Recycling/salvage collection

What are recyclable or salvaged materials?
Materials that are economically viable for further use and that are not delivered to a landfill or other disposal site as solid waste.

Are charges for collecting recyclable/salvaged goods subject to the solid waste collection tax?
No. Charges for the collection of recyclable materials are not subject to the solid waste collection tax.

How are recycling/salvage businesses taxed?
The following taxes apply:

Service & other activities B&O tax is due on:

• Income from picking up/collecting recyclable or salvageable materials for recycling at the recycler’s own facility.
• “Tip” fees for accepting economically viable (recyclable) waste (e.g., yard waste) from private individuals, businesses, landscapers, municipalities, or commercial solid waste companies.

Motor Transportation or Urban Transportation public utility tax (PUT) is due on:

• Income received from picking up/collecting recyclable or salvaged materials and hauling the materials to a third-party recycling facility. In this situation, the hauler can only be responsible for loading, unloading, and transporting another’s materials to a third-party recycling facility (i.e., the hauler does not sort or otherwise handle recyclable/salvaged materials).

For information on determining whether motor transportation or urban transportation PUT applies, please see the “Motor Transportation or Urban Transportation” section of our Trucking Guide.

“Tip” fees separately billed to customers are still subject to service and other activities B&O tax as discussed above.

Manufacturing B&O tax is due on:
Processing recyclable materials into other usable products. The tax is based on the “value of products” manufactured and applies to products manufactured from recycled materials, whether they are processed for sale or for the manufacturer’s own use.

• The ”value of product” is based on the selling price of the goods (if sold) or the retail selling price of products of similar quality, quantity, and character (if not sold).
• Businesses manufacturing recycled/salvaged materials into new, usable products may also qualify for the Manufacturer’s Machinery and Equipment (M&E) Sales & Use Tax exemption.
• When reporting a manufacturing and a selling activity for the same product, you can take a Multiple Activities B&O Tax Credit so that B&O tax is only paid once.

Wholesaling B&O tax is due on:
Income from sales of recycled/salvaged materials or products manufactured from such materials when the buyer provides a reseller permit to the seller.

Retailing B&O tax is due on:
Income from sales to consumers of recycled/salvaged materials or new products manufactured from such materials. Retail sales tax is also due unless the sale is exempt.

Use tax is due on:
Articles that are manufactured by the recycling/salvage company for its own use, based on the “value of the product” as measured by the retail selling price for items of similar quality, quantity, and character.

Are separately itemized charges for hauling by a recycling/salvage business taxed differently?
No. Separately itemized charges for hauling or “trucking” are considered part of the overall recycling/salvage service provided and are taxed in the same manner as charges for recycling/salvage services as discussed above in Question 3.

On what charges do recycling/salvage businesses collect retail sales tax from customers?
Sales to consumers of recycled/salvage materials or new products manufactured from such materials. (The income is also subject to retailing B&O tax, as noted above.)

Do recycling/salvage businesses pay sales tax themselves?
Yes. All tangible personal property purchased and used in conducting business (not sold or rented to customers) is subject to retail sales tax at the time of purchase.

How are compost facilities that receive yard waste, process it, and sell compost taxable?
Compost facilities are taxed in the same manner as described in this section. For more information, see our Special Notice on Composting Facilities.

Are purchases of vehicles, tractors, and trailers subject to sales tax?
Yes. Vehicles, tractors, trailers, as well as component, repair and replacement parts for such property are subject to sales tax when used in Washington. If sales tax was not paid on the property at the time of purchase, use tax applies to the value of the tractor, trailer, parts, etc.

However, if a transfer business hauls materials (that they did not collect from private or commercial consumers) “for hire” in interstate or foreign commerce (across state lines), it may qualify for a sales and use tax exemption on purchases of: To qualify, the business must:

• Motor vehicles and trailers.
• Purchases of component parts for motor vehicles and trailers.
• Leases of motor vehicles and trailers without an operator.
• Labor and services used in “construction, cleaning, repairing, altering or improving” of qualifying vehicles and trailers or component parts.

To qualify, the business must:

• Be a motor carrier (MC) permit holder.
• Meet the minimum threshold for “substantial use” (at least 25%) in interstate or foreign commerce.