Ezel / Tax Rulings / NE
NE 22-96-2 Individual Income Tax 1996-11-07

When can Nebraska tax a nonresident motor carrier employee who works in more than one state?

Short answer: It cannot. A nonresident motor carrier employee (as defined by federal law) who regularly performs duties on a commercial motor vehicle in more than one state can be taxed only by their state of residence. Nebraska may still tax and require withholding for a nonresident who works only in Nebraska, or who works from a Nebraska headquarters or office rather than regularly across state lines.

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This page answers the general question as of 1996. Ezel answers yours, under current Nebraska tax law, with citations.

Currency note: this ruling is from 1996
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
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Ruling is a general statement of Department policy rather than advice to a single taxpayer, but it can be amended, superseded, or made obsolete by a later ruling or a change in statute or regulation, this ruling itself supersedes Revenue Ruling 22-91-2 and should be read together with Revenue Ruling 22-96-1, so confirm it is still in effect before relying on it. It interprets federal law (49 U.S.C. § 14503) that has been amended over time. 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. The source PDF is a scanned image; the text below was recovered by OCR and may contain minor artifacts.
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.
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Plain-English summary

A nonresident who works for a motor carrier and regularly performs duties on a commercial motor vehicle in more than one state can be taxed only by their state of residence -- not by Nebraska. This follows a federal law, 49 U.S.C. § 14503 (enacted by Public Law 104-88), that overrides ordinary state income-source rules for these interstate transportation workers.

The exemption is narrow. It covers only motor carrier employees, as defined by federal law, whose regular duties actually span more than one state. It does not cover employees who work only in Nebraska, and it does not cover employees who happen to sit at a Nebraska headquarters or office instead of regularly crossing state lines in a covered role.

This ruling supersedes Revenue Ruling 22-91-2 and should be read together with Revenue Ruling 22-96-1.

Who is covered

The federal exemption reaches nonresident employees of a motor carrier providing interstate transportation subject to federal regulation, or of a motor private carrier, but only if they regularly perform assigned duties with respect to a motor vehicle in more than one state. The ruling lists covered roles:

  • operators of commercial motor vehicles
  • independent contractors when operating commercial motor vehicles
  • mechanics
  • freight handlers
  • individuals who directly affect commercial motor vehicle safety in the course of employment

It expressly excludes employers, and employees of the United States Government, a state, or a political subdivision of a state.

"Regularly in more than one state" is the test

The exemption does not extend to every employee of a motor carrier -- only to those performing regular duties in more than one state. An over-the-road driver who runs between states on a systematic basis is the classic example. Work that is emergency, infrequent, or sporadic in another state does not count as performing regularly assigned duties in more than one state.

When Nebraska can still tax and require withholding

Two situations remain taxable in Nebraska:

  • A nonresident employee who performs regularly assigned duties both in Nebraska and outside the state from a headquarters or other office location does not qualify for the exemption. The employer must withhold Nebraska income tax under Withholding Tax Regulation 21-006.
  • A nonresident who works for a motor carrier in Nebraska and not regularly in any other state is likewise subject to Nebraska income tax and withholding.

Common questions

Q: I'm an over-the-road driver living outside Nebraska but I pick up and deliver through Nebraska. Does Nebraska tax my wages?

A: No. If you regularly drive a commercial motor vehicle in more than one state, only your state of residence may tax that compensation.

Q: I'm a dispatcher or office worker for a motor carrier at its Nebraska office. Am I exempt too?

A: No. An employee performing duties from a Nebraska headquarters or office, rather than regularly operating a motor vehicle across state lines, is not covered and is subject to Nebraska withholding.

Q: Does one emergency run into another state make me exempt?

A: No. Emergency, infrequent, or sporadic out-of-state work is not "regularly assigned duties in more than one state."

Q: Are mechanics and freight handlers covered, or only drivers?

A: Mechanics, freight handlers, and others who directly affect commercial motor vehicle safety are covered -- but still only if they regularly perform their duties in more than one state.

Citations and references

  • 49 U.S.C. § 14503 (Public Law 104-88) -- limits state income taxation of interstate motor carrier employees to their state of residence
  • Nebraska Withholding Tax Regulation 21-006 -- employer withholding on nonresident wages that remain Nebraska-taxable
  • Nebraska Revenue Ruling 22-96-2 -- supersedes Revenue Ruling 22-91-2; see also Revenue Ruling 22-96-1

Source

Original ruling text

Revenue Ruling 22-96-2
Supersedes Revenue Ruling 22-91-2
( See also Revenue Ruling 22-96-1)

Individual Income Tax-Compensation Paid to Certain Motor Carrier Employees Working in More than One State

COMPENSATION PAID TO MOTOR CARRIER EMPLOYEES AS DEFINED BY FEDERAL LAW WHO REGULARLY WORK IN MORE THAN ONE STATE CANNOT BE TAXED EXCEPT BY THE EMPLOYEES' STATE OF RESIDENCE.

Advice has been requested as to which motor carrier employees are covered by the exemption from state income tax under 49 USCS §14503 (Public Law 104-88).

Nonresident employees of a motor carrier providing transportation in interstate commerce subject to federal regulation or of a motor private carrier can only be taxed by their state of residence if they regularly perform assigned duties with respect to a motor vehicle in more than one state. Such employees include: operators of commercial motor vehicles, independent contractors when operating commercial motor vehicles, mechanics, freight handlers, and individuals who directly affect commercial motor vehicle safety in the course of employment. Such employees do not include employers, or employees of the United States Government, a State, or a political subdivision of a State.

The exemption does not extend to all employees of a motor carrier but applies only to those motor carrier employees performing regular duties in more than one state. This would include, for example, over-the-road drivers operating between states on a systematic basis. Performing regularly assigned duties in more than one state does not include emergency, infrequent, or sporadic work in more than one state.

Nonresident employees of a motor carrier performing regularly assigned duties both in Nebraska and outside the State in a headquarters or other office location would not qualify for an exemption from Nebraska income tax. Instead, Nebraska income tax must be withheld by their employer in accordance with Withholding Tax Regulation 21-006. A nonresident who works for a motor carrier in Nebraska and not regularly in any other state would, likewise, be subject to Nebraska income tax and withholding.

APPROVED:

M. Berri
State Tax Commissioner

November 7, 1996

[Recovered by OCR from a scanned single-page PDF; a garbled header graphic and an abbreviated signer name appear in the original scan.]

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