Were charges taxable when a firm processed hazardous waste until it became nonhazardous and hired a third party to dispose of the remaining ashes?

Plain-English summary

Texas generally taxed charges for garbage or other solid-waste collection or removal, but exempted collection and removal of hazardous waste as defined in Rule 3.356(a)(4)(D).

The firm handled only hazardous waste, processed it until it was no longer hazardous, and hired a third party to haul the residue to a dump. Its customer charges for processing and removing that waste were nontaxable.

The third-party contractor's charge to dispose of the resulting ashes was also nontaxable. Although the processing had made the residue nonhazardous, the letter classified it as industrial solid waste.

Common questions

Were the firm's hazardous-waste processing and removal charges taxable? No.

Did the residue become nonhazardous before final disposal? Yes.

Was the third-party disposal charge taxable? No, because the ashes were industrial solid waste.

Citations and references

• Comptroller Rule 3.356(a)(4)(D).

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9005L1022C13

Original ruling text

May 18, 1990

Dear **:

Bob Jeffcoat has sent me your letter on waste disposal studies subsequent
remediation services and asked me to respond.

The Texas Sales Tax Statute imposes a tax on charges for "Garbage or
other solid waste collection or removal." However, charges for collection and
removal of hazardous waste as defined in rule 3.356 (a)(4)(D) are not taxable.
I am enclosing a copy of the rule for your reference.

As we discussed, your firm deals strictly in hazardous waste. You
process the waste until it is no longer hazardous and then contract with a
third party to remove it to a dump site. Your charges to your customer for
processing and removing the waste are not taxable. And, even though you reduce
the original material to a non-hazardous residue, the charge made to you by the
third party contractor for disposing of the ashes is not taxable because it
constitutes industrial solid waste.

Texas does not have either a personal or corporate income tax but we do
impose a Corporate Franchise Tax. You will be receiving a franchise tax
questionnaire under separate cover.

This opinion is based on the facts you presented in your letter and our
follow-up phone conversation. other facts, though similar, may yield different
results.

Feel free to call or write me if you have questions. You can reach me by
calling toll free 800-531-5441 or FAX (512) 475-0900.

Sincerely,

Al Van Allen
Taxability Section
Legal Services Division