BY NICK NIEMANN & MATT OTTEMANN, McGRATH NORTH LAW FIRM IN OUR FIRST ARTICLE ON LB644, PUBLISHED IN ISSUE 4, 2025, of the Nebraska CPA journal, we discussed how Section 31 of that law, now codified at Neb. Rev. Stat. § 77-3,114, was impacting Nebraska’s existing incentive contracts as well as posing a threat to Nebraska’s economic development. LB644 became operative on Oct. 1, 2025. Given the importance of this topic to so many Nebraskans and Nebraska companies, and the impact this is also having on potential new expansion projects in Nebraska, we are providing updates that have arisen on this topic since our first article was published. Since its initial publication, we and other members of the business community have been addressing the legal and constitutional issues, as well as business climate issues, regarding LB644. It appears our concerns are gaining traction within the Nebraska Department of Revenue. On Feb. 12, 2026, the Department issued a statement saying: “At this time the Nebraska Department of Revenue is pausing enforcement of the foreign adversarial company incentive ban for programs with statutorily mandated agreements signed prior to Oct. 1, 2025, for further analysis.” Based on this statement, the Department could determine that it has the authority to permanently pause enforcement of LB644, with respect to existing agreements, without a statutory amendment. The Nebraska Department of Revenue may also conclude that legislative action is needed to permanently pause enforcement. At this time, it is unclear whether the Department will continue its enforcement pause. Regardless, the statement from the Department did not address pausing enforcement for agreements signed after Oct. 1, 2025. This article should be reviewed in that context. A REVIEW: THE BASICS OF LB644 LB644 declares that any “foreign adversarial company” is ineligible to receive benefits under any incentive program of the state of Nebraska. The Department of Revenue has specifically identified at least 24 incentive programs to which this applies. The statute’s definition of a “foreign adversarial company” is extraordinarily broad. It can include a company that: Has a subsidiary organized in any of six listed foreign governments, or Has any ownership interest held by one of those governments. The six foreign governments are those of the following countries: China, Cuba, North Korea, Russia, and Iran, plus the Maduro Regime of Venezuela. Together, these countries represent more than 20% of the world’s GDP (with the vast majority coming from China). Under the statute’s definition, a company could be deemed a “foreign adversarial company” based solely on having a Chinese subsidiary, for example, or merely because one of those governments, such as through a sovereign investment fund, acquires a single share of its stock. Crucially, LB644 contains no grandfather clause for existing incentive contracts. On its face, the law would impose new conditions on companies that already have binding agreements with the state of Nebraska. The Department had previously confirmed that it would apply LB644 to existing projects, AN UPDATE: Impact of LB644 on Existing Incentive Contracts STATE TAX BRIEFING CONTINUED ON PAGE 16 15 nescpa.org
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