Sales, Use and International Tax Activity Update - April 2009

States “Mobilize” to Combat Common Automobile Waste

Going “Green” is starting to catch on in many jurisdictions both within and outside the United States. Targeting our mobile society, environmental agencies in many states have focused on items that generate significant disposal costs. Tires and lead acid batteries are prime examples of products that have caught the attention of environmentalists. Fees have been imposed at the retail sale level to pay for the proper disposal or recycling of lead acid batteries and tires. Below is a high-level overview of tire and battery fees.

Tires

Twenty four states, Puerto Rico, and 8 Canadian Provinces have enacted laws to impose a recycling fee on new tires sold. Fees generally apply to pneumatic tires and are imposed at the retail level. In some jurisdictions the fees apply to new replacement tires only but in other jurisdictions it also applies on the sale of new automobiles, trucks or equipment that have pneumatic tires.

There are some exemptions to the fees in certain jurisdictions. Common exemptions are tires for mobile enhancing equipment such as wheelchairs, recapped tires, farm tractors and implements, and bicycle tires.

Tire recycling fees in the United States typically have a range of $ 0.25 to $10.00 per tire and size of the tire usually does not have a bearing on the amount of the fee. In Canada the fee range is $3.00 to $75.00 per tire and is usually assessed based on the size of the tire.

Batteries

Only 12 states and two Canadian Provinces have imposed lead acid battery recycling fees. In most jurisdictions the fee will not apply if a lead acid battery is traded in on a new replacement battery. In addition the purchaser may be granted 30 days to turn in an old battery and recoup the fee paid to the retailer. Battery fees typically have a fee range of $1.00 to $5.00 and the amount of the fee may be based on voltage. The retailer in some jurisdictions may retain the fee if there is not a trade in. Obviously the concern by the environmental agencies is the proper disposal of the batteries.

The fees are generally reported and paid to the appropriate Department of Revenues but the laws and rules are promulgated by the jurisdictional Department of Environmental Protection.

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