Are environmental testing and reporting services on a landfill's own ground taxable in New York?

Plain-English summary

Monroe Livingston Sanitary Land-Fill, Inc. operates a landfill and hires outside vendors to analyze and report the component levels of motor oil, groundwater, leachate, condensate, and methane gas in ground samples. The printed reports go only to the landfill. It asked whether it must pay sales tax on these testing/reporting charges.

The Department's answer has two parts:

• Not a taxable information service. The vendors do collect, compile, and analyze information and furnish reports — an information service under § 1105(c)(1). But the § 1105(c)(1) exclusion applies: the information is personal or individual in nature (it concerns only the contents within the landfill's own ground) and it is not substantially incorporated in reports furnished to others (the reports go only to the landfill). So the charges are not taxable as an information service.
• But potentially taxable as servicing real property. Under § 1105(c)(5) (maintaining, servicing, or repairing real property), and following George Industries, TSB-A-90(16)S (air monitoring for asbestos: not a taxable information service, but taxable under § 1105(c)(5) as servicing real property when not tied to a capital improvement), the charges for analyzing the ground and issuing reports are subject to sales and use tax as maintaining/servicing real property — provided the work is not rendered in connection with a capital improvement.

What this means for you

Failing the information-service tax doesn't mean tax-free

An analysis-and-report service that escapes the § 1105(c)(1) information-services tax (because the information is personal/individual and not shared with others) can still be taxable under a different provision. Here the same testing was caught by § 1105(c)(5) as a real-property service.

Testing tied to the physical property is a real-property service

Analyzing the ground, soil, air, or structure of a site — as distinct from selling reusable information — is treated as maintaining/servicing real property and is taxable under § 1105(c)(5), unless it's performed as part of a capital improvement.

The capital-improvement link is the key exception

If the testing is rendered in connection with a capital improvement, the § 1105(c)(5) tax doesn't apply. Standalone monitoring/testing of an existing site, not tied to a capital improvement, is taxable.

Common questions

Q: Is environmental testing of a landfill's own ground a taxable information service?
A: No. Because the information is personal/individual (only about the operator's own ground) and reported only to the operator, it's excluded from the § 1105(c)(1) information-services tax.

Q: So the charges are tax-free?
A: Not necessarily. The testing can be taxable under § 1105(c)(5) as maintaining/servicing real property, unless it's done in connection with a capital improvement.

Q: What case did the Department rely on?
A: George Industries, TSB-A-90(16)S, where asbestos air-monitoring reports weren't a taxable information service but were taxable as servicing real property when not tied to a capital improvement.

Q: When would the testing NOT be taxable at all?
A: When it's rendered in connection with a capital improvement, taking it out of § 1105(c)(5).

Citations and references

Statutes, regulations, and authorities:

• Tax Law § 1105(c)(1) (tax on information services; exclusion for information personal or individual in nature not substantially incorporated in reports furnished to others)
• Tax Law § 1105(c)(5) (tax on maintaining, servicing, or repairing real property, as distinguished from a capital improvement)
• Tax Law § 1101(b)(9) (definition of capital improvement)
• George Industries, Inc., TSB-A-90(16)S (asbestos air-monitoring reports not a taxable information service, but taxable as servicing real property when not tied to a capital improvement)

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_64s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-91 (64)S
Sales Tax
September 20, 1991

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S910624C

On June 24, 1991, a Petition for Advisory Opinion was received from Monroe Livingston
Sanitary Land-Fill, Inc., 1241 South Road, Scottsville, New York 14546.
The issue raised by Petitioner, Monroe Livingston Sanitary Land-Fill, Inc., is whether
Petitioner is required to pay sales tax on charges incurred by it for testing services and subsequent
reports reflecting the results of such testing.
Petitioner operates a landfill. It engages the services of outside vendors to analyze and report
the component levels of motor oil, groundwater, leachate, condensate and methane gas in ground
samples. Printed reports are provided to Petitioner only.
Section 1105(c) of the Tax Law imposes sales tax on the receipts from every sale, except for
resale, of the following services:
"(1) The furnishing of information by printed, mimeographed or multigraphed
matter or by duplicating written or printed matter in any other manner, including the
services of collecting, compiling or analyzing information of any kind or nature and
furnishing reports thereof to other persons, but excluding the furnishing of
information which is personal or individual in nature and which is not or may not be
substantially incorporated in reports furnished to other persons. . . .
Petitioner engages outside vendors to collect, compile and analyze information concerning
the component levels of motor oil, groundwater, leachate, condensate and methane gas in Petitioner's
landfill and to furnish Petitioner with reports thereof. Therefore, the outside vendors provide an
information service. However, since the information provided on the reports only pertains to the
contents within the ground in Petitioner's landfill, such information is considered to meet the
requirement of being personal or individual in nature. Moreover, as the reports are only furnished
to Petitioner, the requirement that the information is not or may not be substantially incorporated in
reports furnished to other persons is also met.
Accordingly, the charges to Petitioner for analyzing the component levels of motor oil,
groundwater, leachate, condensate, and methane gas and the furnishing of reports thereof are not
subject to New York State and local sales or use tax pursuant to Section 1105(c)(l) of the Tax Law
as such charges are for the sale of information which falls within the exclusion from tax provided
under said section.

-2­
TSB-A-91 (64)S
Sales Tax
September 20, 1991

However, the charges for the service of analyzing the ground for certain component levels
of pollutants and the issuing of reports of the findings may under some circumstances be subject to
sales tax pursuant to Section 1105(c)(5) of the Tax Law.
Section 1105(c)(5) imposes a sales tax upon receipts from the services of "[m]aintaining,
servicing or repairing real property. . .as distinguished from adding to or improving such real
property, property or land, by a capital improvement as such term capital improvement is defined
in paragraph nine of subdivision (b) of section eleven hundred one. . . ."
In George Industries, Inc., Adv Op Comm T&F, April 16, 1990, TSB-A-90(16)S the
Commissioner of Taxation and Finance advised that while the charge for the service of monitoring
air for asbestos content and the issuing of reports was not subject to sales tax pursuant to Section
1105(c)(l) of the Tax Law since the information furnished was considered personal and individual
in nature and not substantially incorporated in reports furnished to other persons, such charge was
subject to sales tax under Section 1105(c)(5) of the Tax Law as a charge for the service of
maintaining, servicing or repairing real property where such service was not performed in connection
with a capital improvement.
Accordingly, pursuant to Section 1105(c)(5) of the Tax Law and George Industries, Inc.,
supra, the charges to Petitioner by outside vendors for the services of analyzing the ground for
certain component levels of pollutants and the issuing of reports in connection therewith are subject
to sales and use tax as charges for maintaining and servicing of real property provided that such
charges are not rendered in connection with a capital improvement.

DATED: September 20, 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.