Incentives Update 08-19-20

Nebraska Legislative Update………..

  • The 106th Nebraska Legislature’s 2nd Session convened (January 8, 2020), adjourned due to COVID-19 (March 25, 2020), reconvened (July 20, 2020), and adjourned, for the year, on Thursday, August 13, 2020.   
  • The Nebraska Legislature passed the ImagiNE Nebraska/business incentive legislation.  The bill, which began as LB720, became part of a compromise bill (LB 1107), that included property tax relief, business incentives and a transformational jobs project at UNMC (NEXT – Nebraska Transformational Projects Act). The bill passed on a 41-4 vote. 
  • Governor Pete Ricketts signed into law Legislative Bill 1107 on August 17, 2020.
  • For purposes of business incentives, the Nebraska Advantage Act will sunset at 12/31/20 and ImagiNE Nebraska applications may be filed on/after 1/1/21.  Any applications filed and approved, via a ‘complete application’ date, under Nebraska Advantage, on/prior to 12/31/20, will be ‘grandfathered’ in under the NAA program.

For additional information about the legislative session, please go to the Nebraska Legislature link at

ImagiNE Nebraska (LB 1107) – Cursory High Points

  • Fiscal cap is in place at $25M (2021 & 2022), 100M (2023 & 2024), $150 million (2025) and after Year 5, cap is equal to 3% of actual General Fund net receipts. 
  • A requirement that the Taxpayer not violate any state or federal law against discrimination.
  • Applications will be filed to the Nebraska Department of Economic Development, and compliance/audits will be completed by the Nebraska Department of Revenue.
  • Application fees, due to the State of Nebraska, have increased to $5,000, for all tier levels, and a .05 fee is assessed on benefits realized.  A credit is allowed against the .05 fee, specific to the first $5,000 (i.e. application fee). 
  • Qualified activity designations have changed, involving designated activities and/or NAICS codes. Furthermore, locations will be designated as either qualified or non-qualified locations, as a result of meeting a majority activity designation.
  • A tier designation, at application, exists, but the Applicant may move to another tier, via a State-provided form, ‘until the first December 31 following the end of the ramp-up period’.
  • Attainment period (aka ramp-up period) is 5 years, Entitlement period is 7 years, and Carryforward period is 3 years.
  • Base year (employment) for 2021 applications, will be the higher FTE computation of 2019 or 2020, whereas applications filed in 2022 or later, will utilize ‘the year immediately preceding the year of application’.
  • Qualified employees must be Nebraska residents (out-of-state employees working at the NE site no longer qualify), full-time employees (part time employees no longer qualify), offered a sufficient package of health/benefit coverage, and meet minimum wage requirements (required of the applicable tier).  Each tier has a documented minimum wage requirement at either 70% of the statewide average (rural manufacturing), 75% of the statewide average, 90% of statewide average, 100% of the statewide average, or 150% of statewide average.  Using current wages (this will change for 2021 applications), 100% of the statewide average is currently estimated/calculated at $44,824 annually/$21.55 per hour.
  • Qualified investment continues to have a project location bias and allow for assets placed in service at the project site, assets transferred into NE (and utilized at the project site) and assets leased (at the project site). 
  • Benefits may be claimed/filed ‘when’ the business reaches the required levels (at the end of the calendar year), rather than ‘post’ audit.  As a result of this change, yearly filing requirements and correlating documentation/support, required by NDR, will be expanded and scrutinized yearly, in order to ensure compliance.  The Department of Revenue has the authority to conduct audits, of any filer.   
  • Updated language on job training and talent recruitment, including additional use of credits.

Economic Development around the Country………. is expanding its physical offices in six US cities, estimating that it will add 3,500 corporate jobs and 900,000 sq. ft. of office space across its hubs in New York, Phoenix, San Diego, Denver, Detroit and Dallas. 

BAE Systems, one of the world’s leading aerospace and defense technology companies, is expanding its operations in Austin, Texas, via the construction of a new 390,000 sq. ft. facility, at its campus development in Parmer Austin Business Park.  The site, which is anticipated to be completed in 2022, and valued at approximately $150M, will increase capacity by more than 1,400 employees and include business activities including, but not limited to, engineering, manufacturing, laboratory, and administrative.

Online pet retailer Chewy, Inc., is opening an eCommerce fulfillment center in Belton, Missouri, at the NorthPoint Development’s Southview Commerce Center.  The Company estimates that the new 800,000 sq. ft. facility will require approximately 1,200 employees, whom will help ship pet food and pet-related products representing over 2,000 brands.

