Ezel / Tax Rulings / TX
TX 9003L0999D06 Sales and/or Use Tax (State,Local,MTA) 1990-03-07

Were hazardous-waste container rentals exempt, and were labor backcharges to a detailer taxable when bad drawings caused parts to be remade?

Short answer: The container rental was taxable because only actual hazardous-waste disposal was exempt, not containers or equipment. The backcharge for extra corrective labor caused by the detailer's drawing errors was not taxable because it was not passed on to the final customer.

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This page answers the general question as of 1990. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1990
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 is an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
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

Texas had not exempted containers or other equipment used in hazardous-waste removal. Only the actual disposal of hazardous waste was exempt, so the firm's hazardous-waste container rental was taxable.

The firm also charged a detailer for extra labor needed to remake or rework parts scrapped because the detailer's drawings were wrong. Because that corrective labor was not passed through to the final customer, the backcharge to the detailer was not taxable.

Common questions

Was the hazardous-waste container exempt? No.

What hazardous-waste activity was exempt? Actual disposal.

Was the corrective-labor backcharge taxable? No, under the facts described.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller March 7, 1990

Dear *:

Thank you for your recent letter regarding the taxability of a
hazardous waste container your firm rents and backcharges you make
to a detailer.

No provision has been made to exempt containers or any other
equipment used in the hazardous waste removal area. The actual
disposal of hazardous waste is the only exemption provided for at
this time.

The other question you had related to backcharges. You explained
this to be extra labor costs incurred in reworking and remaking
parts that had been scrapped due to incorrect drawings by the
detailer. Because an error in the detailer's drawings caused you
extra labor hours to correct the mistake, you "backcharge" the
detailer for the extra labor. The extra labor is not passed on to
the final customer. The backcharge to the detailer is not taxable
at this time.

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 additional information, you may
call me toll free at 1-800-252-5555, extension 5-0330. The
regular number is 512/463-4600, or write me at Tax Correspondence,
Comptroller of Public Accounts.

Sincerely,
Bettie U. Peterson
Tax Correspondence Division

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