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Lincoln recently added a new tax on food and beverages served in restaurants, bars and delis, a 2 percent tax intended to help pay for the West Haymarket Arena.

So how is that new tax recorded on restaurant customer receipts?

Let us count the ways:

* On some receipts it's labeled "occupation" tax, after the legal name of the tax.

* At some restaurants it is called the "arena" tax, since it will go to help pay off the arena-related bonds.

* At other businesses it is called the "restaurant tax" or just "tax" or "tax 3."

* And at some businesses the new tax doesn't exist, at least not on the customer receipt. Only the 7 percent (state and city sales tax) shows up on the receipt.

This is all perfectly legal.

"It can be labeled anything," said Don Herz, Lincoln city finance director.

State law has no rules about what the new tax, which started Jan. 1, is called by consumers and businesses.

Some restaurants in Omaha labeled that city's new 2.5 percent tax on restaurant food the "MAYOR'S" tax, particularly before the unsuccessful election to recall Mayor Jim Suttle.

A number of Lincoln businesses are labeling Lincoln's tax "the arena tax."

The arena, that's where the money will go, says Justin Jones, owner of Raising Cane's Chicken Fingers, which uses "arena" tax on the receipts.

Jones said his decision was based on the adage "if it walks like a duck, quacks like a duck, it's a duck."

Customers ought to know how the tax is being used, he said.

Lincoln voters last spring approved the arena bond issue, and news stories and other information indicated a new 2 percent tax on restaurants and bars would help pay off that bond.

Lincoln city leaders aren't expressing any opinion about the best label for the tax, which is expected to bring in about $7.4 million this year.

But they refer to it by its official name, an "occupation" tax.

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In fact, businesses don't have to collect the occupation tax from customers, like they do the city and state sales tax, according to Herz.

But they do have to pay it to the city.

Restaurants can treat it like another cost of doing business, such as property taxes or food costs, and simply pass it on in the price for food and drink.

"It's their option whether they want to pass that tax along to customers or if they want to absorb that," Herz said.

Businesses have a number of options with the occupation tax, according to Deepa Buss, with the Nebraska Department of Revenue.

They can collect it from the customer, using a separate line on the receipt. Or they can leave it off the receipt entirely, she said.

But legally they cannot combine the sales tax and the occupation tax, thus showing a single tax (of 9.14 percent) on the receipt, she said.

A number of Lincoln restaurants do just that, however. Some of them have told customers their computer systems won't let them separate out two taxes.

The state agency will not be searching for these folks, but will send letters when they discover someone is handling the occupation tax illegally, Buss said.

"This is more of an educational effort," she said.

Reach Nancy Hicks at 402-473-7250 or



Nancy Hicks reports on Lincoln city government, but she’s been following the leaders of local and state government for more than 40 years.

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