FAQ's Regarding the Carpet Stewardship Program
What is AB 2398?
California AB 2398 is Carpet Stewardship legislation, signed by the governor of California, on September 30, 2010. The purpose of the legislation is to increase the diversion and recycling of carpet in the state of California.
What are the specific goals of the Carpet Stewardship program?
The goals of the program are to increase:
- Recyclability of carpets (the ability of a carpet to be recycled)
- Market growth of secondary products made from postconsumer carpet
- Reuse of postconsumer carpet
- Recycling postconsumer carpet
- Diverting postconsumer carpets from landfills
Dealer and Retailer Information
The bill would require a manufacturer of carpet to add a Carpet Stewardship Assessment of $0.05 per square yard upon the purchase price of all carpet sold and/or distributed in the state by that manufacturer — how will this be collected and disbursed?
The $0.05 per square yard will be collected as a non–taxed item on the invoice throughout the sales and distribution chain, including from the retailer/dealer to end user.
Will the Carpet Stewardship Assessment of $0.05persquare yard cover ALL of the costs to recycle carpet in the State of California?
No, the Carpet Stewardship Assessment will NOT cover the costs of carpet recycling. The Carpet Stewardship Assessment is an incentive to be used by the members of the carpet recycling industry. The incentive may be used by the recyclers to invest in new, innovative technologies, new product development or market introductions that will further the achievement of the goals set out in AB 2398.
Who will pay for carpet recycling in California?
As with any market based activity, the retailer must pass on the costs to consumers. Carpet recycling is a business that has been in California for more than ten years and has been managed in a market–based fashion.
What products are included in AB 2398?
AB 2398 includes all carpet sold into California, Broadloom and Carpet Tile, Commercial and Residential. AB 2398 does NOT include Rugs, Underlayment, Carpet Cushion, or Synthetic Turf
How is ‘carpet’ defined in AB 2398?
AB 2398 defines carpet as:
- “Carpet” means a manufactured article that is used in commercial or residential buildings affixed or placed on the floor or building walking surface as a decorative or functional building interior feature and that is primarily constructed of a top visible surface of synthetic face fibers or yarns or tufts attached to a backing system derived from synthetic or natural materials.
- “Carpet” includes, but is not limited to, a commercial or a residential broadloom carpet or modular carpet tiles.
- “Carpet” does not include a rug, pad, cushion, or underlayment used in conjunction with, or separately from, a carpet.
How do I show the Carpet Stewardship Assessment on the customer invoice?
The CA Carpet Stewardship Assessment of $0.05 per square yard shall appear as an after–tax line item on the customer invoice In order to have consistent communications across the state, we are recommending that retailers use the term “CA Crpt Stewardship Assessment” as the language on the customer invoice. Here is an example of how the assessment should be included on the invoice. For more information on Customer Invoicing, please go to the CARE web site, www.carpetrecovery.org, and click on the AB 2398 web page.
I am an installer. Do I collect this tax when I install the carpet?
It appears that there are two parts to this question. First of all, the installer does not collect the assessment. The assessment will be collected by the retailer at the time of the purchase of the carpet by the consumer.
The second part of this question appears to deal with the issue of sales tax. Please note that the assessment is not a tax, nor is it taxable. See section 42972 (c) (3).
(3) The assessment established pursuant to this subdivision and Section 42972.5 is exempt from the taxes imposed by Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code and shall meet both of the following requirements:
(A) The assessment shall be added by a manufacturer to the purchase price of all carpet sold by manufacturers to a California retailer or wholesaler or otherwise sold for use in the state. The assessment shall be clearly visible on invoices or functionally equivalent billing documents as a separate line item and shall be accompanied by a brief description of the assessment or a label approved by the department.
(B) Each retailer and wholesaler shall add the assessment to the purchase price of all carpet sold in the state. The assessment shall be clearly visible on invoices or functionally equivalent billing documents as a separate line item and shall be accompanied by a brief description of the assessment or a label approved by the department.
What if I sell carpet to a customer who is out of state of California? Do I add the Carpet Stewardship Assessment to out of state sales?
AB 2398 covers only carpet sold into the state of California. If you sell carpet to someone whose ship to address is out of the state of California or out of the United States, for example, the sale shall not include the California Carpet Stewardship Assessment. There is an exemption form that you will need to complete to document that the sale is outside of the state of the California. For a copy of the exemption form, please go to the AB 2398 web page on the CARE web site.
What kinds of records do I need to keep in order to be in compliance with AB 2398 and how long do I need to retain these records?
Retailers must retain the following records for sales of carpet into California, for a period of three years:
- Manufacturer of the Carpet
- Date(s) the Retailer Ordered or Purchased the carpet from the Manufacturer
- Date(s) the Retailer Sold or Offered the carpet for promotional purposes
- Retailer Invoice(s) or functionally equivalent billing documents showing California Carpet Stewardship Assessment
- Certification Letter(s) from the department if provided by a manufacturer to demonstrate that carpet from the manufacturer is or was subject to a department–approved stewardship plan
Who will educate the consumer about this program?
The carpet manufacturers and CARE will provide information to the dealers and retailers to help educate the consumers about the Carpet Stewardship Assessment. In addition, consumer information will be available on the websites of the carpet manufacturers, CARE and CalRecycle. These educational materials will be available prior to the retailers prior to June 1, 2011.
What happens if a business (i.e. manufacturer, distributor, wholesaler, dealer, retailer etc) does not comply with AB 2398?
A civil penalty up to the following amounts may be administratively imposed by the department (the California Department of Resources, Recycling and Recovery (CalRecycle)) on any person who is in violation of any provision of AB 2398:
(1) One thousand dollars ($1,000) per day.
(2) Ten thousand dollars ($10,000) per day if the violation is intentional, knowing, or negligent.
The department or the court will assess or review the amount of a civil penalty imposed.
How do wholesalers, retailers and other interested parties ensure that carpet manufacturers are in compliance with AB 2398?
CalRecycle shall post a notice in its Internet Web Site listing manufacturers that are in compliance with AB 2398. The wholesaler and retailer that distributes or sells carpet shall monitor the Internet Web Site.
What do I do if my carpet manufacturer is not listed on the CalRecycle Web Site?
Please contact CalRecycle or CARE if you do not see your carpet manufacturer on the list.
California Stewardship Funding Mechanism
How will the funding from the Stewardship Assessment be used?
The funding from the Stewardship Assessment will be used to meet the goals of AB 2398, specifically to increase:
- Recyclability of carpets, (the ability of a carpet to be recycled)
- Market growth of secondary products made from postconsumer carpet
- Reuse of postconsumer carpet
- Recycling postconsumer carpet
- Diverting postconsumer carpets from landfills
How much money will be generated from the Carpet Stewardship Assessment?
Based on an estimate of approximately 100 Million square yards of carpet sold into California, it is expected that about $5 Million will be collected from the Carpet Stewardship Assessment annually.
How will the funding be distributed?
In order to have a viable, sustainable and cost–effective program that meets the goals of AB 2398, the Carpet Stewardship Organization (CARE) will be distributing the funds to the first–level processor. The first–level processor is the organization that either shreds or shears the carpet, harvesting the fiber and other valuable components, and selling that material to the next stage in the process. It is the expectation that this will result in a push–pull strategy, whereby the first–level processor will negotiate both upstream with the haulers and collectors, and downstream with the final manufacturer to negotiate favorable pricing to stimulate the marketplace and achieve continuous meaningful improvement in the rates of recycling and diversion and other specified goals in order to be in compliance.
Other Important Information for the Retailer and Dealer
How many jobs will be added because of this legislation?
We cannot predict how many jobs will be added, however, we expect growth in carpet recycling as a result of the legislation. And, as part of the program, CARE will be providing an Annual Report to the state that will include the number of jobs in California involved in recycling.
When will the Carpet Stewardship Assessment begin?
July 1, 2011
Where can I get a copy of AB 2398?
Click on the following link for a copy of AB 2398
Who will manage this program for the State of California?
The program will be managed by the California Department of Resources, Recycling and Recovery (CalRecycle). The carpet industry will submit a stewardship plan to CalRecycle either individually, or through the Carpet America Recovery Effort (CARE).
Where can I get more information or answers to other questions I may have?
Please contact your carpet manufacturer or distributor, or you may find additional information on www.carpetrecovery.org, or go to www.calrecycle.ca.gov
How does a retailer find a carpet recycler in California?
Please go to www.carpetrecovery.org and click on the US map on the homepage. From there, you can go to the map of California and find detailed information on carpet recyclers for the state.
I am a consumer. How do I recycle my carpet in California?
For more than ten years, carpet recyclers have been at work in California, diverting millions of pounds of discarded carpet from landfills and recycling it into useful new products. For more information on how to recycle your carpet, contact your local carpet retailer.