Commercial Metals Company, a Texas-based steel and metal manufacturer, plans to construct a $300 million rebar micro mill adjacent to its current operation center and campus in Mesa, Arizona. The expansion in Mesa represents CMC’s third micro mill, since 2009, and is expected to produce an estimated nominal annual capacity of 500,000 tons, including 150,000 tons of merchant product, The Company plans to hire 185 additional employees. 

The developer of Fortnite, Unreal, and Gears of War (Epic Games) is planning to start construction, during 2020, to expand its current headquarters in Cary, NC.  The plans, which are expected to accommodate up to 2,000 employees, and include an additional 450,000- to 500,000-sq. ft. will occur at an adjacent property, next to the current property that Epic has owned since 2015.  Epic’s new facility will include a range of amenities, outdoor features, and additional parking.

Kubota continues to invest in Kansas, with its most recent decision to invest $43M and create net-new 130 full-time positions, at a Great Plains Manufacturing site in Salina, Kansas.  Through Kobata and its Subsidiaries, the Company currently employs over 1,600 people in Kansas.  

Austin also announced, during July-2020, that it will become home to a new Tesla assembly plant, which will produce the Tesla Cybertruck and Model Y (SUV).  The plant will cost in excess of $1.1B and employ 5,000 people, and vehicle production is anticipated to begin late 2021. 

Over 100 million pizzas a year.  That’s how many pizzas the Schwan’s Company will produce in Salina Kansas, after the upcoming expansion.  During August 2020, the Company made public its plans to build/expand, by 400,000 sq. ft., its current pizza manufacturing plant in Salina, KS.  The Company already employs 1,125, at the plant, and anticipates hiring an additional 225 net new full-time jobs (by 2023).

Walmart is building a new direct-import distribution center, at an estimated cost of $220M, at/near Ridgeville, South Carolina, and the Port of Charleston.  The new distribution center will support approximately 850 Walmart Stores and Sam’s Clubs in the Southeast Region. 

This newsletter is provided for information purposes only and should not be used by itself as legal, tax or business advice.

Supporting the R&D Credit with JIRA, November 2020

Subject:                 Supporting the R&D Credit with JIRA

Newsletter Date:   November, 2020

IRS Circular 230 Required Notice‐‐IRS regulations require that we inform you that to the extent this communication contains any statement regarding federal taxes, that statement was not written or intended to be used, and it cannot be used, by any person (i) for the purpose of avoiding federal tax penalties that may be imposed on that person, or (ii) to promote, market or recommend to another party any transaction or matter addressed herein.


JIRA is a fantastic platform for project tracking, but it can also help in supporting your R&D credit claim. Using some or all of these best practices will help you in your goal of having as minimal a role as possible for yourself or your personnel during a review of your R&D credit, as the documentation will do the supporting for you. First, let’s learn a little about what JIRA is…

JIRA is a tool developed by Australian Company Atlassian. It is used for bug tracking, issue tracking, and project management, most commonly during the software development. 

Atlassian provides JIRA for free to open source projects meeting certain criteria, and to organizations that are non-academic, non-commercial, non-governmental, non-political, non-profit. For academic and commercial customers, the full source code is available under a developer source license.

The tool can be used as a hosted solution or as an internally managed, on-premise solution. When launched in 2002, JIRA was purely issue tracking software, targeted at software developers. The app was later adopted by non-IT organizations as a project management tool. The process sped up after the launch of Atlassian Marketplace in 2012, which allowed third-party developers to offer project management plugins for JIRA. “BigPicture”, “Portfolio for JIRA”, “Structure”, and “Tempo Planner” are major project management plugins for JIRA.

Software teams began adopting JIRA as they adopted the Agile development method (a development method that breaks product development work into small increments that minimize the amount of up-front planning and design. Iterations, or sprints, are short time frames (timeboxes) that typically last from one to four weeks). As a project management tool, JIRA is a robust way of tracking and assigning tasks, tracking progress and issues, as well as tracking time spent on specific tasks and sub-tasks. Whether being used for project management in the realm of software development or for non-software development related projects, JIRA can be leveraged to support your R&D credit.

Some of the fields/inputs in JIRA that can be used to help support the R&D credit activities in your company include:Who was involved (creator, reporter, and assignee fields)

  1. What work was performed to attempt to resolve said issue (summary and or description)
  2. When the work was performed (creation, update, and resolution timestamps)
  3. How the work was carried out (description and or comments)
  4. Why the work contributes to the development/implementation of new features or functionality, or how it pertains to the overall improvement of the product or service (epics or other parent entities that group together logically related issues).

