Are a recycler's charges to collect and process used oil and oily waste taxable as a trash removal service in New York?

Plain-English summary

A company operates an oily-waste recycling terminal (in New Jersey): it collects used motor oil and oily byproducts, recycles them to recover oil it sells, and purifies the leftover water. It asked whether its charges to collect and process that waste are subject to New York sales tax.

The Office of Counsel said generally no. New York taxes trash removal as a service to real property (§ 1105(c)(5)) — but only if what's collected is actually "trash," which turns on whether the material has economic value. Following Matter of Marisol, where a chemical-waste recycler that tested and accepted only recyclable waste (with fees tied to the recovered chemicals' market value) was held not to provide trash removal, the Department found this recycler's business "very similar": it tests and accepts only oily waste it can recycle, its fees can depend on the market value of the oil, and it sells the recovered oil. So the oily waste isn't "trash," and its charges to collect and process it aren't taxable — whether it's hired directly or as a subcontractor. Waste brought to and accepted at its New Jersey terminal isn't a New York sale either.

The one taxable scenario: if it collects waste from a New York customer and, rather than returning it, transports it to another facility for disposal, that's a taxable trash removal service. (By contrast, merely returning collected waste to the customer and charging for transport is a non-taxable transportation service.) The opinion also notes it can only address the petitioner's own tax liability, not charges by unrelated third parties.

What this means for you

Recyclers and waste processors

If you test, accept, and recycle material with economic value — especially with pricing tied to recovered-commodity markets — your collection and processing charges generally aren't taxable trash removal (Marisol). The line flips when the material is genuinely discarded: hauling a New York customer's unrecyclable waste to a disposal site is taxable trash removal.

Generators of used oil and recyclable byproducts

Collection charges from a true recycler are typically non-taxable; charges to dispose of (not recycle) your waste can carry tax.

Accountants and tax professionals

The test is "is it trash?" = does it have economic value (Marisol; Seneca Foods)? Distinguish non-taxable transportation (return to customer) from taxable § 1105(c)(5) trash removal (haul to disposal). Out-of-state acceptance isn't a New York sale.

Common questions

Q: Why isn't collecting used oil a taxable trash removal service?
A: The oil has economic value — it's tested, recycled, and sold, with fees tied to oil prices — so it isn't "trash" under § 1105(c)(5).

Q: When would my charges be taxable?
A: If you collect a New York customer's waste and transport it to another facility for disposal instead of returning or recycling it, that's taxable trash removal.

Q: Does it matter that the terminal is out of state?
A: Yes — waste delivered to and accepted at the New Jersey terminal isn't a New York sale.

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(c)(5) (tax on maintaining/servicing real property, including trash removal)
• 20 NYCRR 541.2(d) (subcontractor); 20 NYCRR 2376.1(a) (advisory opinions only for the petitioner's own liability)
• Matter of Marisol, Inc., Tax Appeals Tribunal (Jan. 4, 1996) (recyclable waste with economic value is not trash)
• Matter of Seneca Foods Corp., Tax Appeals Tribunal (July 6, 1995); TSB-A-06(35)S; TSB-A-15(48)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales-ao-2020.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a20-47s.pdf

Original ruling text

New York State Department of Taxation and Finance
Office of Counsel

TSB-A-20(47)S
Sales Tax
October 27, 2020

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION
The Department of Taxation and Finance received a Petition for an Advisory Opinion
from [ REDACTED ] (“Petitioner”). Petitioner asks whether its charges for recycling oil and oilcontaminated fluids (collectively “waste” or “oily waste”), as well as its charges for the
collection of such waste, are subject to New York State and local sales tax. 1 We conclude that
Petitioner’s charges for collecting and/or accepting oily waste are not subject to New York State
and local sales tax, but that its charges to New York customers, if any, to collect and transport
oily waste to other facilities for disposal are subject to tax.
Facts
Petitioner owns and operates a recycling terminal in New Jersey where it recycles oily
waste. Examples of oily waste include used motor oil, and the byproducts of the operations of car
washes, automobile dealerships, and manufacturing plants. When Petitioner obtains oily waste,
it recycles it through a process that isolates the oil and removes most contaminants. Petitioner
sells the recovered oil to third parties. Petitioner purifies any water that remains after the oil has
been recovered and transfers it to county and/or municipal water purification plants.
Petitioner obtains oily waste from customers that either bring the waste to Petitioner’s
terminal or hire Petitioner (either directly or as a subcontractor) to collect and remove the waste
from various locations. Petitioner owns and operates its own trucks for this purpose. In either
case, any material that is brought to Petitioner’s terminal is tested upon arrival to determine its
contents. Materials that do not contain oil will be rejected by Petitioner and returned to its
customer. Also, Petitioner will not accept any oily waste that contains contaminants that require
a special method of disposal, such as caustic chemicals. Rather, Petitioner will either return this
contaminated waste or, if required to do so, transport it to another (non-affiliated) facility for
disposal. Otherwise, Petitioner recycles 100% of the oily waste it tests and accepts, and nothing
is returned to its customer.
The amount that Petitioner charges to collect and/or recycle oily waste is determined by a
number of factors, including the volume of waste to be recycled, the type of impurities in the

