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LEGISLATURE OF NEBRASKA
ONE HUNDRED NINTH LEGISLATURE
SECOND SESSION
LEGISLATIVE BILL 1037
Introduced by Raybould, 28.
Read first time January 14, 2026
Committee: Revenue
A BILL FOR AN ACT relating to revenue and taxation; to amend sections1
77-2602.05, 77-2602.06, and 77-2603.01, Reissue Revised Statutes of2
Nebraska; to change provisions relating to negotiations and3
agreements between the Governor and federally recognized Indian4
tribes relating to the collection and dissemination of any cigarette5
tax or other tobacco product tax collected on sales of cigarettes,6
roll-your-own, or smokeless tobacco made or sold on a federally7
recognized Indian tribe's Indian country; to harmonize provisions;8
and to repeal the original sections. 9
Be it enacted by the people of the State of Nebraska,10
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Section 1. Section 77-2602.05, Reissue Revised Statutes of Nebraska,1
is amended to read: 2
77-2602.05 (1) A person that paid taxes applicable under section3
77-2602 on cigarettes sold in an exempt transaction shall be eligible for4
a refund of the taxes paid on those cigarettes. 5
(2) Exempt transactions, for purposes of this section and section6
69-2703, are defined as: 7
(a) Cigarette sales on a federal installation in a transaction that8
is exempt from state taxation under federal law; and9
(b) Cigarette sales on an Indian tribe's Indian country to its10
tribal members where state taxation is precluded by federal law.11
(3) Except as provided in subsection (5) of this section, the person12
seeking a refund of taxes shall submit an application to the Tax13
Commissioner providing documentation sufficient to demonstrate (a) that14
the cigarettes were sold in a package bearing the correct stamp required15
under section 77-2603 or 77-2603.01 and that the stamp was one that16
required payment of tax, (b) that the person paid the applicable taxes in17
question, (c) that the cigarettes were sold in an exempt transaction, and18
(d) that the person has not previously obtained the refund on the19
cigarettes. The documentation shall include, in addition to information20
necessary to meet the requirements of subdivisions (3)(a) through (d) of21
this section and any other information that the Tax Commissioner may22
reasonably require, documents showing the identity of the seller and23
purchaser and the places of shipment and delivery of the cigarettes. The24
Tax Commissioner shall verify the accuracy and completeness of the25
required documentation and information before granting the requested26
refund. 27
(4) If a meritorious refund claim under subsection (3) of this28
section is not paid within sixty days after submission of the required29
documentation, the refund shall include interest on the amount of such30
refund at the rate specified in section 45-104.02 as such rate existed at31
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the date of submission of the required documentation.1
(5) The Tax Commissioner and an Indian tribe may agree upon a tax2
refund formula to operate in lieu of application for refunds under3
subsection (3) of this section. The aggregate refund provided to an4
Indian tribe under a formula for a year shall not exceed the aggregate5
tax paid by entities owned and operated by that tribe or a member of that6
tribe on cigarettes sold in exempt transactions on that tribe's Indian7
country during that year. Refunds of taxes under subsection (3) of this8
section shall not be available for cigarettes sold in exempt transactions9
on an Indian tribe's Indian country by an Indian tribe that agrees upon a10
refund formula under this subsection. Nothing in this subsection shall11
limit the state's responsibility authority to enter into negotiations for12
an agreement pursuant to section 77-2602.06 pertaining to the collection13
and dissemination of any cigarette taxes or the state's authority to14
enter into such an agreement which may otherwise be inconsistent with15
this subsection. 16
Sec. 2. Section 77-2602.06, Reissue Revised Statutes of Nebraska, is17
amended to read: 18
77-2602.06 (1)(a) Upon receipt of a written request from the19
governing body of any federally recognized Indian tribe within the State20
of Nebraska, the (1) The Governor or his or her designated representative21
shall enter into good-faith negotiations for the purpose of executing may22
negotiate and execute an agreement with the governing body of any23
federally recognized Indian tribe within the State of Nebraska concerning24
the collection and dissemination of any cigarette tax or other tobacco25
product tax under this section and sections 77-2602.05 and 77-2603.01 or26
escrow collected pursuant to section 69-2703, on sales of cigarettes,27
roll-your-own, or smokeless tobacco made or sold on a federally28
recognized Indian tribe's Indian country. The Governor or his or her29
designated representative retains the discretion on whether to execute30
such an agreement, but is under a duty to negotiate in good-faith.31
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Negotiations on such agreement shall commence within sixty days after the1
Governor's receipt of such written request and shall continue until2
either an agreement is executed or the parties jointly declare an impasse3
in writing. While negotiations remain active there shall be at least one4
negotiation session every ninety days. 5
(b) The Governor or his or her designated representative shall not6
decline to negotiate, terminate negotiations, or unreasonably delay7
negotiations under this section based solely or primarily upon a8
federally recognized Indian tribe's exercise of its lawful governmental9
authority with respect to matters unrelated to the taxation of cigarettes10
and other tobacco products, including, but not limited to, the regulation11
of cannabis within the tribe's Indian country. 12
(c) The scope of negotiations under this section includes, but is13
not limited to, the collection, allocation, and refund of any cigarette14
tax or other tobacco product tax, as well as any amounts paid into or out15
of escrow pursuant to section 69-2703 or other statutes enacted to16
implement the Master Settlement Agreement. 17
(d) The existence of obligations arising under the Master Settlement18
Agreement or statutes enacted to implement the Master Settlement19
Agreement, including escrow requirements under section 69-2703, shall not20
on its own constitute a valid basis for declining or unreasonably21
delaying negotiations under this section so long as the tribe's proposals22
are consistent with federal law and the Master Settlement Agreement.23
(2) The agreement shall specify: 24
(a) Its duration; 25
(b) Its purpose; 26
(c) Provisions for administering, collecting, and enforcing the27
agreement and for the mutual waiver of sovereign immunity objections with28
respect to such provisions; 29
(d) Remittance of taxes and escrow collected;30
(e) The division of the proceeds of the tax and escrow between the31
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parties; 1
(f) The method to be employed in accomplishing the partial or2
complete termination of the agreement; 3
(g) A dispute resolution procedure; 4
(h) Adequate reporting and auditing provisions; and5
(i) Any other necessary and proper matters. 6
(3) (2) The agreement shall require tribal taxes to be imposed7
equally on all cigarettes and other tobacco products regardless of8
manufacturer or brand. 9
(4) (3) The agreement shall require that all packages of cigarettes10
bear either a stamp under section 77-2603 or a tribal stamp under section11
77-2603.01. 12
(5) (4) The agreement may provide for the sale of cigarettes not13
included in the directory under section 69-2706, but only if the14
agreement requires that such cigarettes bear the tribal stamp under15
section 77-2603.01 and only if the agreement includes provisions to16
account for escrow deposits on such cigarettes in amounts equal to and in17
a manner consistent with the deposits required of manufacturers under18
section 69-2703 or otherwise requires payment of escrow by the19
manufacturers in accordance with section 69-2703 and pursuant to section20
69-2708.01. 21
(6) (5) An Indian tribe entering into an agreement under this22
section shall agree not to license or otherwise authorize an individual23
tribal member or other person or entity to sell cigarettes, roll-your-24
own, or smokeless tobacco in violation of the terms of the agreement.25
(7) Upon receipt of a written request from a federally recognized26
Indian tribe within the State of Nebraska, the (6) The state shall may,27
in the best interests of the state, enter into good faith negotiations28
toward a any future agreement, compact, or treaty with such any Indian29
tribe that is consistent with sections 77-2602.05, 77-2602.06, and30
77-2603.01. 31
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Sec. 3. Section 77-2603.01, Reissue Revised Statutes of Nebraska, is1
amended to read: 2
77-2603.01 The state may, as part of enter into an agreement with an3
Indian tribe entered into pursuant to section 77-2602.06 , contemplate4
which contemplates the use of a tribal stamp for sales of cigarettes on5
an Indian tribe's Indian country in lieu of the cigarette stamp required6
under section 77-2603. 7
Sec. 4. Original sections 77-2602.05, 77-2602.06, and 77-2603.01,8
Reissue Revised Statutes of Nebraska, are repealed.9
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