Storage of Motor Home in Tennessee Created Nexus for Montana LLC

Tuesday, December 2nd, 2014


The Tennessee Court of Appeals ("Court") recently ruled that a Montana LLC had nexus with Tennessee because it stored a motor home in Tennessee for six months a year.

The taxpayer was a Montana LLC. The owner and only member of the LLC had a home in Tennessee. The LLC purchased a motor home to use outside Tennessee as a mobile office. Starting in 2007, the LLC stored the motor home in Tennessee at the LLC owner's home for six months out of the year. The LLC only drove the motor home in Tennessee while going to or from other states. The LLC only used the motor home as an office in other states.

A state can only require an individual to pay or collect tax if that individual has "substantial nexus" with the state. An out-of-state individual must have some physical presence in a state to have substantial nexus.

The Court ruled that the LLC had substantial nexus with Tennessee. The LLC stored the motor home in Tennessee for six months out of the year for around seven years. The LLC also used the motor home for transportation in Tennessee, even if only briefly. The Court ruled that this was enough physical presence for the LLC to have substantial nexus. Tennessee could therefore require the LLC to pay tax on its purchase of the motor home.

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