Is trash collection taxable, and does a credit for customers who separate recyclables make it a nontaxable sale for resale?

Plain-English summary

A solid-waste hauler was considering giving customers a credit (a reduction on their bill) in exchange for separating their trash into recyclable and non-recyclable materials, which the hauler would then prepare for market (plastic, wood, cardboard, paper, glass, metals). The question: is trash collection taxable under Tax Law § 1105(c)(5), and does the recycling credit make the arrangement a sale for resale (and thus not taxable)?

The Department held:

• Trash removal is a taxable real-property service. Collecting trash is the taxable service of maintaining, servicing, and repairing real property under § 1105(c)(5).
• The hauler isn't buying property for resale. In this arrangement the hauler is selling a taxable service, not purchasing tangible personal property for resale. The recycling credit doesn't convert the service into a resale transaction.
• Different fees don't change the character of the service. The hauler may charge different fees to different customers based on the nature and condition of the waste, but that variation doesn't change the nature of the service or the fee.
• The whole charge is taxable. Accordingly, the entire amount charged for waste removal remains subject to tax under § 1105(c)(5).

What this means for you

Trash and debris removal is a taxable service to real property

Hauling away waste is squarely within § 1105(c)(5)'s tax on servicing real property. That the customer sorts the waste, or that some of it is recyclable and later sold, doesn't take the collection service out of the tax.

A recycling incentive isn't a purchase for resale

Offering a bill credit to customers who separate recyclables is a pricing/incentive feature of the taxable removal service — not the hauler buying materials for resale. The service is still what the customer is paying for, and it's taxable.

Charging by waste type doesn't create an exemption

Varying your fee by the kind or condition of waste is fine, but it doesn't change the taxability. The full charge for the removal service is taxable regardless of how the fee is calculated.

Common questions

Q: We give customers a credit for sorting recyclables — is our service now tax-free?
A: No. Trash removal is a taxable service to real property under § 1105(c)(5), and the recycling credit doesn't make it a sale for resale.

Q: We charge different rates depending on the waste — does that affect taxability?
A: No. Different fees don't change the nature of the service; the entire charge for waste removal is taxable.

Q: Are we buying the recyclables for resale?
A: No. In this arrangement you're selling a taxable removal service, not purchasing tangible personal property for resale.

Citations and references

Statute:

• Tax Law § 1105(c)(5) — tax on the service of maintaining, servicing, and repairing real property, which includes trash removal

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1989.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a89_32s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-89 (32)S
Sales Tax
August 29, 1989

Taxpayer Services Division
Technical Services Bureau

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S881101B

On November 1, 1988, a Petition for Advisory Opinion was received from Lawrence R.
Schillinger, 15 Elk Street, Albany, New York 12207.
The issue raised is whether the service of collecting certain trash material is subject to sales
tax under §1105(c)(5) of the Tax Law and whether a credit issued by a solid waste hauler to its
customer to induce the customer to separate recyclable materials is considered to be a sale for resale
and thus not subject to tax.
A solid waste hauler is considering offering an incentive to its customers whereby the
customer will receive a reduction in its bill in exchange for separating its trash into recyclable and
non-recyclable components. The solid waste hauler will subsequently prepare the material for
market. The types of material which will be collected and marketed include plastic, wood, corrugated
cardboard, paper, glass and metals.
Section 1105(c)(5) of the Tax Law imposes a tax upon the service of maintaining, servicing
and repairing real property, which includes the service of trash removal.
Under the circumstances described herein, the solid waste hauler is not purchasing tangible
personal property for resale. Rather, it is selling a taxable service to real property, the service of trash
removal. The waste hauler is free to charge different fees to different customers depending on the
nature and condition of the waste to be removed. However, the existence of different fees does not
change the nature of the service performed by the waste hauler and does not change the nature of the
fee received for such services.
Accordingly, the entire amount charged by the waste hauler for waste removal remains
subject to tax under section 1105(c)(5) of the Tax Law.

DATED: August 29, 1989

s/FRANK J. PUCCIA
Director
Technical Services

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.