Ruling 92-15
Sales and Use Taxes Services to Real Property
This Ruling has been cited in Ruling 94-5
FACTS:
1. A company [hereinafter, "the Company"] contracts with owners of industrial, commercial or income-producing real property, under which contracts the Company will contain or remove hazardous waste therefrom by providing services that it refers to as facility decontamination services and groundwater and soil remediation services.
2. The facility decontamination services involve containing and removing hazardous wastes so that an industrial, commercial or income-producing facility can be demolished, sold or used for another purpose. The following tasks are generally involved:
A. Hazardous wastes are pumped, vacuumed or otherwise collected into containers and then transported away from the facility.
B. Tanks, trenches and draining are vacuumed, power washed, scrubbed and steam cleaned. The resulting rinse water is collected, analyzed and disposed of as required by law.
C. Walls, floors, ceilings and equipment are vacuumed, power washed, scrubbed and steam cleaned. The resulting rinse water is collected, analyzed and disposed of as required by law.
D. Plant equipment, storage tanks and process tanks are disposed of as required by law. Often, these items must be disposed of as hazardous waste.
3. Groundwater and soil remediation projects involve the installation on industrial, commercial or income-producing real property of the following types of systems:
A. The installation of trenches or wells to recover contaminated groundwater and bring it to a cleaning system, such as a filter or an air stripper which blows air through the water to strip contaminants from it. The cleaned water is then discharged.
B. The installation into contaminated soil of vapor or pressure probes which are hooked up to a vacuum pump system that removes contaminants by drawing air through the soil. (The Company refers to this as soil venting.) Before the vapors are discharged into the air, contaminants are removed therefrom by filtering the vapors through a carbon absorption canister.
C. The injection of microbes into the soil or water. (The Company refers to this as bioremediation.) The microbes eat the hazardous material and turn it into a non-hazardous substance.
4. In providing groundwater and soil remediation services, the Company may need to clear a site, construct access roads and install barriers or fences to secure the site.
ISSUES:
Where the rinse water that is generated by cleaning surfaces, equipment and tanks is not itself a hazardous waste, whether the cleaning services involved constitute janitorial services.
Whether sales of tangible personal property that is used or consumed in the voluntary containing or removing of hazardous wastes are subject to sales and use taxes.
Whether the construction of access roads to, and the installation of barriers and fences to secure, groundwater and soil remediation project sites are services rendered in containing or removing hazardous waste.
RULING:
Conn. Gen. Stat. §12-407(2)(i)(I) imposes sales and use taxes on services provided to industrial, commercial or income-producing real property. Excluded therefrom, however, are "any such services rendered for the voluntary containing or removing of hazardous waste ...."
The Connecticut Supreme Court has noted that:
[A] cardinal rule of statutory construction is that statutes are to be construed to give effect to the apparent intention of the lawmaking body. Farms Country Club, Inc. v. Carini, 172 Conn. 439, 444, 374 A.2d 1094; Jarvis Acres, Inc. v. Zoning Commission, 163 Conn. 41, 46, 301 A.2d 244; McAdams v. Barbieri, 143 Conn. 405, 416, 123 A.2d 182; 2A Sutherland, Statutory Construction (4th Ed.) §45.05. If the language of the statute is clear, it is assumed that the intention is expressed by the words themselves and therefore there is no need to construe the statute; Anderson v. Ludgin, 175 Conn. 545, 552, 400 A.2d 712; for where the wording is plain, courts will not speculate as to any supposed intention because the question before a court then is not what the legislature actually intended but what intention it expressed by the words that it used. Doe v. Institute of Living, Inc., 175 Conn. 49, 68, 392 A.2d 491; Lee v. Lee, 145 Conn. 355, 358, 143 A.2d 154.
Robinson v. Unemployment Security Board of Review, 181 Conn. 1, 6, 434 A.2d 293 (1980).
The wording of Conn. Gen. Stat. §12-407(2)(i)(I) is plain: services rendered for the voluntary containing or removing of hazardous waste are not services to industrial, commercial or income-producing real property.
If the term "voluntary" is construed according to the commonly approved usage of the language; Conn. Gen. Stat. §1-1(a); it means "performed, made, or given of one's own free will ... acting or done without any present legal obligation to do the thing done or any such obligation that can accrue from the existing state of affairs ...." Webster, Third New International Dictionary.
Construing the term "voluntary" according to this commonly approved usage of the language, services will be considered as rendered for the voluntary containing or removing of hazardous waste where the recipient of the services "[acts] solely on its own initiative in the containment or removal of hazardous waste. The removal or containment of hazardous waste is not 'voluntary' when performed following an order or mandate issued by a federal or state agency or ... a court order." Ruling No. 91-5. Such orders or mandates will generally be a matter of public record, but service providers must presume, in the absence of documentation to the contrary, that the containing or removing of hazardous waste is involuntary.
Were resort to the legislative history necessary, the statements made in the course of debate on the floor of the House concerning Substitute House Bill No. 5162 (which became 1984 Conn. Pub. Acts 507) indicate that the bill was intended to "offer an incentive to those companies who are not mandated but ... voluntarily remove hazardous waste materials from their property. One of the incentives would be not having to pay the sales tax." 27 H.R. Proc., Pt. 17, 1984 Sess., p. 6010.
