Are a contractor's charges for hauling away debris from demolition and construction sites subject to New York sales tax?

Plain-English summary

Young Contracting Corp. had been collecting sales tax on its charges for removing debris from demolition and alteration sites. Some customers then told it that, because of a recent New York State Supreme Court decision, the tax wasn't due — and Young Contracting asked the Department whether debris-removal charges are in fact taxable.

The Department held they are.

• Debris removal is a taxable service. Under 20 NYCRR 527.7(b)(2), "All services of . . . debris removal are taxable, whether from . . . a construction site or vacant land." The regulation's Example 3 makes the point directly: a contractor erecting a building hires a carter to haul away the construction debris, and the charges paid to the carter are taxable.
• The contrary court decision was on appeal. The State Supreme Court decision the customers pointed to was being appealed by the State Tax Commission. Pending the outcome, the Department's position remained the one stated in its regulation.
• Bottom line. Young Contracting's charges to customers for debris removal are subject to State and local sales tax.

What this means for you

Trash and debris hauling is generally a taxable service in New York. If you charge customers to remove construction rubbish, demolition debris or other trash, that charge is taxable under 20 NYCRR 527.7(b)(2) — it's treated as a service, not as untaxed labor bundled into a construction job.

A lower-court win doesn't change your obligation while it's on appeal. Customers hearing about a favorable court ruling isn't a reason to stop collecting. The Department followed its own regulation until the appeal was resolved, and a vendor that stops collecting on the strength of a decision still under review takes on the risk if the decision is reversed.

Because tax law shifts, verify the current rule. This opinion is from 1981 and turned partly on litigation that was still pending; treat it as the Department's position at that time and confirm how debris-removal charges are treated today before relying on it.

Common questions

Q: Are my charges for hauling away construction or demolition debris taxable?
A: Yes. Under 20 NYCRR 527.7(b)(2), debris-removal services are taxable, whether the debris comes from a construction site or vacant land — as the regulation's Example 3 illustrates for a carter hauling construction debris.

Q: A court said debris removal isn't taxable — can I stop collecting?
A: In this opinion, no. That decision was being appealed by the State Tax Commission, and the Department's regulatory position (taxable) continued to apply pending the appeal.

Q: Does this bind the Department for my business?
A: No. Like all advisory opinions, it binds the Department only as to the petitioner (Young Contracting) on its stated facts. It also reflects 1981 law and unresolved litigation — confirm the current treatment for your situation.

Citations and references

Statutes, regulations and authority:

• 20 NYCRR 527.7(b)(2) — services of debris removal are taxable, whether from a construction site or vacant land (Example 3: charges to a carter hauling construction debris are taxable)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1981.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a81_25s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-81(25)S
Sales Tax
September 24, 1981

Taxpayer Services Division
Technical Services Bureau
STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S810622B

On June 22, 1981, a Petition for Advisory Opinion was received from Young Contracting
Corp., 2501 Third Avenue, Bronx, New York 10451.
The issue raised is whether the removal of construction rubbish from premises where
demolition and alterations were made is subject to state and local sales tax.
Petitioner has been collecting sales tax on charges to customers for removing debris from
construction sites. Petitioner has been informed by several customers that, as a result of a recent
decision by the Supreme Court of the State of New York, tax is not due on charges for these services.
Section 527.7(b)(2) of the Sales and Use Tax Regulations states, in part: "All services of
. . . debris removal are taxable, whether from . . . a construction site or vacant land.
Example 3:

A contractor who is erecting a building engages a carter to
haul away the debris resulting from the construction activities.
The charges paid to the carter are taxable."

The decision of the State Supreme Court to which Petitioner refers is being appealed by the
State Tax Commission. Pending the outcome of the appeal, the Department's position remains as
stated in Section 527.7(b)(2) of the Sales Tax and Use Tax Regulations. Accordingly, Petitioner's
charges to customers for debris removal are subject to State and local sales tax.

DATED: August 31, 1981

JAMES H. TULLY., COMMISSIONER
TP-8 (4/80)

s/LOUIS ETLINGER
Deputy Director
Technical Services Bureau

LOUIS M. JACOBSON, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR