I run a portable-toilet rental and servicing business — do I owe sales tax on the toilets and supplies I buy to run it, or on the insurance I charge customers for the toilets?

Plain-English summary

Call-A-Head Corp. provides portable toilets along with supplies (toilet paper, soap, paper towels, chemicals, rock salt when needed) and a weekly on-site cleaning, all billed to customers as a single lump sum; customers can pay extra for more frequent cleanings (separately stated and taxed). Call-A-Head buys standard fiberglass toilets from a wholesale distributor and also builds its own upscale units out of components like doors, porcelain toilets, electric heaters, radios, piping, and vanities; it also buys paint to maintain the toilets, and separately charges customers who want to insure the toilets they're using.

Call-A-Head asked the Department to sort four categories of its own purchases and charges into taxable and exempt buckets.

The Department's answer turns on a single legal characterization: Call-A-Head isn't renting toilets — it's selling a taxable waste-removal service. New York case law (Waste Management of New York and U-Need-A-Roll Off Corp.) treats supplying portable toilets or waste receptacles, and later removing the accumulated waste, the same way it treats trash-removal services: taxable under Tax Law §1105(c)(5) as "maintaining, servicing or repairing real property." Because the toilets themselves are never "actually transferred" to customers — they're temporarily placed on a customer's property and then reclaimed and reused for other customers — none of the resale or actual-transfer exclusions apply to them.

That framing produces the four results:

1. Toilets and components Call-A-Head buys to build its own upscale units are taxable. Since the finished toilets are never resold or actually transferred (they get reclaimed and reused), Call-A-Head's own purchases of them and their parts are ordinary taxable retail purchases.
2. Consumable supplies (toilet paper, soap, paper towels, chemicals, rock salt) are exempt. These items ARE actually transferred to the customer — the customer physically uses them up during the service — so they qualify for the actual-transfer exclusion, unlike the toilets themselves.
3. Paint used to maintain the toilets is taxable. Even though the paint physically becomes part of the toilet, the toilet itself is never actually transferred to a customer, so the paint doesn't inherit the exemption either.
4. Separately stated toilet-insurance charges are not taxable at all — insurance isn't a sale of tangible personal property or one of the services New York's sales tax law reaches.

A footnote adds a useful contrast: rock salt here is treated as "actually transferred" because it has continuing value to the customer, unlike a prior opinion (R.J. Schickler Inc., TSB-A-03(40)S) where rock salt used in a different service dissipated so quickly that the Department found it was never actually transferred.

What this means for you

Portable-toilet, dumpster, and waste-receptacle service businesses

If your business model is "we supply a receptacle, then reclaim and reuse it while removing accumulated waste," New York treats the whole thing as a taxable waste-removal service — meaning your own purchases of the receptacles (and parts/paint used to build or maintain them) are taxable, since they're never resold or transferred to your customers. But genuinely consumable items your customers use up (paper, soap, chemicals) stay exempt as actually-transferred property.

Businesses billing an optional insurance or waiver charge

A separately stated charge for insuring rented or serviced equipment is treated as insurance, not a taxable sale or service — but keep it broken out on the bill.

Accountants and tax professionals

The "actually transferred vs. reclaimed and reused" line from Waste Management is the load-bearing test here, and it recurs across many New York service-plus-property rulings (rental equipment, uniforms, linens). Watch for it whenever a client's service model involves supplying reusable property alongside consumable supplies in one lump-sum charge.

Common questions

Q: Do I owe sales tax when I buy the toilets or dumpsters I rent out as part of a waste-removal service?
A: Yes, if the receptacle is reclaimed and reused rather than actually transferred to the customer — your purchase of it is a taxable retail purchase, because the exclusions for resale or actually-transferred property don't apply.

Q: What about the supplies my customers actually use up, like toilet paper or chemicals?
A: Those are exempt, because they're actually transferred to (consumed by) the customer during the service.

Q: Is a separately stated equipment-insurance charge to my customer taxable?
A: No — it's neither a sale of tangible personal property nor an enumerated taxable service.

Q: Does this ruling apply to my portable-sanitation or waste-service business?
A: Not automatically. This is an Advisory Opinion binding only on the petitioner and only as to the facts it described. Your billing structure and the reusability of your equipment may differ in ways that change the analysis.

Citations and references

Statutes and regulations:

• Tax Law §1101(b)(4)(i) (resale exclusion; property actually transferred with a taxable service)
• Tax Law §1105(a) (tax on tangible personal property)
• Tax Law §1105(c)(5) (tax on maintaining, servicing, or repairing real property)

Cases and prior opinions referenced:

• Waste Management of New York, Inc., Tax Appeals Tribunal, March 21, 1991
• U-Need-A-Roll Off Corp. v. New York State Tax Comm'n, 67 N.Y.2d 690 (1986)
• Matter of Atlas Linen Supply Co. v. Chu, 149 A.D.2d 824 (3d Dept. 1989)
• R.J. Schickler Inc., TSB-A-03(40)S (rock salt that dissipates too quickly to be "actually transferred")

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2008.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a08_55s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Counsel
Advisory Opinion Unit

TSB-A-08(55)S
Sales Tax
August 26, 2008

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S080204B

A petition dated January 28, 2008 requests an advisory opinion about Corp.’s sales and compensating use tax
obligation on the following transactions:
(1) Corp.’s purchases of (a) fiberglass portable toilets, and (b) other tangible personal property that the Corp. uses
to manufacture its own portable toilets, which are used in its portable toilet facilities operation (Operation);
(2) Corp’s purchases of tangible personal property, such as toilet paper, soap, paper towels, chemicals, and rock
salt, that is consumed by its customers during Corp.’s Operation;
(3) Corp.’s purchases of paint that it uses to maintain its portable toilet facilities (toilets); and
(4) Corp.’s charges to insure its toilets.
Corp.’s purchases of tangible personal property and paint, described in (1) and (3) respectively, are subject to sales and
use tax. Its purchases of tangible personal property described in (2) and its insurance charges described in (4) are not
subject to sales and use tax.
Facts
Corp.’s Operation includes the provision of toilets and supplies, such as toilet paper, soap, paper towels,
chemicals, and rock salt (when necessary), that are consumed by its customers during use of the toilets, and a weekly
on-site cleaning if toilets are provided for at least one week. The charges for all of these items are included in one
lump sum. Customers can pay additional fees for more frequent on-site toilet cleanings. Corp. separately states those
additional cleaning charges, when applicable, and collects sales tax on them. Corp. also separately charges customers
for insuring the toilets upon their request. It does not sell or rent toilets that it does not also undertake to service.
Corp. purchases traditional fiberglass portable toilets from a wholesale distributor; the toilets are then slightly
modified and provided to its customers. Corp. also manufactures its own upscale units. Corp. purchases, for example,
doors, porcelain toilets, electric heaters, radios, piping and vanities, and builds those upscale units for use in its
Operation. Corp. also purchases paint that it uses to maintain the toilets.
Transaction #1
Corp.’s Operation is a taxable waste removal service, not a rental of tangible personal property. Thus, Corp.’s
purchases of traditional fiberglass toilets and other tangible personal property that Corp. uses to manufacture its own
upscale toilets are retail sales transactions subject to New York State and local sales and compensating use tax.
The receipts from every retail sale of tangible personal property are subject to sales and use tax unless
otherwise exempted or excluded. (Tax Law § 1105[a]). Excluded from the definition of “retail sale” are, among other
things, purchases of tangible personal property intended to be resold as such or as a physical component of tangible
personal property, and purchases in which tangible personal property is actually transferred to the purchaser of a

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TSB-A-08(55)S
Sales Tax
August 26, 2008

