Jurisdictions all across the country have instituted disposable carryout bag fees and bans. San Francisco passed its ban on single-use bags back in 2007, and greatly expanded the ordinance in 2012 to include all retail stores. The District of Columbia has a bag fee that dates back to January 1, 2010, entitled the “Anacostia River Clean Up and Protection Act.” In just the past few months, a number of cities have imposed new bag fees that became effective, including:
| Mammoth Lakes, CA | (March 1st) |
| Yountville, CA | (March 31st) |
| Hermosa Beach, CA | (April 1st) |
| Cambridge, MA | (March 31st) |
| South Portland, ME | (March 1st) |
| Falmouth, ME | (April 1st) |
| Kirkland, WA | (March 1st) |
There are many variations of these bans and fees. Some of the more recent iterations of such laws include the following:
Cambridge, Massachusetts Bag Fees and Ban
Effective March 31, 2016, Cambridge, Massachusetts has banned the use of traditional plastic shopping bags and now requires retailers to charge a fee of $0.10 per bag for paper and compostable plastic bags distributed at the point of sale. This fee is also subject to sales and use tax. For more information see Cambridge Ordinance Number 1366, the “Bring Your Own Bag” ordinance. One of the interesting aspects of this bag fee is that it applies to restaurants. While there are several other fees in jurisdictions that also apply to restaurants (including, for example, San Francisco, CA and the District of Columbia), it is far more common to exclude restaurants from the fee requirements. Because of this, Massachusetts published TIR 16-5, which discusses how state sales and meals taxes apply to this fee. Per TIR 16-5, “when checkout bags are sold by a retail establishment to customers under the Ordinance, they are subject to state sales tax, including the sales tax on meals.” The guidance allows restaurants to either separate the fees collected for the bags and include those fee on a separate sales tax return, or include the fees on their meals tax return. In the former situation, the restaurant does not need to collect meals tax; in the latter they must collect meals tax.
New York City, New York’s New Bag Fee
After trying for a number of years, New York City just recently passed a bag fee that becomes effective October 1, 2016. This is one of the biggest jurisdictions to impose such a fee. The law requires retailers to charge at least $0.05 on all carryout bags, and these fees are retained by the stores. Unlike in Cambridge, this fee does not apply to restaurants or food service establishments located outside of grocery stores. However, the fee is not imposed on bags used to carry items purchased by a person using the supplemental nutrition assistance program. Also included in the law is a “Bag Fee Holiday” of sorts. Stores do not need to charge the fee on reusable carryout bags annually from April 17 to April 30. For more information see Int. No. 209-A, “Plastic Bag Bill – Reducing the use of carryout bags.” As jurisdictions impose these types of fees that affect sales and use tax, Sovos stays on top of the issue and adjusts our solutions accordingly so you can remain compliant. To learn more about how to improve your sales tax determination and filing accuracy, contact us today.
