New DC PaintCare Fees Complicate U.S. Paint Stewardship Compliance

New DC PaintCare Fees Complicate U.S. Paint Stewardship Compliance

December 2, 2016, 8:00 am EDT in Blog, In the News

Effective November 1, 2016, the District of Columbia (DC) is imposing a paint recovery fee (also known as a PaintCare fee) on qualifying architectural paint products. This new PaintCare fee will make compliance slightly more difficult for paint retailers accustomed to the current size-based product fee structure.

History

PaintCare fees are nothing new in the United States. Since 2009, eight states (CA, CO, CT, ME, MN, OR, RI, VT) have enacted laws authorizing Paint Stewardship programs. As part of the Paint Stewardship programs administered by PaintCare Inc., a PaintCare fee is added to the purchase price of paint being sold. These fees are paid to PaintCare Inc. by paint manufacturers, then passed down to retailers and eventually to customers.

Unlike a bottle deposit, PaintCare fees are not refunded to the individual returning leftover paint. Rather, the fees are used to fund the stewardship program (e.g. paint collection, transportation, recycling, public outreach, and program administration, and to manage old “legacy” paint).

Current PaintCare Fee Structure

In an unusual but pleasant development from a compliance perspective, PaintCare fees are currently uniform across 7 of the 8 Paint Stewardship states (Vermont fees in parentheses below). The fees are based on a uniform container size structure as follows (spray paint is not included):

$0.00 ($0.00)Half pint or smaller
$0.35 ($0.49)Larger than half pint to smaller than 1 gallon
$0.75 ($0.99)1 gallon
$1.60 ($1.99)Larger than 1 gallon to 5 gallons

DC PaintCare Fee Structure

The DC Paintcare fee will be the second state to differ in fee price, these fees range from $0.45 to $1.95 depending on paint container size. More importantly and unlike the 8 other states with PaintCare fees, DC will have 2 unique size distinctions that none of the current PaintCare states apply (bold for emphasis):

$0.00Half pint or less
$0.45More than half pint to less than 1 gallon
$0.95More than 2 gallons up to 5 gallons
$1.95More than 2 gallons up to 5 gallons

Conclusion

Bad News: The new size distinctions will likely require retailers to adjust certain product mapping within their tax engine in order to accurately comply with this change.

Good News: Sovos is able to accurately support the imposition of all of the new PaintCare size distinctions making it easier for our clients to meet their reporting and remittance obligations.

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About Erik Wallin

Erik Wallin is a Senior Tax Counsel on the Tax Research Team at Sovos Compliance. Erik has been with Sovos Compliance since 2011, and his main areas of focus are on U.S. Transaction Tax Law which includes special expertise in the taxation of technology and the taxation mechanisms that apply throughout the Colorado home rule jurisdictions. Erik is a member of the Massachusetts Bar, has a B.A. from York College of Pennsylvania, a J.D. from New England School of Law, and an LL.M. in Taxation from Boston University.