Now that you know a little more about what JIRA is and where it has come from, let’s investigate how you can best use JIRA to help with reporting information related to the Research and Development Tax Credit, or, how tax departments can use these practices as a conversation guide with development groups.

Best Practice 1: Use Those Descriptor Fields!

The easiest way to communicate what the technical nature of the work was and how it was carried out is to focus on filling out the (default) project, summary, and description fields in a consistent manner as the work progresses. If you choose to organize JIRA into multiple projects, it helps tremendously during an R&D credit review, as an auditor can then filter for eligible work at the project level. Summaries and task descriptions should be filled out with enough detail such that someone outside your company can easily tell what tasks are related to qualified activities and directly in support of your R&D work according to Section 41 guidelines.

The information contained within these fields should enable an auditor to clearly distinguish between eligible and ineligible work at the task level. Beyond that, you may choose to create custom JIRA labels (e.g. ‘R&D’ or ‘experimental’) and apply them to epics/issues for ease of filtering at the end of the tax year, as well as any other fields that may help a reviewer see what small or routine tasks were necessary parts of an R&D project.

Naming/labeling conventions, terms, acronyms, and insider jargon should all be standardized across JIRA issues to enable an outsider to filter for, reference, and group logically related tasks. For example, if tasks or sub-tasks are labeled as “Bugs”, but those activities actually include qualified work such as performance testing of a newly deployed feature prior to roll-out, it may be worth the discussion to either break out those activities as sub-tasks, or give them a label all their own (i.e, “performance testing” or “testing” instead of “Bugs”.

Likewise, consistency is key. If projects go by a different name every time they get referenced, tracking the work associated with a given claim becomes a nightmare.

Best Practice 2: Use Sub-Tasks to Bolster Assignee Fields for Wage QRE

Wages make up the bulk of expenses of a typical R&D claim, meaning that evidence supporting your wage allocation is commonly the most important kind of evidence. Therefore, it’s important that your supporting documents clearly demonstrate who was working on a given task, and when that work occurred.

Trying to use JIRA to calculate the overall qualified percentage of individuals can result in lower than accurate results, due to a built-in feature of JIRA regarding past reassignment of tasks that decreases the amount of eligible work you can associate to specific individuals. The root cause stems from JIRA having only one Assignee field, and this field only retains the most recent assignee ID. As already stated, Atlassian has done this purposefully, as it means one person is responsible for each piece of work at any given time, but this it makes it much more difficult to figure out how to apportion total time logged in a particular issue amongst all past and present assignees.

So how do you make sure that your JIRA documentation matches the actual R&D work of your team? The most straightforward way is to create a large amount of individual sub-tasks (e.g. having design, production, and validation all be independent tasks), each with a single individual being responsible for them, and duplicating tasks should multiple people need to collaborate. Admittedly, this method results in a lot of clutter in terms of fields but will ensure that the “assignee” field accurately identifies who did what.

Alternatively, you might consider adding a custom user-picked field for tracking personnel who have previously worked on a task, but who became unassigned for whatever reason, for multiple assignee tracking with minimal overhead.

Best Practice 3: Time Spent is Time Tracked

Since two JIRA issues can take wildly different amounts of time (compare an issue to fix a typo with one to develop a new feature) it helps if you can account for that. Since qualified R&D issues tend to take longer than routine ones, a tracking method which treats every issue as equal weight is probably leaving money on the table.

This is where the recommendation to leverage the “time spent” fields to keep as accurate an accounting of time spent on tasks as possible. This can be done either at the epic or task level. Make sure that you don’t miss out on time spent planning work and all the other support activities as these are eligible tasks as well; many companies only track hands-on development work in JIRA, while neglecting to log the initial R&D, design, and planning work that made implementation possible.

In lieu of explicit timekeeping, it is acceptable to use story points for time tracking/project weighting purposes. While the IRS prefers some form of time tracking, in practice they commonly recognize that story points are a good proxy for time/effort spent on tasks, so long as points are consistently applied to tasks throughout the project lifecycle. Therefore, if you have a reasonable estimate for the amount of time an individual performed qualified activities throughout the year, as well as projects/tasks to which they were assigned in JIRA, then it is a reasonable approach to utilize the number of story points as an indicator of how to properly allocate time to those projects.