Are charges for picking up and shredding confidential documents subject to New York sales tax?

Plain-English summary

Confidential Data Management (a division of Empire Recycling Corporation) destroys confidential documents for a fee. It picks up documents at customer locations with its own trucks — the documents become its property once loaded — hauls them to its plant, and shreds and bales them, then either sells the shredded paper to recyclers or disposes of it. It bills two charges: a shredding charge (by the pound) and a flat pickup charge. It asked whether it must charge sales tax.

The Department held the service is taxable as trash removal under § 1105(c)(5):

• § 1105(c)(5) taxes servicing real property and specifically includes "trash removal from buildings."
• The courts read trash removal broadly. All aspects of trash removal are taxable, and it does not matter whether the material was generated by an industrial process — including the transportation cost of hauling the waste. The Department cited Rochester Gas and Electric Corp. v. State Tax Commn. (fly ash from energy production) and Cecos International, Inc. v. State Tax Commn. (chemical-waste landfill/treatment), where haulers' transportation charges were taxable as trash removal, not exempt transportation.
• Records-destruction is trash removal. In Pioneer Warehouse Corp., TSB-H-80(119)S, carting away attorneys', accountants', banks', and brokerage houses' records to an incinerator to be burned was trash removal subject to tax.
• Result: Confidential Data Management's pickup, transport, shredding, and disposal of the documents come within these decisions and are subject to sales tax under § 1105(c)(5) — covering both the shredding charge and the pickup charge.

What this means for you

Document destruction is taxed as trash removal, not as an exempt service

Shredding and hauling away documents is, for New York sales-tax purposes, trash removal — an enumerated taxable service under § 1105(c)(5). Framing it as "data destruction," "records management," or "recycling" doesn't change the result. Providers should collect sales tax on these services.

The pickup/transportation charge is taxable too

A common instinct is to treat a separate hauling or pickup charge as nontaxable transportation. New York rejects that for trash removal: the transportation of the waste is part of the taxable removal service (Rochester; Cecos). Both the pickup fee and the shredding fee are taxed.

That the waste is later recycled or sold doesn't exempt the service

Whether the shredded paper is sold to recyclers or disposed of, the service to the customer is taxable trash removal. Downstream recycling doesn't convert the customer-facing removal service into something nontaxable.

Common questions

Q: Is confidential document shredding taxable in New York?
A: Yes. It is treated as trash removal, a taxable service on real property under § 1105(c)(5).

Q: Is the separate pickup or hauling charge taxable?
A: Yes. The transportation of the waste is part of the taxable trash-removal service; it is not exempt transportation (Rochester; Cecos).

Q: Does it matter that the shredded paper is recycled?
A: No. The service to the customer is taxable trash removal regardless of whether the material is later recycled or disposed of.

Citations and references

Statute and cases:

• Tax Law § 1105(c)(5) — tax on maintaining, servicing, or repairing real property, specifically including trash removal from buildings
• Rochester Gas and Electric Corp. v. State Tax Commn., 126 AD2d 238, affd 71 NY2d 931; Cecos International, Inc. v. State Tax Commn., 126 AD2d 884, affd 71 NY2d 934
• Pioneer Warehouse Corp., TSB-H-80(119)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1991.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a91_30s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-91 (30)S
Sales Tax
March 27, 1991

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S910304A

On March 4, 1991 a Petition for Advisory Opinion was received from Confidential Data
Management, Division of Empire Recycling Corporation, P.O. Box 353, Utica, New York 13503.
The issue raised by Petitioner, Confidential Data Management, Division of Empire Recycling
Corporation, is whether it must charge sales tax on charges for the pick-up and shredding of
confidential documents.
Petitioner is in the business of destroying confidential documents for a fee. It picks up
confidential documents at customer locations with its own vehicles. The documents become property
of the Petitioner once they are loaded onto the Petitioner's truck. The documents are then transported
to the Petitioner's plant where they are shredded and bailed by the Petitioner's processing equipment.
If the shredded paper is of a high enough quality, it is subsequently sold to paper recycling plants.
If the shredded paper is not suitable for recycling, it is ultimately disposed of.
Petitioner bills its customers in two parts. One charge is for the shredding of the customer's
documents. This charge is based upon the total number of pounds of paper shredded for the
customer. The second charge is a pick-up charge and is typically a "flat-fee" that is charged to the
customer.
Section 1105(c)(5) of the Tax Law imposes a sales tax upon the receipts from "Maintaining,
servicing or repairing real property, property or land. . .whether such services are performed in or
outside of a building. . . ." Such section specifically includes "trash removal from buildings" as a
service subject to tax.
The Courts have held that all aspects of trash removal are subject to tax and that it does not
matter whether or not the trash was generated as a result of an industrial process. (See: Rochester
Gas and Electric Corporation v. State Tax Commn., 126 AD 2d 238, affd 71 NY 2d 931 and Cecos
International, Inc. v. State Tax Commn., 126 AD 2d 884, affd 71 NY 2d 934)
Both Rochester and Cecos involved the taxability of the transportation costs arising from the
transportation of industrial waste products. In Rochester the taxpayer was an energy producer which
generated fly ash as a waste product of its energy production. In Cecos the company operated a
landfill and waste treatment facility for the disposal of chemical waste. Both companies used
independent haulers to transport the waste from the waste generation location to the waste disposal
location.
In these cases, the courts held that the transportation costs were not a nontaxable
transportation service but were taxable pursuant to Tax Law Section 1105(c)(5) as "trash removal
from buildings".

-2­
TSB-A-91 (30)S
Sales Tax
March 27, 1991
Furthermore, the State Tax Commission held in Pioneer Warehouse Corp., Dec St Tx Comm,
February 22, 1980, TSB-H-80(119)S that the providing of a service in which records consisting of
files belonging to attorneys, accountants, banks and brokerage houses were carted away to an
incinerator to be burned came within the definition of trash removal and thus such service was
subject to sales tax pursuant to Section 1105(c)(5) of the Tax Law.
Petitioner's services consisting of picking up confidential documents at customers' locations,
transporting them to its plant, and shredding and disposing of said documents come within the
parameters of the above cited decisions and thus such services are subject to the imposition of sales
tax pursuant to Section 1105(c)(5) of the Tax Law.

DATED: March 27, 1991

s/PAUL B. COBURN
Deputy Director
Taxpayer Services Division

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