service described in Tax Law section 1105(c)(5) in conjunction with the performance of that service. (See Tax Law §
1101[b][4][i]). Receipts from the sale of services are generally not taxable unless the service is among those
enumerated in Tax Law section 1105(c). The performance of waste removal services is a form of “[m]aintaining,
servicing or repairing real property, property or land,” which is an enumerated service, and receipts from its sale are
accordingly subject to sales and use tax under Tax Law section 1105(c)(5). (See Waste Management of New York,
Inc. [Waste Management], Tax Appeals Tribunal, March 21, 1991).
The provision of portable toilets in conjunction with waste removal services is part of the taxable waste
removal service. In Waste Management, the Tribunal treated portable toilet services like trash removal services.
There, as in U-Need-A-Roll Off Corp. v. New York State Tax Comm’n (Roll Off), 67 N.Y.2d 690 (1986), the taxpayer
performed a waste removal service by supplying waste containers and subsequently removing the accumulated waste.
In all cases, the service provider charged its customers a lump sum that was not divided into a service component and a
rental component. Charges for both the portable toilet service and the trash removal service were deemed to be
charges for waste removal services, and taxable under Tax Law section 1105(c)(5).
These decisions govern Corp.’s situation. Corp. provides toilets and removes the accumulated waste either at
the expiration of the service agreement, on a weekly basis for longer agreements, or as separately contracted for by its
customers. Supplying receptacles for human waste and subsequently removing that waste is not significantly
distinguishable from supplying trash receptacles and removing that accumulated waste. Waste Management, which
held that these activities receive the same sales tax treatment, makes this clear. Thus, Corp., like the taxpayers in
Waste Management and Roll Off, is selling a waste removal service taxable under Tax Law section 1105(c)(5), and
that taxable service includes the provision of waste receptacles.
The two exclusions mentioned above do not render Corp’s purchases untaxable. The activities of providing
the waste removal service and supplying the toilets are inseparable and cannot be considered separate transactions for
sales tax purposes. (See Matter of Atlas Linen Supply Co. v. Chu, 149 A.D.2d 824, 826 [3d Dept. 1989], lv denied, 74
N.Y.2d 616). As stated above, Corp. is selling waste removal services, not toilets. Thus, the tangible personal
property used in the Corp.’s Operation is not being “resold as such” to its customers, but rather is being provided as
part of Corp.’s service.
Nor is Corp. “actually transferring” to its customers the tangible personal property it uses in its Operation. In
Waste Management, the Tribunal found that the service provider’s waste receptacles were not “actually transferred”
where they were temporarily located on the customers’ property, then reclaimed and reused by the taxpayer to provide
trash removal services to other customers. (Waste Management at 12). Transfers of that property therefore do not
qualify for the “retail sale” exclusion for property sold in conjunction with the performance of a taxable service. So
Corp. must pay sales and use tax on its purchases of tangible personal property, such as fiberglass toilets and other
items used to manufacture its own toilets, used in its Operation.
Transaction #2
Corp.’s purchases of tangible personal property that are actually transferred to its customers are not retail sales
subject to sales and use tax.

TSB-A-08(55)S
Sales Tax
August 26, 2008

-3-

Corp. supplies its customers with items such as toilet paper, soap, paper towels, chemicals, and rock salt (when
necessary)1, which the customer consumes during use of the toilets. These supplies are not being resold as such for the
reasons described above. The items, however, are “actually transferred” in conjunction with Corp.’s performance of
waste removal services. (See Id.; Tax Law § 1101[b][4][i]). As a result, Corp.’s purchases of those items are not
subject to sales and use tax under Tax Law section 1105(a).
Transaction #3
Corp.’s purchases of paint that it uses to maintain its toilets are retail sales transactions subject to sales and use
tax.
Corp. purchases paint, which eventually becomes a physical component of the toilets. As discussed above,
however, the toilets are provided as part of the waste removal service and, as a result, are not being resold. Thus, the
paint does not qualify for the resale exclusion in Tax Law section 1101(b)(4)(i). Corp. also does not “actually
transfer” the paint in conjunction with the performance of its taxable waste removal services because the paint
becomes a physical part of the toilets and the toilets themselves are never “actually transferred” to its customers. (See
Waste Management at 12). As a result, Corp.’s purchases of paint that it uses to maintain its toilets are retail sales
subject to sales and use tax under Tax Law section 1105(a).
Transaction #4
Corp. insures the toilets for an additional fee. This separately stated charge is neither a sale of tangible
personal property nor a service enumerated by Tax Law section 1105(c). Thus, Corp.’s separately stated insurance
charges are not subject to sales and use tax.

DATED: August 26, 2008

/S/
Jonathan Pessen
Director of Advisory Opinions
Office of Counsel

NOTE: An Advisory Opinion is issued at the request of a person or entity. It is

limited to the facts set forth therein and is binding on the Department only
with respect to the person or entity to whom it is issued and only if the
person or entity fully and accurately describes all relevant facts. An
Advisory Opinion is based on the law, regulations, and Department
policies in effect as of the date the Opinion is issued or for the specific
time period at issue in the Opinion.

1
The rock salt is “actually transferred” in conjunction with a taxable maintenance or repair service to real property because it has
continued value to the customer. This situation is distinguishable from that in R.J. Schickler Inc., TSB-A-03(40)S, November 19,
2003, where the rock salt dissipated so quickly that the Tax Department concluded that it had not been “actually transferred” to the
customer.