Can a janitorial-services company buy its plastic trash can liners tax-free as a 'resale,' since some of them stay in the customer's trash cans?

Plain-English summary

A cleaning contractor providing janitorial services buys plastic trash can liners for two uses: some are used to carry trash out of the building, and others are simply placed in office and restroom trash cans and left there on the customer's premises. The contractor's accountant asked whether these purchases could be made tax-free as a "purchase for resale," since some liners physically stay behind with the customer.

The Department said no, across the board. Janitorial services are themselves a taxable service under Tax Law § 1105(c)(5). The resale exclusion only shelters materials that either become a physical component part of the property being serviced, or are "actually transferred" to the customer in conjunction with performing the taxable service -- meaning the transfer itself has to be a meaningful part of delivering the service, not just an incidental byproduct of it. Trash can liners fail both tests: they don't become part of the property being cleaned, and even the liners left behind in the cans are just a supply the janitorial contractor uses to do its job (holding trash until pickup), not something transferred to the customer as part of the service being sold. So all of the contractor's liner purchases -- both the ones used to remove trash and the ones left in place -- are ordinary retail purchases subject to sales tax, with no resale exemption available.

What this means for you

Janitorial and cleaning-service contractors

Don't assume that leaving supplies behind on a customer's premises automatically qualifies them as a tax-exempt "resale." The test is whether the item becomes part of the serviced property or is genuinely transferred as part of delivering the taxable service -- routine consumables like trash liners, even ones left in place, are usually just your own cost of doing business and are taxable when you buy them.

Building owners and property managers hiring janitorial contractors

The sales tax on your contractor's supplies (like trash liners) is baked into their cost of doing business, not separately exempted -- expect that cost reflected in your service contract pricing.

Accountants and tax professionals

This ruling is a useful contrast case next to the asbestos-contractor supplies opinion issued the same day (TSB-A-99(33)S): there, contaminated disposable supplies genuinely became part of the waste transferred to the customer and qualified for a resale-adjacent refund; here, ordinary trash liners used in performing a routine service did not. The line is whether the item's transfer is functionally part of delivering the taxable service, not merely whether it's physically left behind.

Common questions

Q: Are trash liners left in a customer's trash cans "resold" to the customer?
A: No -- the Department treated them as a supply the contractor uses to perform its janitorial service, not property transferred to the customer as part of that service, so no resale exclusion applies.

Q: Does it matter that some liners are used just to carry trash off-site rather than left behind?
A: No -- neither use qualifies for the resale exclusion; both are ordinary taxable purchases by the contractor.

Q: Is the janitorial service itself taxable to the building owner?
A: Yes -- janitorial services are an enumerated taxable service under Tax Law § 1105(c)(5), separate from the question of whether the contractor's own supply purchases are taxable.

Citations and references

Statutes and regulations:

• Tax Law § 1101(b)(4)(i) (retail sale, resale exclusion)
• Tax Law § 1105(c)(5) (tax on maintaining, servicing or repairing real property, including janitorial services)
• 20 NYCRR § 526.6(c) (resale exclusion)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1999.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a99_34s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-99(34)S
Sales Tax
June 24, 1999

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S990219B

On February 19, 1999, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Jeffrey J. Coren, CPA, 225 West 34th Street, Suite 2015, New York, New
York 10122.
The issue raised by Petitioner, Jeffrey J. Coren, CPA, is whether plastic trash can liners
purchased by janitorial services are subject to State and local sales and use taxes.
Petitioner submits the following facts as the basis for this Advisory Opinion.
Cleaning contractors providing janitorial services purchase plastic trash can liners. Some
of the trash can liners may be used by the janitorial service to remove trash from the premises.
Other liners are placed in trash cans in offices and restrooms and are left on the customer’s premises.
Applicable Laws and Regulations
Section 1101(b)(4)(i) of the Tax Law defines a "retail sale," in part, as follows:
A sale of tangible personal property to any person for any purpose, other than
(A) for resale as such or as a physical component part of tangible personal property,
or (B) for use by that person in performing the services subject to tax under
paragraphs (1), (2), (3), (5), (7) and (8) of subdivision (c) of section eleven hundred
five where the property so sold becomes a physical component part of the property
upon which the services are performed or where the property so sold is later actually
transferred to the purchaser of the service in conjunction with the performance of the
service subject to tax. . . .
Section 526.6(c) of the Sales and Use Tax Regulations provides, in part:
Resale exclusion. (1) Where a person, in the course of his business
operations, purchases tangible personal property or services which he intends to sell,
either in the form in which purchased, or as a component part of other property or
services, the property or services which he has purchased will be considered as
purchased for resale and therefore not subject to tax until he has transferred the
property to his customer.

-2­
TSB-A-99(34)S
Sales Tax
June 24, 1999

Opinion
Janitorial services are subject to tax under Section 1105(c)(5) of the Tax Law. In accordance
with Section 1101(b)(4)(i) of the Tax Law and Section 526.6(c) of the Sales and Use Tax
Regulations, tangible personal property purchased for use in performing the services subject to tax
under Section 1105(c)(5) of the Tax Law may be purchased for resale, where the property so sold
becomes a physical component part of the property upon which the services are performed or where
the property is to be actually transferred to the purchaser of the service in conjunction with the
performance of the taxable service. In this case, plastic trash can liners are purchased by cleaning
contractors to remove trash from a customer’s premises or to be placed in trash cans in offices and
restrooms and left on the customer’s premises to be picked up by the cleaning contractor when
performing its janitorial services. Such liners do not become a physical component part of the
property upon which the services are performed and are not actually transferred to the purchaser of
the service in conjunction with the performance of the service. Rather, such plastic trash can liners
are merely a supply used by the cleaning contractor in performance of its janitorial services.
Therefore, the cleaning contractor may not purchase the plastic trash can liners for resale.
Accordingly, the purchase of plastic trash can liners by janitorial services constitutes a retail sale of
tangible personal property under Section 1101(b)(4) of the Tax Law, and is subject to sales and
compensating use tax.

DATED: June 24, 1999

NOTE:

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

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