What counted as industrial solid waste for Texas waste-removal tax purposes, and how should a customer handle a collector providing both taxable and nontaxable removal?

Plain-English summary

The letter borrowed the Texas Solid Waste Disposal Act's definition of industrial solid waste: waste from manufacturing, mining, or agricultural operations.

That definition excluded liquid or semiliquid waste subject to the Texas Water Quality Act. It also excluded waste from service industries, retail establishments, and manufacturing-support activities such as office waste and shipping refuse.

Because liquid waste did not qualify as industrial solid waste, its collection and disposal were taxable unless the waste fit a category identified in Rule 3.356(A) or (D).

When one collector handled both taxable and nontaxable waste, the customer could provide an exemption certificate stating that it would pay tax directly. The customer then had to determine the taxable percentage and report tax on that portion of the charge.

Common questions

Did manufacturing waste count as industrial solid waste? Yes, subject to the stated exclusions.

Did ordinary office or shipping refuse count? No.

Was liquid-waste collection taxable? Yes, unless a referenced Rule 3.356 category applied.

Could mixed collection charges be allocated? Yes, with the described certificate and direct payment on the taxable percentage.

Citations and references

• Texas Solid Waste Disposal Act.
• Comptroller Rule 3.356(A) and (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/9008L1038E08

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TEXAS 78774
BOB BULLOCK
Comptroller August 20, 1990

Dear *:

You wrote to us requesting more information about sales tax
on waste removal. More specifically, you asked about indus-
trial solid waste. Thank you for your patience as we've
struggled to define that term.

As much as we hate to refer folks to another statute, it
seems to be the most reasonable way to define such a term.
We will use the definition of industrial solid waste found
in the Texas Solid Waste Disposal Act.

That means industrial solid waste is waste resulting from
any process of manufacturing, mining or agricultural opera-
tions. But it does not include liquid or semi-liquid waste
which is subject to the Texas Water Quality Act. And it does
not include waste from service industries, retail establish-
ments, or manufacturing support activities such as office
waste and shipping refuse.

Since liquid waste doesn't fall under the definition of in-
dustrial solid waste, the collection and disposal of your
liquid waste will be taxable unless the waste falls under
the definitions in (A) or (D) on page 2 of the enclosed
Rule 3.356.

Collecting some waste is taxable and collecting other kinds
of waste is not taxable. If your collector does both, you
should give the collector an exemption certificate stating
that you are buying taxable and non-taxable waste collec-
tion services and you will pay tax on the taxable portion
directly to the Comptroller.

Then determine the percentage of waste that represents tax-
able waste collection and report and pay tax to us on the
charge for taxable waste collection.

Thanks again for your patience.

If you have any questions or need more information, please
call me. The toll-free number is 1- 800- 531- 5441. The
regular number is 512/463-4614. Or you may write me at the
Taxability Section of Legal Division. [(fax) 512-475-0900]

Sincerely,
Adina Whittemore
Taxability
Legal Division