2026 Spring Seminar Series Seminar: Stephen Lusch University of Kentucky

Will Travel for Packages: The Effect of Economic Nexus Standards on Cross-Border Package Delivery

Co-author: Patrick Hopkins (Kansas State University)

Abstract: This study examines consumer response to changes in sales tax collection requirements. As physical presence-based nexus became less effective amid rising online shopping, states adopted broader rules tied to economic activity. Our findings are consistent with consumers utilizing cross-border delivery to minimize sales taxes in reaction to states adopting economic nexus standards. Specifically, focusing on zip codes along state borders, we observe that implementing economic nexus standards decreases the demand for PO boxes in the implementing zip code and increases the demand for PO boxes in the neighboring, non-implementing zip code. Consistent with theory, we observe that these effects are more (less) pronounced when the benefit (cost) of engaging in the strategy is higher. This research contributes to the literature on sales tax avoidance by providing empirical evidence of cross-border package delivery, highlighting the ongoing regulatory challenges as consumers adapt to new tax environments post-Wayfair.