The New Mexico Administrative Hearings Office determined that UPS may depart from the statutory apportionment method for trucking companies, based on mileage driven in the state, because it produces a result that bears no rational relationship to UPS’s New Mexico business activity.

Echoing a 1992 Montana Supreme Court case also involving UPS, the Administrative Hearings Office explained that the mileage method can cause distortion in large geographic states with small populations – like New Mexico – because drivers travel farther to reach fewer customers than in smaller, more densely populated states. The Administrative Hearings Office determined that the mileage method was grossly distortive for UPS because it resulted in a more than ten-fold increase in sales attributed to New Mexico compared to actual revenue from New Mexico customers.

In place of the statutory method, UPS was permitted to use the “state-to-state volume method,” which instead assigned half of the receipts from a sale to the state of origination and the remaining half to the destination state.


In re United Parcel Service Inc. (Ohio) & Affiliates, No. 19-27 (N.M. Admin. Hearings Office Oct. 25, 2019)