Is a waste-management consulting company's fee for auditing, designing, and monitoring a client's waste program -- without ever hauling or disposing of waste itself -- subject to New York sales tax?

Plain-English summary

Refuse & Environmental Systems, Inc. provides waste-management consulting to chain retailers, supermarkets, and restaurants with multiple locations across one or more states. It never touches the waste itself -- it doesn't own or lease any hauling trucks, landfills, disposal facilities, or waste equipment like containers or balers. Instead, it audits a customer's waste generation, designs a customized waste-management program (pickup schedules, recycling, baling, cardboard back-haul), prepares bid specifications and solicits competitive bids from independent waste haulers, monitors the customer's ongoing waste stream, audits the haulers' invoices (requesting credits when needed), and forwards those invoices to the customer for payment -- acting purely as the customer's agent in dealing with the haulers. It also produces customized, proprietary, confidential reports analyzing each customer location's disposal costs and equipment usage, built from the company's own historical-data formulas rather than any shared industry database, used by the customer for cost comparisons and budgeting. The haulers' own invoices already include any tax owed on the actual collection and disposal services (including landfill taxes and sales tax); the company's own management fee is separate and isn't based on or tied to the haulers' pickup or disposal charges. It asked whether its own management fee is taxable.

The Department said no. New York's sales tax only reaches specifically listed ("enumerated") services -- and the kind of management consulting this company provides, including preparing the incidental confidential reports as part of that consulting relationship, isn't on that list. Since the actual waste hauling and disposal is handled (and separately taxed, where applicable) by the independent haulers under direct contracts with the customers, and the consulting company's own fee is for advisory and administrative services rather than for the hauling/disposal itself, none of its receipts are subject to New York sales or use tax.

What this means for you

Waste-management consultants and brokers who don't own hauling or disposal equipment

If your services are limited to advising, auditing, program design, competitive bidding, monitoring, and reporting -- without you actually performing or owning the collection, hauling, or disposal function -- your management fee generally isn't subject to New York sales tax, even when it's billed alongside pass-through hauler charges that do include tax.

Retail chains and multi-location businesses hiring waste-management consultants

Expect your consultant's advisory fee to come without New York sales tax, while the actual waste hauling and disposal charges from your haulers will carry whatever tax applies to those services directly.

Accountants and tax professionals

This ruling turns on the well-established principle that New York's sales tax under Tax Law § 1105(c) only reaches specifically enumerated services -- general management consulting, even industry-specific consulting like waste-stream management, falls outside that list, and incidental deliverables (like the customized proprietary reports here) don't change that result as long as they remain part of the consulting engagement rather than a separate taxable product.

Common questions

Q: Is a waste-management consultant's fee for designing and monitoring a customer's waste program taxable?
A: No, as long as the consultant's role is advisory/administrative and it doesn't itself perform or own the actual waste collection, hauling, or disposal.

Q: Does producing customized reports as part of a consulting engagement make the whole fee taxable?
A: No -- reports that are incidental to a nontaxable consulting service, and that remain confidential/proprietary rather than a standalone product, don't convert the consulting fee into a taxable sale.

Q: Are the waste hauler's own charges to the customer taxable?
A: This ruling doesn't change that separate analysis -- hauler charges for actual collection and disposal are taxed under their own applicable rules (including any landfill or sales tax the hauler includes), independent of the consultant's advisory fee.

Q: Does this ruling apply to my waste-management consulting business?
A: Not automatically. An Advisory Opinion binds the Department only for the taxpayer and facts it was issued to, and it can't be relied on by anyone else. Whether your specific services stay purely advisory depends on your own facts.

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1997.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a97_85s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-97(85)S
Sales Tax

