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Indirect Tax

Tire Fees in the United States

Thomson Reuters Tax & Accounting  

Thomson Reuters Tax & Accounting  

The EPA estimates that one scrap or waste tire is generated per person per year in the United States.  Tires are very tricky to dispose of and to recycle. Stockpiling waste tires can not only pollute the environment, it can also cause safety and health problems.  However, recycling tires can be cost prohibitive.  As a result, most states impose tire recycling fees in order to support recycling efforts.

Tire fees range from twenty-five cents to five dollars per tire.  A tire fee may vary based on the size of the tire, the type of vehicle the tire is made for, or whether or not the tire is studded.  Some states leave tire fees in the hands of retailers.  Hawaii requires tire retailers to charge a fee for disposal of waste tires, but leaves the amount of the fee up to retailers.  On the other hand, Iowa gives retailers the option of charging a tire fee.  Fees set by retailers are generally encouraged to be included in the price of the tire, meaning the fee would be included in the total amount subject to sales taxes.

States that mandate and set the amount of the tire fee typically exclude the fee from sales tax liability.  However, as with everything, there are some exceptions. Florida, for example, mandates a one dollar fee per tire sold and requires the fee to be included in the total amount subject to sales and use tax. ONESOURCE Determination can capture these “tax on tax” situations by including the tire fee in the amount subject to sales and use taxes in those states.

Tire fees are available in ONESOURCE Determination in March 2016 content.

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