Effective March 1, 2020, the state of New York authorizes counties and cities the option to impose a five-cent paper carryout bag reduction fee when sales tax vendors of tangible personal property provide paper carryout bags, other than exempt bags, to customers. The bag fee applies to each paper carryout bag provided to a customer, even if the vendor does not sell any tangible personal property or services to a customer, and regardless of whether the tangible personal property or service is tax exempt. Localities that will impose the paper bag fee beginning March 1, 2020, are:
The paper carryout bag reduction fee is not included in any amount that is subject to sales tax and it must be collected in addition to any sales tax due on the transaction. Sellers should note that receipts must separately state the bag fee and include the number of bags provided. Sellers must report and remit the bag fee on Schedule E, Paper Carryout Bag Reduction Fee, which is filed as part of their sales tax return. Note that the bag fee is not included when calculating the vendor collection credit.
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 tax.
Effective March 1, 2020. New York also bans businesses from providing plastic carryout bags to customers, unless such bags are exempt. Exempt bags are bags that are:
The paper carryout bag fee does not apply to:
Other entities that may be exempt from sales tax, such as religious or charitable organizations, are subject to the paper carryout bag fee. For additional information and resources, visit New York’s Paper Carryout Bag Reduction Fee webpage. (Paper Carryout Bag Reduction Fee, New York Department of Taxation and Finance, February 2020; Publication 718-B, New York Department of Taxation and Finance, February 2020)