Were medical-waste incineration and collection charges taxable, and did the collector need to issue an exemption certificate to the incinerator?

Plain-English summary

The collector was handling medical waste that, according to the stated facts, was not hazardous waste.

The incinerator's charge to destroy that waste was not taxable. Because the collector was not an exempt organization, there was no reason to give the incinerator an exemption certificate.

The collector's own service was taxable garbage collection under Rule 3.356. Its customer charge remained taxable when it passed the incinerator cost through, because that amount recovered an expense incurred in providing the taxable collection service.

Common questions

Was the incinerator's charge to the collector taxable? No.

Did the collector need an exemption certificate? No. The underlying destruction charge was not taxable, and the collector was not an exempt organization.

Could the collector pass the incinerator cost through tax-free? No. The passed-through amount was part of the taxable garbage-collection charge.

Citations and references

• 34 Tex. Admin. Code Rule 3.356 (Real Property Services)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9003L0995C07

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

March 22, 1990

Dear *:

We received your letter questioning whether your company ABC should
issue an exemption certificate when transporting medical waste to
XYZ's incinerator. According to our telephone conversation, the
medical waste your company is collecting is not hazardous waste.

I am uncertain why XYZ sent you a letter requesting an exemption cer-
tificate. XYZ's charge to your company to destroy waste in an incin-
erator is not taxable. And, according to our records, ABC is not an
exempt organization. Therefore there is no reason for your company
to insure XYZ an exemption certificate.

Garbage collection services are taxable. See the enclosed Rule
3.356 relating to real property services. Your charge to your
customer to collect and dispose of the medical waste is taxable.
When you pass the incinerator charge on to your customer this is
also taxable, because you are recovering your expenses incurred in
providing garbage collection services.

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

If you have any questions you may call or write Tax Correspondence.
You may call toll free 1-800-252-5555, or our regular number is
512/463-4600. My extension is 3-4658.

Sincerely,
Sherry Buckley
Tax Correspondence