Is a residential paper-waste removal and recycling service subject to Kansas sales tax?

Plain-English summary

A company that removes and recycles residential paper waste asked whether its service is subject to Kansas retailers' sales tax. The Department ruled it is not — the service is treated like trash removal, which Kansas does not tax.

The service. "Your service is the removal and recycling of residential paper waste."

The holding. "It is the opinion of the Kansas Department of Revenue that the service you perform is essentially recycling and trash removal. Kansas does not tax trash removal services. Accordingly, your service of recycling items being disposed of would not be subject to Kansas retailers' sales tax."

What this means for you

Recycling and waste-hauling businesses

A service that amounts to hauling away and recycling residential waste is treated as trash removal, which Kansas does not tax. You do not charge Kansas retailers' sales tax on that service.

The characterization is what matters

The Department taxed the service by what it essentially is — recycling and trash removal — not by the "recycling" label alone. A different service bundled with the pickup (for example, a taxable sale of goods or an enumerated taxable service) could be treated differently, so look at the substance of what you provide.

Non-taxable service, tax on inputs

This ruling addresses only whether the service is taxable. As Kansas generally treats providers of non-taxable services as the consumers of what they buy, expect to pay sales tax on the equipment and supplies you purchase to run the operation.

Common questions

Q: Is residential recycling pickup taxable in Kansas?
A: No. The Department ruled that removing and recycling residential paper waste is essentially trash removal, and Kansas does not tax trash removal services.

Q: Why is "recycling" treated as trash removal?
A: The Department looked at the substance of the service — hauling away items being disposed of — and concluded it is essentially recycling and trash removal, which is not taxed.

Q: Do I still pay tax on my trucks and supplies?
A: This ruling only addressed the taxability of the service. Kansas generally treats a non-taxable-service provider as the consumer of its purchases, so plan to pay sales tax on the property you buy to provide the service.

Citations and references

• The Department did not cite a specific K.S.A. section. The holding rests on Kansas not taxing trash removal services: because the removal-and-recycling service is essentially trash removal, it is not subject to Kansas retailers' sales tax.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1999-04

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

January 20, 1999

XXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXX
XXXXXXXXXXXXX

Dear XXXXXXXXXXXXXXXX:

The purpose of this letter is to respond to your letter dated December 21, 1998.

Your company is engaged in providing a service to consumers. Your service is the removal and recycling of residential paper waste. You asked if the sale of this service would be subject to Kansas retailers’ sales tax.

It is the opinion of the Kansas Department of Revenue that the service you perform is essentially recycling and trash removal. Kansas does not tax trash removal services. Accordingly, your service of recycling items being disposed of would not be subject to Kansas retailers’ sales tax.

This is a private letter ruling pursuant to Kansas Administrative Regulation 92-19-59. It is based solely on the facts provided in your request. If it is determined that undisclosed facts were material or necessary to an accurate determination by the department, this ruling is null and void. This private letter ruling will be revoked in the future by operation of law without further department action if there is a change in the statutes, administrative regulations, or case law, or a published revenue ruling, that materially affects this ruling.

Sincerely,

Mark D. Ciardullo
Tax Specialist

MDC

Date Composed: 01/21/1999 Date Modified: 10/11/2001

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