Are charges to pick up containers of chemical waste from a plant and deliver them to a treatment/disposal company subject to sales tax?

Plain-English summary

FMC Corporation operates an agricultural-chemical manufacturing facility. Making insecticides and fungicides creates chemical waste, which FMC places in special containers leased from Niagara Sanitation Co., Inc. Niagara picks up the filled containers at FMC's location and delivers the contents to an independent company that treats and disposes of the waste (and bills FMC directly). Niagara separately states the container rentals and the pickup/delivery charges and bills sales tax on both. FMC asked whether the pickup and delivery charge is taxable.

The Department held the pickup/delivery service is taxable trash removal.

• Trash removal is a taxable real-property service. Section 1105(c)(5) taxes the service of maintaining, servicing, or repairing real property, which includes the service of trash removal.
• "Trash removal" means removing trash from real property. The term isn't defined in the statute or the regulations, but its inclusion in a tax on real-property maintenance makes clear it means simply removing trash from real property. It is not necessarily tied to the treatment or disposal of the trash.
• Treatment/disposal itself isn't taxed; the removal is. Receipts from the treatment or disposal service, in and of themselves, are not subject to tax. But Niagara Sanitation's service of removing the waste from FMC's real property is taxable trash removal.

What this means for you

Hauling waste off your property is a taxable service in New York. Charges to pick up and remove trash — including industrial or chemical waste in containers — from your real property are taxable trash removal under § 1105(c)(5), regardless of what the hauler is carrying.

The taxable event is the removal, not the disposal. The downstream treatment and disposal of the waste is a different service that isn't itself taxed. So a bill that separates "pickup/removal" from "treatment/disposal" can have a taxable line (removal) and a nontaxable line (treatment/disposal).

Container rentals are their own charge. Here the hauler separately stated container rentals (a lease of tangible personal property) from the pickup/delivery service. Separately stating charges lets each be taxed according to its own character.

Common questions

Q: I pay a hauler to pick up and remove waste from my plant. Is that taxable?
A: Yes. Removing trash — including chemical waste — from your real property is taxable trash removal under § 1105(c)(5).

Q: Is the treatment and disposal of the waste also taxable?
A: Not in and of itself. The Department treated the treatment/disposal service as not subject to tax; it's the removal from your property that's the taxable trash-removal service.

Q: Does it matter that the waste is hazardous chemical waste, not ordinary trash?
A: No. The tax turns on removing trash from real property, not on the type of waste. The pickup/removal is taxable trash removal either way.

Citations and references

Statutes:

• Tax Law § 1105(c)(5) — tax on maintaining, servicing, or repairing real property, including trash removal

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1984.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a84_27s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-84(27)S
Sales Tax
October 15, 1984

Taxpayer Services Division
Technical Services Bureau
STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO.S820426B

On April 26, 1982, a Petition for Advisory Opinion was received from FMC Corporation,
200 East Randolph Drive, Chicago, Illinois 60601.
The issue raised is whether charges for the service of picking up containers of chemical waste
and delivering the same to a waste treatment and disposal company is subject to sales tax.
Petitioner operates an agricultural chemical manufacturing facility. The process employed
by Petitioner to manufacture insecticides and fungicides creates certain chemical wastes which
Petitioner places in special containers leased from Niagara Sanitation Co., Inc. Niagara Sanitation
Co., Inc. picks up the filled containers at Petitioner's location and delivers the contents to an
independent company which treats and disposes of chemical wastes. This independent company
directly invoices Petitioner for its services.
Niagara Sanitation Co., Inc. invoices Petitioner for the container rentals and for the pickup
and delivery services. The charges for the container rentals and for the pickup and delivery services
are separately stated on the invoice presented to Petitioner. Petitioner is billed sales tax on the total
charges for both the container rentals and the pickup and delivery services.
Section 1105(c)(5) of the Tax Law imposes a tax on receipts from the sale of the service of
"maintaining, servicing or repairing real property," including the service of trash removal. The term
"trash removal" is not defined in the statute or the Sales and Use Tax Regulations. However, it is
manifestly clear from its inclusion in a tax on the service of real property maintenance that it has to
do, simply, with the removal of trash from real property. It is not necessarily related to the treatment
or disposal of trash. Indeed, receipts from the provision of such service in and of themselves are not
subject to tax. Accordingly, in the present instance, the service provided by Niagara Sanitation Co.,
Inc., consisting of the removal of waste from the real property of Petitioner, constitutes the service
of trash removal the receipts from which are subject to tax.

DATED: September 2, 1983

RODERICK G. W. CHU, COMMISSIONER
TP-8 (3/83)

s/FRANK J. PUCCIA
Director
Technical Services Bureau

GABRIEL B. DiCERBO, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR