Is a trucking company's fee for hauling recyclable raw material from a supplier's site to a recycler's facility taxable as trash/garbage removal (a real-property maintenance service), or exempt as transportation?

Subject

Is whether Petitioner's receipts for the transporting of recyclable raw material are subject to State and local sales and use taxes under Section 1105(c)(5) of the Tax Law as services for maintaining real property.

What this means for you

Singer Transport, Inc. is a DOT/ICC-regulated common carrier trucking company. It picks up recyclable byproduct material at a supplier's facility and delivers it to a recycler's facility, under one of two arrangements: hired directly by the recycler (who buys the byproduct from the supplier), or hired by a broker who sources the material for the recycler. Either way, the supplier that generates the byproduct is never charged anything for its removal -- the recycler (or broker) pays for the material itself, and separately pays Petitioner directly for the haul.

New York taxes services that "maintain, service, or repair real property," which by regulation expressly includes trash and garbage removal -- even when a carting firm picks up trash at a customer's premises and dumps it elsewhere (Reg. § 527.7(b)(2), Example 3). But New York's regulations also carve out an exemption: a charge for transporting or delivering property by a delivery/transportation company to the person requesting the transport isn't itself a taxable service (Reg. § 526.5(g)(3)). The key distinction the Department drew: because the supplier -- whose property the trucks pick up from -- is never charged a removal fee, and Petitioner is instead hired and paid by the recycler or broker purely to move already-purchased material to a destination they designate, this is genuine transportation service, not trash/garbage removal. Citing its own earlier ruling on a similar building-materials trucking firm (C.K. Industries Corp., TSB-A-88(14)S), the Department held Petitioner's hauling charges are exempt.

Q&A

Q: We haul waste or recyclable material and charge the property owner (where we pick it up) directly for removing it -- does this ruling cover us?
A: No -- this opinion turns specifically on the supplier/property owner NOT being charged a removal fee. If you invoice the site owner directly for taking material away, that's the taxable trash/garbage-removal pattern the regulations describe (Reg. § 527.7(b)(2)), not exempt transportation.

Q: Does it matter whether we're hired by the recycler directly or by a broker acting on the recycler's behalf?
A: No -- the Department treated both scenarios the same, since in either case Petitioner is paid by the recycler or broker (who has no ownership/possessory interest in the supplier's property) purely to transport material already purchased from the supplier.

Q: What's the general rule distinguishing exempt trucking from taxable "maintaining real property" services?
A: Under Reg. § 526.5(g)(3), a charge for transporting/delivering property to whoever requested the transport isn't itself taxable. But removal services billed to the person whose property is being cleared -- like ordinary trash and garbage removal under Reg. § 527.7 -- are taxable real-property-maintenance services.

Citations

• Tax Law § 1105(c)(5) -- taxes services maintaining, servicing, or repairing real property (as distinguished from capital improvements).
• 20 NYCRR § 526.5(g)(3) -- a transportation/delivery company's charge to the person requesting the transport is not a taxable receipt.
• 20 NYCRR § 527.7 -- defines "maintaining, servicing and repairing" real property, expressly including trash/garbage removal as taxable (Example 3).
• C.K. Industries Corp., Adv Op Comm T&F, February 8, 1988, TSB-A-88(14)S -- a trucking firm's hauling for building contractors/supply yards was exempt transportation, not a taxable service.

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1994.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a94_54s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-94 (54)S
Sales Tax
December 23, 1994

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S940705C

On July 5, 1994, a Petition for Advisory Opinion was received from Singer Transport, Inc.,
2470 Allen Avenue, Niagara Falls, New York 14303.
The issue raised by Petitioner, Singer Transport, Inc., is whether Petitioner's receipts for the
transporting of recyclable raw material are subject to State and local sales and use taxes under
Section 1105(c)(5) of the Tax Law as services for maintaining real property.
Petitioner is a common carrier trucking company. Petitioner is subject to regulation by the
New York State Department of Transportation (the "DOT") and the Federal Interstate Commerce
Commission (the "ICC"). The DOT and ICC both regulate and approve Petitioner's rates for its
services, i.e., Petitioner's tariffs. Different tariffs are established for transportation of different
products. Petitioner's tariff schedules, and the actual selection of tariffs used to charge specific
customers, have been audited by the DOT and the ICC. The DOT and the ICC view the appropriate
tariff for the services Petitioner provides as the "general commodities" tariff. Petitioner does not
have a "waste" tariff.
Petitioner's services at issue arise under one of two scenarios. In the first scenario, Petitioner
is retained by an entity engaged in the business of recycling tangible personal property (hereinafter
the "Recycler"). The Recycler uses a byproduct generated by a separate entity (hereinafter the
"Supplier") as its raw material. The Recycler purchases this raw material directly from the third
party Supplier, i.e. the Recycler pays the Supplier for the by-product. The Recylcer recycles the raw
materials it has purchased from the Supplier into a product which the Recycler then sells at retail.
At no time does the Recycler charge the Supplier a fee of any kind or provide to the supplier a
service of any kind.
Petitioner is retained by and invoices the Recycler directly for the transportation services
provided. Petitioner picks up the Recycler's raw materials at a location designated by the Recycler
(typically the Supplier's facility) and delivers the same raw materials to a different location also
designated by the Recycler (typically the Recycler's facility). The pick-up points and delivery points
are both in New York State.
Neither the Recycler nor the Supplier are related to Petitioner in any way. The Recycler has
no ownership or possessory interest in the Supplier's real property from which Petitioner picks up
the raw materials for transport.
Under the second scenario, Petitioner is retained by a third party broker (hereinafter the
"Broker"). The Broker is in the business of locating, on behalf of Recycler, sources of supply of
recyclable raw materials. The Broker either purchases the by-products directly from the Supplier on