Petitioner also asks about the taxability of charges assessed by non-affiliated third parties. However, 20 NYCRR
2376.1(a) authorizes the issuance of advisory opinions “at the request of any person who is or may be subject to a
tax or liability under the Tax Law …,” and explicitly prohibits the issuance of opinions “to any person or entity
acting on behalf of an unidentified or hypothetical person or entity.” Accordingly, only Petitioner’s questions that
relate to its own potential tax liability are considered herein.
1

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TSB-A-20(47)S
Sales Tax
October 27, 2020

waste, Petitioner’s overhead, and the pricing of its competitors. Further, when oily waste
consists primarily of oil, the market value of this oil may affect Petitioner’s pricing. When the
market price of oil is high, for example, Petitioner may charge a lower fee to collect and/or
accept waste, or it may not charge a fee at all. Moreover, if the market value of oil is high
enough, Petitioner may even pay a customer for its waste.
Analysis
Generally, sales tax need only be collected on receipts from the sale of tangible personal
property, and the services described in Tax Law § 1105. Among the services subject to sales tax
are services for the maintenance, servicing or repairing of real property. Tax Law § 1105(c)(5).
This includes trash removal services. See, e.g., TSB-A-06(35)S. Whether a service is a trash
removal service depends on whether items being collected may properly be considered “trash,”
which requires assessing if such items have any economic value. See Matter of Marisol, Inc.,
Tax Appeals Tribunal (January 4, 1996); Matter of Seneca Foods Corp., Tax Appeals Tribunal
(July 6, 1995).
In Matter of Marisol, Inc., Tax Appeals Tribunal (January 4, 1996), the Tax Appeals
Tribunal found that a taxpayer engaged in the business of collecting and recycling chemical
waste from its customers was not providing a trash removal service. Notably, the taxpayer in
Marisol did not accept just any chemical waste from customers. Rather, it would test the waste it
collected and accept only that which it could recycle. While the taxpayer sometimes charged its
customers for the collection of their chemical waste, what was charged varied and depended, in
part, on the market for the chemicals in the waste that the taxpayer would recover and sell. The
Tribunal found that, under these circumstances, the chemicals being collected by the taxpayer
had economic value and, thus, were not “trash” for purposes of Tax Law § 1105(c)(5).
Here, Petitioner’s business appears to be very similar to the one described in Marisol. As
noted above, Petitioner owns and operates a terminal in New Jersey where it recycles oily waste.
As in Marisol, Petitioner is sometimes hired by customers to collect this waste, which Petitioner
brings to its terminal for processing (recycling). Only oily waste is accepted by Petitioner for
processing and, significantly, Petitioner’s charges, if any, to collect and/or process such waste
may depend, at least in part, on the market value of the oil in it. Petitioner sells the recycled oil
it recovers. On these facts, we find that the oily waste that Petitioner collects and accepts from
customers is not “trash” within the meaning of Tax Law § 1105(c)(5). Petitioner’s charges for
collecting oily waste that it accepts and processes, therefore, are not subject to New York State

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TSB-A-20(47)S
Sales Tax
October 27, 2020

and local sales tax. This is the case regardless of whether Petitioner is hired directly by the
owner of the waste or is hired by another business on a subcontractor basis. See 20 NYCRR §
541.2(d); TSB-A-15(48)S.
Petitioner also accepts oily waste from customers who bring it to its terminal in New
Jersey for processing. Petitioner’s charges for processing the waste it accepts at its terminal are
not subject to New York State and local sales tax for the reasons discussed above. Moreover,
because such waste will necessarily have been delivered, tested and accepted by Petitioner in
New Jersey in these instances, any “sale” that might occur between Petitioner and its customers
would take place in New Jersey and, thus would not be subject to sales tax in New York State. l.
Finally, while Petitioner recycles 100% of the oily waste it accepts, Petitioner indicates
that, should it not be able to recycle waste it collects, it will either return the waste to its
customer or transport it to a non-affiliate facility for disposal. It is not clear whether Petitioner
charges the customer in these instances. To the extent that Petitioner returns to the customer the
waste it collected and assesses a charge to cover its transportation costs, this would be a charge
for a transportation service that is not subject to sales tax. However, if Petitioner collects waste
from a customer in New York and does not return the waste to that customer, but rather
transports it to another facility for disposal, this would constitute a charge for a trash removal
service subject to sales tax, and Petitioner must collect sales tax on any charges it makes. See
Tax Law § 1105(c)(5).

DATED: October 27, 2020

/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.