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Tennessee Issues Nexus Guidance for Transportation Companies

March 1, 2018

Tennessee issued the Revenue Ruling #17-08, which details nexus for transportation companies. Below is a summary of this ruling and key points to be aware of as transportation activity nexus is contemplated for the 2017 tax year.

“Substantial nexus” can be created in Tennessee either by having a specific connection with the state that would be enough to impose tax or by exceeding any of the bright-line presence thresholds. For purposes of this ruling, Tennessee focused on the first part of the nexus standard.

The ruling details that transportation companies create substantial nexus in the state if any of the following occur:

a) The transportation company provides intrastate transportation services within Tennessee,
b) makes deliveries of goods into Tennessee that originate in another state, or
c) transports goods from Tennessee for delivery into another state.

The ruling dictates that traveling through Tennessee with trips that do not originate or terminate in Tennessee where the vehicles do not make any pickups or deliveries in Tennessee and the company conducts no other business activity in Tennessee does not constitute doing business in Tennessee.

It is important to understand that this is not a law change. Through this ruling, Tennessee is now on record outlining its formal policy on nexus-creating activities for transportation companies.

If you have questions about state nexus or filing requirements in Tennessee or any other state, please contact a KSM advisor.

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