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December 23, 1994
speculation that it can sell them at a profit to a Recycler, or acts as a middleman between the
Recycler and the Supplier, receiving a commission from the Recycler based on the purchase price
paid by the Recycler to the Supplier.
In all transactions involving a Broker, the underlying relationship between the Recycler and
the Supplier remains the same. The Recycler is purchasing for value, the recyclable materials from
the Supplier directly or though the Broker. The Recycler charges no fee whatsoever to the supplier
nor does the Broker charge the Supplier any fee.
The only difference from Petitioner's perspective between the first scenario and the second
scenario is that Petitioner in the second scenario is retained directly by the Broker, rather than by the
Recycler, to pick up the raw materials from the Supplier's facility and transport them to the
Recycler's facility. Petitioner invoices the Broker directly and the Broker tells the Petitioner where
to pick up and deliver the raw materials.
Neither the Broker, the Recycler nor the Supplier are related to Petitioner in any way, neither
does the Broker nor the Recycler have an ownership or possessory interest in the Supplier's real
property from which Petitioner picks up the raw materials for transport.
Section 1105 of the Tax Law provides, in part, as follows:
Sec. 1105. Imposition of sales tax.--... there is hereby imposed and there shall
be paid a tax ... upon:
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(c) The receipts from every sale, except for resale, of the following services:
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(5) Maintaining, servicing or repairing real property, property or land, as such
terms are defined in the real property tax law, whether the services are performed in
or outside of a building, 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 of this chapter, but excluding services rendered by an individual who
is not in a regular trade or business offering his services to the public.
Section 526.5(g) of the Sales and Use Tax Regulations provides, in pertinent part, as follows:
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(3) A charge for transporting or delivering property by a transportation or
delivery company to the person or business requesting that the property be
transported or delivered is not a receipt subject to tax, since transportation

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and delivery are not themselves services subject to tax.
Section 527.7 of the Sales and Use Tax Regulations provides, in part, as follows:
Reg. Sec. 527.7. Maintaining, servicing or repairing real property.--(Tax Law,
§ 1105(c)(5)). (a) Definitions. (1) Maintaining, servicing, and repairing are terms
which are used to cover all activities that relate to keeping real property in a
condition of fitness, efficiency, readiness or safety or restoring it to such condition.
Among the services included are services on a building itself such painting; services
to the grounds, such as lawn services, tree removal and spraying; trash and garbage
removal and sewerage service and snow removal.
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(b) Imposition.

(2) All services of trash or garbage removal are taxable, whether from inside
or outside of a building or vacant land.
Example 3. A carting firm picks up trash and garbage at its customer's,
premises and dumps the materials at sites away from its customer's, premises.
Receipts from the sale of this service are taxable. (Emphasis added)
In C. K. Industries Corp., Ad Op Comm T&F, February 8, 1988, TSB-A-88(14)S the
Commissioner opined that services rendered by a trucking firm which transported materials for
building contractors, building supply yards, etc. were not subject to sales tax since the services
rendered by the trucking firm represented exempt transportation services in accordance with Section
526.5(g) of the Sales and Use Tax Regulations.
In the instant case, Petitioner at the request of its customer, either a Recycler or a Broker,
picks up recyclable raw materials from a Supplier and delivers it to location designated by the
Recycler or the Broker. Neither the Recycler, the Broker nor the Supplier are related to Petitioner
in any way, nor does the Broker or the Recycler have an ownership or possessory interest in the
Supplier's real property from which Petitioner picks up the raw materials for transport. Petitioner
is retained by and invoices the Recycler or the Broker directly for the transportation services
provided. The Recycler or the Broker purchases the raw material directly from the Supplier and the
Supplier is not charged a fee for removal of the raw material.

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Accordingly, if Petitioner is retained and paid by the Recycler or the Broker to pick up the
raw material at the Supplier's location and deliver it to a location designated by the Recycler or
Broker, and the Supplier is not charged a fee for the removal of the raw material from its real
property, Petitioner is not providing a trash and garbage removal service under Section 1105(c)(5)
of the Tax Law and Section 527.7 of the Sales and Use Tax Regulations. Rather, Petitioner is
providing a transportation service to the Recycler and the Broker which is exempt from sales tax
pursuant to Section 526.5(g) of the Sales and Use Tax Regulations (See C. K. Industries Corp.
supra.)

DATED: December 23, 1994

s/PAUL B. COBURN
Deputy Director
Taxpayer Services Division

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