The term "hazardous waste" is not defined in the Sales and Use Taxes Act. "[Technical words and phrases, and such as have acquired a peculiar and appropriate meaning in the law, shall be construed and understood accordingly." Conn. Gen. Stat. §1-1(a). Prior to the enactment of 1984 Conn. Pub. Acts 507, the General Assembly had defined the term "hazardous waste" and had given it a peculiar and appropriate meaning in the law. The term "hazardous waste" is defined, for purposes of Chapter 445 (Hazardous Waste) of the Connecticut General Statutes, in Conn. Gen. Stat. §22a-115(a); see Circuit-Wise, Inc. v. Commissioner of Revenue Services, 215 Conn. 292, 576 A.2d 1259 (1990); and, for purposes of sections 22a-133a to 22a133j, inclusive, sections 22a-448 to 22a-454, inclusive, and section 22a-457a, in Conn. Gen. Stat. §22a-448. Each definition includes hazardous waste that has been identified in accordance with the Resource Conservation and Recovery Act of 1976; 42 U.S.C. §6901 et seq.
In enacting [1984 Conn. Pub. Acts 507], the legislature is presumed to have acted with knowledge of existing statutes and with an intent to create one consistent body of laws. State v. Harris, 198 Conn. 158, 168, 502 A.2d 880 (1985); Warner v. Leslie-Elliott Constructors, Inc., 194 Conn. 129, 134, 479 A.2d 231 (1984).
Zachs v. Groppo, 207 Conn. 683, 696, 542 A.2d 1145 (1988).
Issue One:
Where the rinse water that that is generated by the vacuuming, power washing, scrubbing and steam cleaning of walls, floors, ceilings and equipment and that is collected, analyzed and disposed of by the Company is not a hazardous waste, the services cannot be treated as being rendered for the containing or removing of hazardous waste. Since the passage of 1989 Conn. Pub. Acts 251, §1, the Connecticut General Assembly has defined, for purposes of the Sales and Use Taxes Act, as a "sale" or "selling" the rendering of janitorial services; Conn. Gen. Stat. §12-407(2)(i)(AA). "Janitorial services mean and include the maintenance or cleaning of a building, structure or dwelling." LSN-93. "[Services to industrial, commercial or income-producing real property do not include the rendering of services defined as a "sale" or "selling" under ... subparagraph (AA) (janitorial services) ...." Conn. Agencies Regs. §12-407(2)(i)(I)-1(g)(2). Therefore, where such rinse water is not a hazardous waste, janitorial services are being rendered by the Company.
Issue Two:
While the services that are rendered for the voluntary containing or removing of hazardous waste are exempt from sales and use taxes, no provision of Conn. Gen. Stat. §12-412 exempts sales of tangible personal property that is used or consumed in performing such services, and the language of Conn. Gen. Stat. §12-407(2)(i)(I) is silent concerning such tangible personal property. Under the principles of statutory construction that govern the applicability of a tax exemption, any ambiguity in the statutory formulation of an exemption must be resolved against the taxpayer. Plastic Tooling Aids Laboratory, Inc. v. Commissioner of Revenue Services, 213 Conn.365, 369, 567 A.2d 1218 (1990). Accordingly, sales of tangible personal property that is used or consumed in performing such services are subject to sales and use taxes. Ruling No. 89-243.
Issue Three:
The services involved in the construction of access roads to groundwater and soil remediation project sites are not subject to sales and use taxes. "Services involved in the making of improvements to real property that put the property affected to a new use, such as the construction of roads .... will be considered to be rendered in the construction of new real property." Conn. Agencies Regs. §12-407(2)(i)(I)-1(c)(2). "Services to real property that are rendered in the construction of new industrial, commercial or income-producing real property are not within the purview of [Conn. Gen. Stat.] section §12-407(2)(i)(I)." Conn. Agencies Regs. §12-407(2)(i)(I)-1(c)(1).
The services involved in the clearing of, and the installation of barriers or fences to secure, the groundwater and soil remediation project sites are subject to sales and use taxes under a two-step test. First, these services are not considered to be rendered in the construction of new real property, because "services involved in the construction of improvements to real property such as ... walls, fences or gates will not be considered to be rendered in the construction of new real property, unless the construction of such improvements is directly connected with the construction of a new building ...." Conn. Agencies Regs. §12-407(2)(i)(I)-1(c)(2). No new building is being constructed with which the barriers or fences could be directly connected. Second, the services involved, namely, the clearing and grubbing of the sites and the installation of barriers or fences thereabout, do not constitute, and play no role in, the containing or removing of hazardous waste.
RULING:
Where the rinse water that is generated by cleaning surfaces, equipment and tanks is not itself a hazardous waste, the cleaning services involved constitute janitorial services.
Sales of tangible personal property that is used or consumed in the voluntary containing or removing of hazardous wastes are subject to sales and use taxes.
The services involved in the construction of access roads to groundwater and soil remediation project sites are considered to be services rendered in the construction of new industrial, commercial or income-producing real property, and are not subject to sales and use taxes. The services involved in the installation of barriers and fences to secure groundwater and soil remediation project sites are not considered to be services rendered in the construction of new industrial, commercial or income-producing real property or services rendered in containing or removing of hazardous waste, and are subject to sales and use taxes.
LEGAL DIVISION
August 5, 1992