When a city charges for garbage collection only when it supplies a dumpster, is that charge a taxable equipment rental or an exempt municipal trash-removal service?

Plain-English summary

The City of Rome supplies Dempster Dumpster units to provide garbage-collection service, on a contractual basis, to persons in the City. It charges nothing for trash removal where it does not furnish a dumpster, and it will not rent dumpsters to residents without also providing pickup. It asked whether the receipts from this "dumpster service" are subject to sales tax.

The Department held the charge is a taxable dumpster rental.

• The charge is really for the dumpster. Because the City charges only when it provides a Dempster Dumpster, the charge is a charge for the rental of the dumpster — tangible personal property. A "sale" includes a rental or lease (§ 1101(b)(5)), so the rental is taxable under § 1105(a).
• The municipal trash-removal exemption doesn't apply. Section 1116(e) exempts the service of trash removal rendered by a municipal corporation (other than a city of one million or more). But here the receipts come from renting tangible personal property, not from the trash-removal service, so § 1116(e) doesn't reach them.
• The government-vendor exemption doesn't apply either. Section 1116(a)(1) can exempt a political subdivision acting as a vendor of property "of a kind not ordinarily sold by private persons." Dumpsters are property ordinarily sold (and rented) by private persons, so that exemption is unavailable.
• Result: the City must collect sales tax on the dumpster-rental charges.

What this means for you

How you bundle a service and equipment can decide taxability. When a charge is triggered only by supplying equipment, the Department may treat the whole charge as a taxable equipment rental — even if the customer thinks of it as paying for a service like trash pickup.

Government status isn't a blanket exemption when the government acts as a vendor. A municipality selling or renting property competes with private business; the § 1116(a)(1) vendor exemption is limited to property "not ordinarily sold by private persons." Ordinary equipment like dumpsters falls outside it.

Know the precise scope of a service exemption. The § 1116(e) trash-removal exemption covers the removal service itself. Structuring the arrangement so the charge attaches to renting a dumpster moved it out of that exemption and into taxable equipment rental.

Common questions

Q: Isn't this an exempt municipal trash-removal service?
A: No. Because the City charges only when it supplies a dumpster, the charge is for renting the dumpster (tangible personal property), which is taxable under § 1105(a). The § 1116(e) trash-removal exemption covers the removal service, not equipment rental.

Q: Why doesn't the City's government status exempt it?
A: The § 1116(a)(1) vendor exemption only covers property "not ordinarily sold by private persons." Dumpsters are ordinarily sold and rented by private businesses, so the exemption doesn't apply.

Q: Would there be tax if the City charged for pickup without supplying a dumpster?
A: The opinion notes the City charges nothing for trash removal when it doesn't furnish a dumpster; the taxable event here is the dumpster rental. A pure municipal trash-removal service charge could fall under the § 1116(e) exemption — but confirm the specific facts.

Citations and references

Statutes, regulations and authority:

• Tax Law § 1105(a) — imposes sales tax on receipts from every retail sale of tangible personal property
• Tax Law § 1101(b)(5) — defines "sale" to include any rental or lease
• Tax Law § 1116(a)(1) — exempts the state and its political subdivisions, including as a vendor of property not ordinarily sold by private persons
• Tax Law § 1116(e) — exempts the service of trash removal rendered by a municipal corporation (other than a city of one million or more)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1981.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/h81_86s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-H-81(86)S
Sales Tax
April 23, 1981

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

PETITION NO. S801024A

On October 24, 1980, a Petition for Advisory Opinion was received from the
City of Rome, City Hall, Liberty Plaza, Rome, New York 13440.
The issue raised is whether or not receipts from dumpster service provided
by the City of Rome is subject to the sales tax imposed under Articles 28 and 29
of the Tax Law.
The City of Rome provides Dempster Dumpster units for use in providing
garbage collection service, on a contractual basis, to persons located in the
City. There is no charge for trash removal where the City does not furnish a
Dempster Dumpster. The City does not rent dumpsters to residents without
providing pick-up service.
Section 1105(a) of the Tax Law imposes a tax on "The receipts from every
retail sale of tangible personal property...."
Section 1101 (b)(5) of the Tax Law defines the term sale to mean "Any
transfer of title or possession or both, exchange or barter, rental, lease.. .for
a consideration...."
Section 1116(a)(1) of the Tax Law exempts from the tax imposed under
section l105(a) "The state of New York, or any of its...political subdivisions
where it is the purchaser, user or consumer or where it is a vendor of services
or property of a kind not ordinarily sold by private persons."
Section 1116(e) of the Tax Law provides as follows:
"(e)

Receipts from the service of trash removal shall be exempt from the
tax on such service imposed by this article, [under section
1105(c)(5) of the Tax Law] where such service is rendered by a
municipal corporation of the state, other than a city of one million
or more, including such service rendered on its behalf, under an
agreement with such corporation."

Since the City does not charge for the service of garbage removal, except
when it provides a Dempster Dumpster, it is clear that the charge made
constitutes a charge for rental of the dumpster. Such charges are subject to tax
under section 1l05(a) of the Tax Law.
The exemption provision contained in section 1116(e) of the Tax Law is not
applicable because the receipts in question are derived from the rental of
tangible personal property and not the service of trash removal. The exemption
provision contained in section 1116(a)(1) of the Tax Law is not applicable
because the property rented is "of a kind...ordinarily sold by private persons."

DATED: April 8,1981

TP-8 (4/80)

s/LOUIS ETLINGER
Deputy Director
Technical Services Bureau

JAMES H. TULLY, JR., COMMISSIONER
LOUIS M. JACOBSON, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR