Paper carryout bag reduction fee
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Beginning March 1, 2020, the New York State Bag Waste Reduction Act authorizes counties and cities to impose a five-cent paper carryout bag reduction fee on paper carryout bags that certain sales tax vendors provide to customers. It also bans businesses from providing plastic carryout bags to customers, unless such bags are exempt bags.
Only sales tax vendors that sell tangible personal property in a locality where the fee is imposed must collect the fee when they provide a paper carryout bag to a customer. For a listing of the localities that enacted the fee, visit Publication 718-B, Paper Carryout Bag Reduction Fee.
The five-cent fee applies to each paper carryout bag provided to a customer by a sales tax vendor of tangible personal property, even if the vendor does not sell any tangible personal property or a service to the customer, and regardless of whether the tangible personal property or service sold is exempt from sales tax. Certain bags and certain customers are exempt from the fee (as discussed below).
- used solely to contain or wrap uncooked, fish, or poultry;
- used by a customer solely to package bulk items such as fruits, vegetables, grains, or candy;
- used solely to contain food sliced or prepared to order;
- used solely to contain a newspaper for delivery to a subscriber;
- sold in bulk to a consumer at the point of sale;
- a trash bag;
- a food storage bag;
- a garment bag;
- prepackaged for sale to a customer;
- a plastic carryout bag provided by a restaurant, tavern, or similar food service establishment, as defined in the state sanitary code, to carry out or deliver food; or
- provided by a pharmacy to carry prescription drugs.
For a complete and current list of exempt bags, see DEC’s Bag Waste Reduction Law: Information for Manufacturers and Retailers.
Publication 718-B, Paper Carryout Bag Reduction Fee, lists those localities that have enacted the five-cent paper carryout bag reduction fee.
The paper carryout bag reduction fee:
- is not included in any amount that is subject to sales tax; and
- must be collected in addition to any sales tax due on the transaction.
The receipt must separately state the bag fee and include the number of bags provided.
Sales tax vendors must report and remit the fee on Schedule E, Paper Carryout Bag Reduction Fee, which is filed as part of their periodic sales tax return.
The paper carryout bag reduction fee is not included when calculating the vendor collection credit.
Important: Any vendor who charges a customer for a paper carryout bag in a jurisdiction that does not impose a fee (or charges in excess of a locally imposed fee) is selling tangible personal property subject to sales tax.
The five-cent paper carryout bag reduction fee does not apply to:
- customers purchasing items using the Supplemental Nutrition Assistance Program (SNAP) (whether used as full or partial payment for items purchased);
- customers purchasing items using the Women, Infants, and Children (WIC) Program (whether used as full or partial payment for the items purchased);
- the State of New York and its agencies and instrumentalities;
- the United States of America and its agencies and instrumentalities; or
- the United Nations.
Other entities (such as religious or charitable organizations) that may be exempt from the payment of sales tax are subject to the five-cent paper carryout bag reduction fee.