Nebraska Supreme Court Affirms State Recapture of Tax Incentives for Data Center

MLB Advanced Media, L.P. v. Nebraska Department of Revenue, 321 Neb. 515 (2026)

MLB Advanced Media, L.P. (“MLB”), the interactive arm of Major League Baseball, sued the Nebraska Department of Revenue (“Department”) and the Nebraska Tax Commissioner (“Commissioner”) under the Nebraska Advantage Act (the “Advantage Act”).  The Advantage Act provides tax incentives, including sales and use tax refunds and property tax exemptions, to encourage investment in Nebraska.  

Under the Advantage Act, the Commissioner may recapture incentives if a project fails to meet required employment or investment levels.  Taxpayers must protest a recapture determination within 60 days.  Neb. Rev. Stat. § 77‑5726(4).  Otherwise, the determination becomes final, and the taxpayer may appeal to the Lancaster County District Court within 30 days.  Id. 

The Commissioner may issue “deficiency determinations” when taxes paid fall short of taxes owed.  § 77-2709(1).  The Department must send notice of such determination by “first class, registered, or certified mail, return receipt requested.”  § 77-27,135.  A taxpayer may protest such deficiency determination within 60 days.  § 77‑2709(7). 

The Commissioner and MLB agreed on a data center project (the “Project”) under the Advantage Act.  Under the agreement, MLB would invest $37,000,000 and the Department would refund MLB the sales and use taxes paid on purchases and leases for the Project. 

MLB sought to transfer the Project and related incentives to a different entity.  However, a taxpayer may transfer a project and its incentives only by transferring the project in its entirety.  § 77-5728(1)(b).  On September 16, 2019, the Department sent MLB a notice of intent to deny MLB’s transfer request because MLB had not responded to previous Department requests for Project asset disposition information.  The Department required such asset information to confirm MLB would transfer the Project in its entirety.  MLB did not protest within the 60-day requirement. 

The Department sent MLB notice of its final denial determination on February 24, 2021.  MLB did not appeal the final determination within 30 days. 

Because the transfer failed, MLB remained responsible for the Project and its obligations.  MLB did not satisfy the Project’s minimum investment requirements but still received tax incentives.  On March 10, 2021, the Department issued a Notice of Deficiency Determination seeking repayment of nearly $2,500,000 in sales and use taxes and interest.  The Department sent the notice via first-class mail without a return receipt.  

MLB submitted a protest on May 28, 2021, 79 days after the notice.  The protest challenged both the transfer denial and the deficiency determination.  Because both determinations had become final, MLB filed an appeal in the Lancaster County District Court. 

The district court dismissed MLB’s appeal as untimely.  The Nebraska Supreme Court affirmed.

The Supreme Court agreed both appeals were untimely.  It also upheld the District Court’s determination that Nebraska law does not require a return receipt when the Department sends notice by first-class mail.  MLB did not dispute the notice’s untimeliness, so no hearing on timeliness was necessary.  The Supreme Court affirmed the dismissal but modified the ruling to eliminate the need for a hearing. 

Attorneys at Baird Holm specialize in various subject matter areas including tax incentives, real estate development and other regulatory matters.  Please contact us with any questions.

Hannes D. Zetzsche
Samuel P. Heffron, Summer Associate