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S970926B

On September 26, 1997, the Department of Taxation and Finance received a
Petition for Advisory Opinion from Refuse & Environmental Systems, Inc., 830
Silver Street, Agawam, Massachusetts 01001. Petitioner, Refuse & Environmental
Systems, Inc., provided additional information pertaining to the Petition on
October 20, 1997.
The issue raised by Petitioner is whether New York State sales tax should
be imposed on the receipts from the sale of its waste management services.
Petitioner submitted the following facts as the basis for this Advisory
Opinion.
Petitioner provides management consulting services to commercial and
industrial generators of solid waste and recyclable materials ( "waste").
Petitioner advises its customers as to the proper, most efficient, economical and
ecologically appropriate means of managing their waste, consistent with state and
local regulations.
Typically, Petitioner’s customers are chain stores, such as department
stores, supermarkets and restaurants. Petitioner services multiple locations for
its customers, which can be in one state, in a multi-state district or
nationwide. Petitioner acts as the representative of its customers in their
relationships with the waste haulers who actually pick up and dispose of the
waste.
The services that Petitioner typically provides to its customers include
some or all of the following activities.
Petitioner conducts an audit of the customer’s generation of waste. Based
on this audit, Petitioner designs (if necessary) a waste management program that
is consistent with the specific needs of the customer. This may include pick up
schedules, recycling programs, baling and cardboard back-haul programs.
Petitioner develops and prepares bid specifications for the bidding process
to meet the customer’s waste hauling needs and invites haulers to bid on such
work.
On an ongoing basis, Petitioner monitors the waste stream of the customer.
When appropriate and necessary, Petitioner requests the pick up of the customer’s
waste by the independent waste haulers.

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TSB-A-97(85)S
Sales Tax

Petitioner audits the customer’s invoices that are submitted by the
independent waste haulers and other service providers, such as end disposal
facilities. Petitioner, where necessary, requests credits and other adjustments
to the customer’s accounts. The waste haulers include in their invoices all
applicable taxes for the services they render, including but not limited to,
landfill taxes and sales taxes on the collection and disposal of waste.
Petitioner forwards the invoices to the customer. Petitioner receives the
funds from the customer in trust and, in turn, pays the haulers and other service
providers on behalf of its customer. Petitioner receives one check from the
customer. The check is for an amount that covers all of the customer’s locations
(both within and outside of New York) and all of the services provided at each
location. The check also includes Petitioner’s management fee and the sales tax
paid by the customer on its purchases.
In addition to the foregoing, as part of its services, Petitioner provides
the customer with customized, written reports on its waste disposal activities,
including compliance reports for state and federal regulatory agencies. These
reports detail the expenses that the customer incurred in the disposal of waste.
The reports are tailored to include information for each location of the customer
that is serviced by Petitioner. The information is comprised, not only of the
disposal cost per location, but also of information relative to the equipment
used (e.g., dumpster size) and frequency of pick ups at the particular location.
In this regard, the information is based not only on the customer’s actual waste
experience for each of its locations, but upon specific proprietary formulas
developed by Petitioner. These formulas are based on historical data provided
by the customer and relate to the size and type of equipment in use, as well as
frequency of pick up. No information in the reports is derived from a common
database.
The reports are used by the customer for a variety of purposes, including,
but not limited to, making comparisons of costs overall, extrapolating sales
volume, overall health and management of the business, business trends within
various time frames, verification of waste disposal expenses and the preparation
of future waste disposal budgets. The reports are deemed proprietary by the
customer and cannot be distributed, sold or otherwise provided to other parties.
In fact, the information contained in the reports is considered confidential to
both the customer and Petitioner.
In this regard, the contract between
Petitioner and its customer specifically refers to these reports and designates
them as confidential and proprietary information. Each report addresses only the
specific activities of the specific customer. No comparisons are made with other
customers and there are no references to any industry standards.
Petitioner does not engage in any waste collection, disposal, treatment,
handling, storage or transportation services whatsoever. Likewise, Petitioner
does not own, lease or otherwise operate a waste hauling company, landfill or
other type of disposal or treatment facility. Petitioner does not own or lease
any waste disposal equipment, such as containers, balers and the like.

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TSB-A-97(85)S
Sales Tax

All hauling for Petitioner’s customers is arranged with independent haulers
by competitive bid.
The contractual relationships are directly between the
customers and the haulers. Petitioner acts solely as the agent for the customers
in these activities. Petitioner does not impose any type of surcharge or other
fee on services provided to its customers by the haulers or by the disposal
facilities. The fees charged by Petitioner are not in any way based upon, or
related to, the pick up or disposal fees.
Opinion
Receipts from the sale of Petitioner’s waste management services are not
subject to New York State and local sales taxes. Section 1105(c) of the Tax Law
imposes sales tax on receipts from the sales, other than sales for resale, of
certain enumerated services.
Management consultant services of the nature
performed by Petitioner and described in this Opinion, including the incidental
furnishing of the confidential and proprietary customized reports, are not
included among the services taxable under Section 1105(c).

DATED: December 29, 1997

NOTE:

/s/
John W. Bartlett
Deputy Director
Technical Services Bureau

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