Which Nebraska water-service charges qualified for the residential sales-tax exemption?

Plain-English summary

Nebraska's residential-water exemption applied when water service was provided to a place designed primarily as a residence or permanent place of abode. The Department included single-family homes, duplexes, townhomes, apartments, condominiums, dorms, nursing homes, assisted-living homes, and similar long-term dwellings.

Individual meters were not required. Water supplied through one meter to an apartment complex could remain exempt even when included in rent.

Mixed-use and nonqualifying property

When one water supply served both residential and other uses and the uses were not separately measured, the exemption did not apply.

Hotels, motels, hospitals, jails, travel trailers, and recreational vehicles did not qualify. The Department distinguished permanent or considerable-length residence from temporary lodging, institutional use, or mobile accommodations.

Residential sewer fees remained taxable under Neb. Rev. Stat. § 77-2701.16(2)(c)(i).

Common questions

Q: Did every apartment need its own water meter?

A: No. A single meter serving an apartment complex could qualify.

Q: Was water service to a nursing home exempt?

A: Yes. The GIL listed nursing homes and assisted-living homes among qualifying residential uses.

Q: Did a hotel qualify because guests sleep there?

A: No. Hotels and motels were expressly excluded.

Q: What if a meter served both apartments and commercial space?

A: If residential and other uses were combined without separate measurement, the exemption did not apply.

Q: Were sewer charges exempt with the water charge?

A: No. Residential sewer fees remained taxable.

Citations and references

• Neb. Rev. Stat. § 77-2704.68 — exemption for residential water service
• Neb. Rev. Stat. § 77-2701.16(2)(c)(i) — residential sewer fees
• Laws 2021, LB 26 — legislation enacted as the residential-water exemption
• Nebraska GIL 1-21-1 — Department interpretation of qualifying residential service

Source

• Landing page: https://revenue.nebraska.gov/about/legal-information/general-information-letters-gils
• Original PDF: https://revenue.nebraska.gov/sites/revenue.nebraska.gov/files/doc/legal/gil/GIL-01-21-1_Residential_Water.pdf

Original ruling text

GIL 1-21-1 Sales and Use Tax: Residential Water Services
This guidance document is advisory in nature but is binding on the Nebraska Department of Revenue
(DOR) until amended. A guidance document does not include internal procedural documents that only
affect the internal operations of DOR and does not impose additional requirements or penalties on
regulated parties or include confidential information or rules and regulations made in accordance
with the Administrative Procedure Act. If you believe that this guidance document imposes additional
requirements or penalties on regulated parties, you may request a review of the document.
This guidance document may change with updated information or added examples. DOR recommends
you do not print this document. Instead, sign up for the subscription service at revenue.nebraska.gov to
get updates on your topics of interest.
September 10, 2021
Dear XXXX,
In your correspondence to the Nebraska Department of Revenue (DOR), you requested sales tax
information regarding Laws 2021, LB 26. The language from LB 26 has been enacted into Neb. Rev.
Stat. § 77-2704.68, which states, “Sales and use taxes shall not be imposed on the gross receipts from
the sale, lease, or rental of and the storage, use, or other consumption in this state of residential water
service.” Your questions include how residential water is defined for purposes of the tax exemption, and
if charges for water service to apartment owners, residential health care facilities, and hotels are exempt.
Based on the information contained in your inquiry, this General Information Letter (GIL) is being
provided. GILs address general questions; provide analysis of issues; and direct taxpayers to the
Nebraska statutes, DOR regulations, revenue rulings, or other sources of information to help answer a
question. A GIL is a statement of current DOR policy, and taxpayers may rely on the DOR to follow the
principles or procedures described in a GIL until it is rescinded or superseded. You may also find current
regulations, revenue rulings, information guides, taxpayer rulings, and other GILs at revenue.nebraska.
gov that may be helpful to you.
Neb. Rev. Stat. § 77-2704.68 does not contain a definition for residential water service. “Residential” is
an adjective used to describe the nature of the water service. In other words, residential water services
means water service to residences. Consequently, DOR must discern the common and ordinary meaning
of the words “residential” and “residences.”
A review of common definitions of “residential” shows that the use of the term residence or living space
is included in the definition. For example, one definition is “concerning or relating to residences,” and
“designed for people to live in.” The Cambridge Dictionary includes “involving living in a place” and
“relating to homes rather than businesses” among its definitions.
More helpful is the definition of “residence,” which has a well-recognized legal meaning and significance.
“Residence,” according to Black’s Law Dictionary (11th ed. 2019), is: “The act or fact of living in a
given place for some time. The place where one actually lives, as distinguished from a domicile. A
house or other fixed abode; a dwelling.”
Consistent with the common and ordinary meaning of the above terms, DOR has determined that
“residential water service,” as used in Neb. Rev. Stat. § 77-2704.68, means that the water service is
provided to places that are designed primarily for residences or permanent places of abode for people.

GIL 1-21-1

Page 2 of 2

The sales tax exemption for residential water service applies to single-family homes, duplexes,
townhomes, apartments, condominiums, dorms, nursing homes, assisted living homes, and other
dwellings designed for people to live in permanently or for a considerable length of time. The
units do not have to be billed individually from their own meters. A single meter for an apartment
complex where water service is provided as part of the rent is exempt. However, when there is
a combination of residential and other uses, and there is no separate measure of water between
the two uses, the exemption does not apply. Hotels, motels, hospitals, jails, travel trailers, and
recreational vehicles do not qualify for the exemption. Sewer fees for residential service remain
taxable pursuant to Neb. Rev. Stat. § 77-2701.16(2)c)(i).
For the Tax Commissioner
Michael J. Walsh, J.D., LL.M.
Tax Policy Manager
Nebraska Department of Revenue