When were pumping containers and cleaning lines in a nonresidential grease-trap, grit-trap, or septic system taxable repair rather than nontaxable maintenance?

Plain-English summary

The April 1988 response distinguished repair from maintenance for pumping containers and cleaning lines in a nonresidential system.

When waste buildup had diminished the system's flow, the service charge was taxable as a real-property repair. When pumping and line cleaning occurred on a regular schedule while the system was flowing properly, the work was nontaxable maintenance under Rule 3.357(a)(3) and (c)(2).

The attached October 1987 letter had separately classified several kinds of waste removal but said the committee was not yet ready to decide whether jet-machine line cleaning was repair or maintenance. The April response supplied that later answer.

What this means for you

Under the 1988 guidance, the system's condition and the timing of the work controlled. Work responding to impaired flow was repair; preventive scheduled service on a properly functioning system was maintenance.

Common questions

Was cleaning a line with reduced flow taxable? Yes, as repair when waste buildup caused the diminished flow.

Was regularly scheduled pumping taxable? No, when the system was flowing properly.

What rule did the letter apply? Rule 3.357(a)(3) and (c)(2).

Citations and references

• 34 Tex. Admin. Code Rule 3.357(a)(3) and (c)(2), cited for repair and maintenance treatment.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8804L0883C01

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller April 19, 1988

Dear *:

Thank you for sending me a copy of Wade Anderson's October 7, 1987 letter
on
removing grit-trap, grease-trap and septic tank waste from tanks and
lines.

When these functions are performed on a non-residential system whose
refuse
flow is diminished due to waste buildup, the serviceman's charges will be
taxable as a real property repair.

The same functions of pumping the containers and cleaning the lines will
not
be taxable if the work is done on a regularly scheduled basis and the
system
is flowing properly. You are correct; Rule 3.357(a),(3) and (c)(2) cover
this.

Please feel free to call or write any time. I'm enclosing a newly adopted
3.357 for your file.

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,
Al Van Allen
Tax Policy Division

Bob Bullock
Comptroller of Public Accounts
Austin, Texas 78774

October 7, 1987

Dear *:

In your letter of October 6, 1987, you asked if the charge for removing
grit-trap waste, grease-trap waste, or septic-tank waste would be subject
to tax under the new provision taxing garbage and solid waste removal.

You also asked if the charge for cleaning sewer and drain lines by use
of a jet machine is taxable.

The tax policy committee met this morning to discuss your grease-trap
question.

As you know from our earlier conversation, we have concluded septic-tank
waste removal should be treated like sewage, i.e., nontaxable. After
considering the grease-trap problem, we also decided this was nontaxable
since the grease would otherwise enter the sewer system.

As regards the removal of grit-trap waste, if the waste is trapped in
the waste water system before it can enter the sewer system, it is
nontaxable. If on the other hand, the-waste is washed into an enclosed
system which does not connect into the regular waste system, the removal
of the grit will be considered a taxable service. This is similar to
the removal of grease that has been separately collected (not in a grease
trap in the water disposal system) by a restaurant. We have concluded
removal of grease in this situation is taxable.

Regarding your questions on the use of the jet machine, this could be
taxable under the section of the act making repair of real property
taxable after January 1, 1988. However, it might also be maintenance
in some situations. The committee has not made any recommendations yet
on the real property provisions, so I cannot answer your question now.
Please stay in touch with me concerning your last question.

Sincerely,
Wade Anderson
Executive Counsel