Was a per-gallon charge for pumping, treating, and permit-discharging residual liquid from removed underground fuel tanks taxable?

Plain-English summary

A contractor installing and removing underground fuel-storage tanks sometimes found residual liquid. It pumped out the liquid, analyzed and treated it when necessary, and discharged it under a Texas Water Commission permit after it met pollution standards. The contractor charged customers by the gallon.

The Comptroller said the per-gallon fee was not taxable. Rule 3.356(a)(4)(A) excluded industrial discharges regulated by a permit under Texas Water Code Chapter 26 from the definition of garbage or other solid waste.

What this means for you

The letter's answer depended on the material being a permit-regulated industrial discharge rather than taxable garbage or solid-waste removal. Different handling or permitting facts could change the result.

Common questions

Was the per-gallon fee taxable? No.

What did the contractor do with the liquid? It pumped, analyzed, treated if necessary, and permit-discharged it after pollution standards were met.

Why was the service outside taxable waste removal? The cited rule excluded qualifying permit-regulated industrial discharges from garbage or other solid waste.

Citations and references

• 34 Tex. Admin. Code Rule 3.356(a)(4)(A) — exclusion from garbage or other solid waste
• Texas Water Code Chapter 26 — permitting law referenced by the rule quotation

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9104L1098D06

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

JOHN SHARP
Comptroller April 3, 1991

Dear **:

Thank you for your recent letter. As I understand it, your
company is in the business of installing and removing
underground fuel storage tanks. Sometimes, you detect
residual liquid content in tanks you remove. You pump it
out, analyze it, treat it if necessary, and, as soon as it
meets the appropriate pollution standards, you discharge it
pursuant to a permit issued by the Texas Water Commission.
You charge your customer a per gallon fee for these
services.

You are not required to collect tax on the per gallon fee.
See enclosed Rule 3.356 (a)(4)(A), which excludes from the
definition of garbage or other solid waste "solid or
dissolved material in domestic sewage, or solid or dissolved
material in irrigation return flows, or industrial
discharges subject to regulation by permit issued pursuant
to the Texas Water Code, Chapter 26. . ."

This opinion is based on the facts presented. Different
facts, though similar, might lead to different answers. If
you have further questions, feel free to write or call me at
1-800-531-5441, ext. 3-3889.

Sincerely,
John Christian
Tax Administration