Ezel / Tax Rulings / TX
TX 8802L0865B07 Sales and/or Use Tax (State,Local,MTA) 1988-02-22

Who collected and remitted Texas sales tax when a city bought commercial trash collection and billed its own customers?

Short answer: The city did. After receiving additional contract facts, Texas treated the city as purchasing trash collection for resale. The city gave the contractor a resale certificate and was responsible for collecting and remitting tax.

Apply this to your situation

This page answers the general question as of 1988. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1988
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This STAR document contains an inconclusive February 4, 1988 letter followed by a February 22 taxpayer-specific letter issued after the contractor supplied additional facts. This page follows the later answer. The later letter says the opinion may change if the facts differ. Garbage-service, municipal-billing, resale-certificate, collection, and remittance rules may have changed; verify current law. STAR documents may no longer represent current policy even when not marked superseded. Taxpayer-identifying details and the city name are redacted. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

The contractor provided commercial trash collection under a contract with CITY A. The city paid the contractor monthly for all services, whether or not the city collected the amount it billed its customers.

With those additional facts, the Comptroller concluded that the city bought trash-collection services for resale. The city should give the contractor a resale certificate, and the city was responsible for collecting and remitting sales tax to Texas.

An earlier February 4 letter in the same STAR document had found the original facts insufficient because it was unclear who customers contacted, who pursued unpaid bills, and what the written contract required. The February 22 answer resolved the issue after receiving more information.

What this means for you

The historical result followed the contractual and collection relationship: the city bought the service, billed customers, and remained obligated to pay the contractor even if a customer did not pay.

Common questions

Did the contractor charge the city tax? No. The city gave the contractor a resale certificate.

Who collected tax from customers? The city.

Who remitted the tax to Texas? The city.

Citations and references

The document cites no numbered statute or rule.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

February 22, 1988

Dear ***:

Thank you for the additional information regarding the contract you have
with CITY A.

As I understand from your letter, you have a contract to provide commer-
cial trash collection. The city pays you monthly for all services ren-
dered whether or not the city received payment for the amount the city
bills its customers.

CITY A is purchasing trash collection services for resale. The city
should issue you a resale certificate. The city is responsible for col-
lecting and remitting the sales tax to the state.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions or need more information, please call our toll-
free number 1-800-531-5441. The regular number is 512/463-4600. You may
write me at the Tax Policy Division.

Sincerely,
(Mrs.) Jo Ann Dieck
Tax Policy Division

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

February 4, 1988

Dear ***:

On behalf of Mr. Bullock, I hope you'll accept my apology for the delay
in
answering your question involving changes in the sales tax law. This
isn't
the way we normally do business.

Our people were, and still are, swamped by a deluge of inquiries as they
attempted to interpret provisions of the new law and draft rules which
would
not adversely impact businesses. In many instances, an answer to a
question
just wasn't available when the question arrived.

The following facts were noted from your letter requesting information on
garbage collection:

1) Your waste collection company has contracted with a city.
2) The city charges its customers the fee and the tax and collects both.
3) The city passes these fees on to your company.

Your question is "should the city report the tax?" From the information
provided, we can't tell who is responsible for tax. For example, who
does
the customer contact for service, you or the city? If the customer fails
to
pay, who attempts collection? Is there a written contract between you
and
the city?

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions or need more information, please call me at
1-800-252-5555 toll free from anywhere in Texas. The regular number is
512/463-4600. You may write me at Telephone Bank Operations.

Sincerely,
Orlando R. Guerrero
Telephone Bank Operations

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