NE 24-01-1 Corporate Income Tax 2001-02-22

Does delivering goods into Nebraska in my own trucks create corporate income tax nexus?

Short answer: No. Under Revenue Ruling 24-01-1, delivering goods into Nebraska using a company's own vehicles, from a point outside the state, is a protected activity under Public Law 86-272 (15 U.S.C. §381) and does not by itself create nexus for corporate income tax purposes. Congress did not specify a required method of delivery, and courts (Department of Taxation v. National Private Truck Council, 480 S.E.2d 500 (Va. 1997); National Private Truck Council, Inc. v. Commissioner of Revenue, 688 N.E.2d 936 (Mass. 1997)) held that soliciting in-state orders approved and filled from outside the state is protected whether the goods are delivered by common or private carriage. A company whose only Nebraska contact is mere solicitation, with deliveries in its own vehicles, has no Nebraska income tax filing obligation.

Apply this to your situation

This page answers the general question as of 2001. Ezel answers yours, under current Nebraska tax law, with citations.

Disclaimer: This is an official Revenue Ruling of the Nebraska Department of Revenue, a guidance document stating the Department's interpretation of how Nebraska tax law applies. Each Nebraska guidance document carries the notice that it 'is advisory in nature but is binding on the Nebraska Department of Revenue until amended.' Unlike a private letter ruling, a Revenue Ruling is a general statement of Department policy rather than advice to a single taxpayer, but it can be amended, superseded, or made obsolete by a later ruling or a change in statute or regulation, many rulings in this series have been rescinded or superseded, so confirm it is still in effect before relying on it. Nebraska's local option sales and use taxes are administered by the Department, not self-collected by home-rule cities. This summary is informational only and is not legal or tax advice. Consult a licensed Nebraska tax professional about your situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.

View original ruling (PDF)

Plain-English summary

A federal law, Public Law 86-272 (codified at 15 U.S.C. §381), limits when a state can tax an out-of-state company's income. If a company's only activity in the state is soliciting orders for goods that are approved and filled from a point outside the state, the state can't impose an income tax on it.

The question here: does a company lose that protection if it delivers the goods into Nebraska in its own trucks instead of using a common carrier? The Department says no.

Why. Congress never specified a required method of delivery in 15 U.S.C. §381. Two courts had already held that soliciting in-state orders filled from outside the state is protected regardless of whether the goods move by common or private carriage — Department of Taxation v. National Private Truck Council, 480 S.E.2d 500 (Va. 1997), and National Private Truck Council, Inc. v. Commissioner of Revenue, 688 N.E.2d 936 (Mass. 1997). Because the federal statute adds no such qualification, the Department may not add one either.

Result. Delivering goods into Nebraska using the company's own vehicles is a protected activity under P.L. 86-272. Such deliveries, by themselves, are not enough to create income tax nexus. A company whose only Nebraska contact is mere solicitation therefore has no Nebraska income tax filing obligation.

What this means for you

An out-of-state seller delivering into Nebraska

If your Nebraska presence is limited to soliciting orders that you approve and fill from outside the state, using your own trucks to deliver does not, by itself, subject you to Nebraska corporate income tax. Watch the boundary, though: P.L. 86-272 protects only solicitation of orders for tangible goods. Other in-state activities (an office, employees doing more than solicit, services) can still create nexus.

A Nebraska-based competitor

An out-of-state rival that only solicits and delivers in its own vehicles is not necessarily filing Nebraska income tax returns — this is a federal-law limit on the state, not a Nebraska choice.

Common questions

Q: Does using my own trucks instead of a freight company create nexus?
A: No. The method of delivery doesn't matter; own-vehicle delivery is still protected under P.L. 86-272.

Q: What activity is actually protected?
A: Solicitation of orders for goods that are approved and filled from a point outside Nebraska — nothing more.

Q: So do I have to file a Nebraska income tax return?
A: Not if mere solicitation (plus own-vehicle delivery) is your only Nebraska contact — you have no Nebraska income tax filing obligation.

Citations and references

Public Law 86-272, 15 U.S.C. §381 — bars state income tax where in-state activity is limited to soliciting orders filled from outside the state.
Department of Taxation v. National Private Truck Council, 480 S.E.2d 500 (Va. 1997) — protection applies regardless of common or private carriage.
National Private Truck Council, Inc. v. Commissioner of Revenue, 688 N.E.2d 936 (Mass. 1997) — same conclusion on delivery method.

Source

Original ruling text

Revenue Ruling 24-01-1
February 22, 2001
Corporate Income Tax -- Nexus. SHIPPING OR DELIVERING GOODS INTO THIS STATE BY
PRIVATE VEHICLE FROM A POINT OUTSIDE THIS STATE DOES NOT CREATE NEXUS
FOR INCOME TAX PURPOSES.
Advice has been requested as to whether the delivery of goods into this state by a company, using
its own vehicles, is a protected activity under Public Law 86-272 (“P.L. 86-272”).
P.L. 86-272, codified at 15 U.S.C. §381, places certain limits on the power of a state to impose a
tax on the income derived from within its borders.
In two recent state tax cases, Department of Taxation v. National Private Truck Council, 480 S.E.2d
500 (Virginia, 1997) and National Private Truck Council, Inc. v. Commissioner of Revenue, 688
N.E.2d 936 (Mass., 1997), it was held that companies soliciting in-state orders that are approved
and filled from a point outside of the state are protected under P.L. 86-272, regardless of whether
the goods are delivered by common or private carriage.
Congress did not identify the manner of delivery necessary to qualify for the immunity when it
enacted 15 U.S.C. §381. National Private Truck Council, supra, at 502. “[S]ection 381 does not
specify common carrier, contract or private carrier, or any other particular method of delivery. In
the absence of a qualification in the federal statute, the Department may not add conditions to, or
otherwise limit, the protections offered by §381. . . “ Id.
Therefore, deliveries into this state by a company using its own vehicles is protected activity
under P.L. 86-272. Such deliveries by themselves are not sufficient to create nexus for income
tax purposes. As a result, having no other contact with this state other than mere solicitation, the
company has no income tax filing obligation with this state.
APPROVED:

Mary Jane Egr
State Tax Commissioner
February 22, 2001

Nebraska Department of Revenue, P.O. Box 94818, Lincoln, Nebraska 68509-4818

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