Sales Tax & Compliance brought to you by >> Avalara Logo new12

Estimated reading time: 4 minutes, 4 seconds

Being a Star Wars fan and with The Last Jedi coming out, I thought of a unique way to explain nexus created by companies using their own trucks and realized this could be more challenging then avoiding a Jedi mind trick.

Much like the force, nexus is all around us and can be difficult to grasp. Those that deal with the financial side of a business and those in the accounting area are familiar with the basics of nexus. A business that has inventory, fixed assets, rents an office, warehouse or some other type of property and/or has employees working in a state, nexus could be created. Others are aware that even if none of these factors exist, just meeting a certain threshold of sales/revenue in a state could create nexus. If nexus is created, the business probably has a filing requirement. Then there are the exceptions to these rules otherwise known as Public Law 86-272 which provides an extremely limited get out of jail free card. Even when a business does qualify for this exception, some states still require the company to file a business tax return and pay the minimum tax.

Now let's focus on a company that believes it is operating only in their home state. The company owned trucks go through many states to deliver goods to their ultimate destinations. Based on nexus standards this business would only need to file a business tax return in the home state, right?

Be careful, because as Admiral Ackbar said in Return of the Jedi, "It's a trap!" Delivering to a state, picking up goods in a state and/or merely passing through a state may create nexus.

Nexus is created in more than half of all states if company owned trucks are used to deliver or pickup goods. These are: AL, AZ, AR, CA, CO, DE, DC, FL, GA, HI, KY, LA, MD, MI, MN, MS, MO, MT, NE, NH, NJ, NY, NC, ND, OK, PA, RI, TX and WV.

The following states create nexus if company owned trucks are merely passing through the state without delivering or picking up goods: AL, AZ, CO, FL, ID, IL, IN, IA, LA, MD, MA, MI, MO, MT, NM, ND, OK, OR, UT and VA. Most of these states base the nexus on the number of times a year the truck drives through that state. For example, a truck would need to pass through IL more than 6 times per year to create nexus in IL.

So the question becomes, what are the odds that the company is going to get caught. As Han Solo said in Return of the Jedi, "Never tell me the odds". There are multiple ways for a state to discover truck presence including when a truck stops at a weigh station. That is when the truck driver might say "I have a bad feeling about this" which is a line said in every Star Wars movie.


The state will check its records to see if the company of that truck had registered to do business in that state and if the company is not registered or filing a tax return, the state could send a questionnaire that tries to determine if nexus has been created, even though in most cases the state already has reason to believe the business has nexus in that state.

So now a company may determine that they have filing requirements in more than the home state. The company can continue to roll the dice and hope to not get caught. But just like Darth Vader tried to hunt down all remaining Jedi to eliminate them, states will continue to crack down on trucks entering their states and have all companies be in compliance with the nexus standards of that state. And, states are being more aggressive in looking for opportunities to increase revenue.

If it is determined that the company is going to file a business tax return in another state(s), the company should register to do business in the state. In addition, most states now apportion income based on sales but this may not apply when dealing with trucking related companies. The following states require a company that uses its own trucks to use a special apportionment formula for revenue which is usually based on mileage driven: AL, AK, AR, CA, CO, CT, FL, GA, ID, IL, IN, IA, KS, KY, LA, MD, MA, MI, MS, MO, MT, NE, NH, NM, NC, OK, OR, PA, SC, TN, UT, WV and WI.

Mazars USA has the expertise to help companies that use their own trucks to deliver goods to identity where nexus has been created and to present solutions such as entering into states voluntary compliance programs and determining sales tax exposure. It is a much better solution than having an "order 66" executed on a company. May the force be with you.

Last modified on Tuesday, 30 January 2018
Read 1526 times
Rate this item
(0 votes)
Tagged under

Sales Tax Assessment Tool

The Accounting Top 100

Sales Tax Calculator

Social Leader board

The Accounting Top 100 social media leaderboard ranks accounting professionals based on their overall presence, influence, and engagement on social media platforms. Each user’s rank is determined by that user’s Klout Score in addition to a list of custom metrics, and all updated rankings are displayed in new leaderboards generated every two weeks.

Did you make the list?

Congratulations! You can now track your progress on the leaderboard by clicking “Follow us” at the top of the list. Want to get the word out about your new celebrity status? Share this page with all of your friends and followers so they can view and join in on this fun social activity.

Think you’ve got what it takes to make the Top 100?

Join for free today!


Avalara’s Accounting Top 100 leaderboard (the “Leaderboard”) is assembled using a list of accounting professional users that’s curated by manual entry as well as by Rise.Global's internal Twitter search functionality. We reserve the right to change scoring metrics used for ranking and to exclude anyone from the list, in our sole discretion. The Leaderboard is not an endorsement, recommendation or sponsorship of any of the accounting professionals on the Leaderboard, and we do not make any representation or guarantee of their ability or reliability. Assessments by different methods or based on different information may yield different results. The Leaderboard is only a starting point to gather information about accounting professionals, and you should not rely on it to decide whether to hire an accounting professional.

For feedback and/or questions please contact [email protected].

Visit other PMG Sites:

PMG360 is committed to protecting the privacy of the personal data we collect from our subscribers/agents/customers/exhibitors and sponsors. On May 25th, the European's GDPR policy will be enforced. Nothing is changing about your current settings or how your information is processed, however, we have made a few changes. We have updated our Privacy Policy and Cookie Policy to make it easier for you to understand what information we collect, how and why we collect it.
Ok Decline