One County’s Complicated Quest for a New ZIP Code

Storey County, Nevada, is a small county of around 4,000 residents with only one brick-and-mortar post office in the county seat of Virginia City, 26 miles southeast of Reno.

While it might not seem like a big deal that the post office shares the 89434 ZIP code with others in neighboring Washoe County, it’s presented a 17-year predicament for Storey County.

Nevada bases sales and use tax accounting on ZIP codes. So when shipments headed for Storey businesses are routed through post offices in Washoe, the proper county sales and use tax isn’t always applied.

Home to the Tesla Gigafactory that opened last week, the Tahoe-Reno Industrial Center is an “economic development and revenue engine” for Storey County, County Manager Pat Whitten told Route Fifty in an interview. But its mail is routed through Sparks, the eastern city in the Reno-Sparks metropolitan area in Washoe County.

If Storey doesn’t stay on top of the 150 businesses and counting in the industrial center about manually reporting incoming equipment and construction materials subject to use tax, they could wind up paying Washoe’s one-eighth of a percent higher rate—no small chunk of change on million-dollar purchases.

“We also want the revenue that is due us to come to us and not some other jurisdiction,” Whitten said.

And Washoe’s rate could soon rise even higher to increase funding of its school district.

Components like a new banana chiller, a walk-in cold storage room for fruit, for Walmart’s food distribution warehouse have “high potentials for weaknesses in proper accounting,” Whitten said.

That’s why, for the past 17 years, Storey has sought a new ZIP code for the industrial park from the U.S. Postal Service.

Whitten said he remembers getting a call from someone with Motorola in New York looking to confirm the address a $10 million racking system was shipped to. She was adamant her tax accounting program said the ZIP code was in Washoe, despite Whitten imploring her to use the state of Nevada reporting form because the address was in Storey.

Not until Whitten said he’d alert Motorola’s customer they’d be paying an excessive sales tax, as well as audit Motorola, did she relent. A breakout report received several months later revealed Motorola has ultimately listened.

“The real question that will haunt me forever, unless we get this fixed, is what about the ones we don’t know about,” Whitten said.

The industrial center is booming right now with the arrival of Tesla’s battery factory and soon a large data co-location center, and that means more shipments of massive equipment. Tesla was lured to the area through state and local tax abatement programs and owes no sales and use tax for 20 years, so there’s no lost revenue there.

Once the personal property and equipment tax abatements sunset in 10 years, county revenue will more than double, and Tesla is a good corporate citizen paying its own way in the meantime—aiding in the purchase of a ladder fire truck required of the site.

Meanwhile, other area retailers are retooling their machinery and altogether employ about 5,000 workers.

But what of Storey’s quest for a new ZIP code? That depends on who you ask.

“ZIP Codes are intended to enable efficient processing and distribution of mail. The realignment of ZIP Code boundaries other than for operational reasons can adversely affect mail service and add considerable administrative and operational costs for the Postal Service,” a Postal Service representative explained to Route Fifty in an email. “Postal officials reviewed the request for a new, unique ZIP Code for the Tahoe-Reno Industrial Center in Storey County, and found that the request did not meet the Postal Service’s criteria for a new ZIP Code. We have shared this finding with local officials.”

Whitten said the county has never made a formal, written ZIP code request and last verbally discussed the possibility in 2005. That’s because he wants to make sure he has USPS’ criteria correct before applying because a rejection means the county can’t try again for 10 years.

Still, the county recently received an email rejecting their bid for a new ZIP code, Whitten said, befuddling him and the region’s modest congressional representation “swinging at the fences” to make one happen.

Whitten points to the creation of the “mythological place,” The Lakes, Nevada, to contest the notion efficiency is the only thing on the Postal Service’s mind when issuing ZIP codes.

When New York-based Citicorp, now Citigroup, opened a large credit card processing center in western Las Vegas in 1985, the banking giant wanted to avoid any stigma associated with Sin City. So it lobbied for and received its own ZIP code.

The facility closed in 2014, taking hopes for economic diversification in the area with it.

Storey will seek clarification on USPS’ “immaculate decision” in the coming weeks and months, and in the meantime the Nevada Department of Taxation allows the county to spot inspect certain sales and use tax forms, under strict confidentiality, for proper reporting.

While ZIP code-based tax reporting is sound in major metro areas, Whitten said, it devolves in rural areas, where multiple jurisdictions share the same ones.

“I’m not going to throw the post office under the bus; they’ve got their reasons,” Whitten said. “But, at the end of the day, they really are the magic answer.”