Material which only accidentally or incidentally becomes incorporated into a finished product and which is not an essential ingredient of the finished product is subject to sales and use tax because such material is not an ingredient or component part of tangible personal property manufactured, processed, or fabricated for ultimate sale at retail. Nucor Steel v. Leuenberger, 233 Neb. 863, 448 N.W.2d 909 (1989).

So long as a material is entered into and is an essential ingredient or component part of a product manufactured, processed, or fabricated for ultimate sale at retail, the material is excluded from the Nebraska sales and use tax, notwithstanding that the material may be used for more than one purpose in manufacturing, processing, or fabricating the product. Nucor Steel v. Leuenberger, 233 Neb. 863, 448 N.W.2d 909 (1989).

Under the former law, subsections (1)(a) and (20) of section 77-2702 provide an exemption from the Nebraska sales and use tax. Nucor Steel v. Leuenberger, 233 Neb. 863, 448 N.W.2d 909 (1989).

When the primary function of tangible personal property is to aid in the production of goods which are manufactured for ultimate retail sale, the property will not be exempt from the use tax as defined in this section, merely because some undetermined fraction of the property is absorbed into the retail product during its manufacture. American Stores Packing Co. v. Peters, 203 Neb. 76, 277 N.W.2d 544 (1979).

Different classification as it affects reusable and nonreusable containers for purpose of sales tax is not arbitrary and unreasonable. Pepsi Cola Bottling Co. v. Peters, 189 Neb. 271, 202 N.W.2d 582 (1972).