Is Suffolk County's mandatory 5-cent carryout-bag fee subject to New York state or local sales tax?

Plain-English summary

Suffolk County enacted Local Law No. 27-2016, effective January 1, 2018, requiring covered stores to charge customers a 5-cent fee per carryout bag when a shopper doesn't bring a reusable bag. The law is designed to encourage reusable bags; stores keep the fee and must separately itemize it on the receipt. The question: is that bag fee subject to state or local sales tax under Tax Law Articles 28 and 29?

The Office of Counsel said no:

• Sales tax applies to receipts from the sale of tangible personal property (Tax Law § 1105(a)).
• The bag fee is a locally mandated charge for the use of a carryout bag intended to encourage reusable bags — it does not constitute the sale of tangible personal property.
• Under these specific circumstances, the carryout-bag fee is not subject to state or local sales tax.

What this means for you

Retailers (then) under Suffolk's bag law

The mandated 5-cent bag fee is not taxable — don't add sales tax on top of the itemized fee. (This 2018 opinion addressed the Suffolk County mandatory fee specifically; New York's statewide bag rules changed afterward, so confirm the current law and any later guidance.)

The reasoning is fact-specific

The Department stressed "under these specific circumstances." The result rests on the fee being a government-mandated charge to discourage bag use, not a price for selling a bag. A store's voluntary charge to sell a bag could be a different (taxable) story.

Accountants

Treat the itemized statutory bag fee as a non-taxable line; don't fold it into the taxable receipt.

Common questions

Q: Do I charge sales tax on the 5-cent carryout-bag fee?
A: No. The mandated bag fee isn't a sale of tangible personal property, so no state or local sales tax applies.

Q: Why isn't selling a bag a taxable sale?
A: Because this is a locally mandated fee to discourage bag use, not a retail sale of the bag — the opinion turns on that specific circumstance.

Q: Is this still the rule?
A: The opinion addresses Suffolk County's 2018 mandatory fee. New York's bag laws changed later, so verify current law and guidance.

Q: Can I rely on this opinion?
A: It binds the Department only as to the petitioner. Use it as guidance and confirm your own facts.

Citations and references

• Tax Law § 1105(a) (tax on retail sales of tangible personal property)
• Tax Law Articles 28 and 29 (state and local sales and use taxes)
• Suffolk County Local Law No. 27-2016 (Local Law to Reduce the Use of Carryout Bags in Retail Sales)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2018.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a18-3s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Counsel

TSB-A-18(3)S
Sales Tax
July 25, 2018

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S180118A

The Department of Taxation and Finance received a Petition for Advisory Opinion from
REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED
REDACTE (“Petitioner”). Petitioner asks whether the locally imposed fee that covered stores in
Suffolk County are required by law to charge customers for carryout bags is subject to state
and/or local sales tax under Articles 28 and 29 of the Tax Law. We conclude that such a fee is
not subject to sales tax.
Facts
The Suffolk County Legislature enacted Local Law No. 27-2016, entitled Local Law to
Reduce the Use of Carryout Bags in Retail Sales (“Local Law”). This Local Law took effect on
January 1, 2018. The Local Law was passed to encourage consumers to bring and use their own
recyclable carryout bags for shopping by imposing a fee of five cents for each carryout bag
provided by retail stores. The Local Law states that all covered stores are required to collect
such a fee for each carryout bag provided to any customer when the customer makes a purchase
and does not bring his or her own carryout bag.
The Local Law defines a covered store as a store engaged in retail sales of “personal,
consumer or household goods . . . that provide carryout bags to customers in which to place
purchased items. This term does not include food service establishments located outside of
grocery stores, supermarkets, convenience stores or foodmarts.” The Local Law defines carryout
bags as:
[A]ny bag that is provided by a covered store to a customer at the point of sale and is
used to carry goods from such store, provided, however, that such term shall not include
any of the following: (i) a bag without handles used to carry produce, meats, poultry, fish,
dairy, dry goods or other non-prepackaged food items to the point of sale within a
covered store or to prevent such food items from coming into direct contact with other
purchased items; (ii) a bag provided by a pharmacy to carry prescription drugs; (iii) a
garment bag; or (iv) any other bag exempted from the provisions of this local law.
The Local Law states that covered stores are allowed to retain the fee collected from the
customer for the carryout bag. The covered store is required to separately itemize the fee for the
carryout bag pursuant to the Local Law on the receipt provided to the customer.

-2-

TSB-A-18(3)S
Sales Tax
July 25, 2018

Analysis
Petitioner asks whether the carryout bag fee is subject to State and/or local sales taxes
under Articles 28 and 29 of the Tax Law. Under § 1105(a), sales tax is generally imposed on the
receipts from the sale of tangible personal property. The fee at issue here is a locally mandated
charge for the use of a carryout bag intended to encourage the use of reusable bags. We
conclude that does not constitute the sale of tangible personal property. Under these specific
circumstances, the carryout bag fee is not subject to State or local sales taxes.

DATED: July 25, 2018

/S/
DEBORAH R. LIEBMAN
Deputy 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. The information provided
in this document does not cover every situation and is not intended to replace the
law or change its meaning.