Was on-site biological remediation taxable garbage collection when microbes treated contaminated soil or water and the waste stayed at the site?

Plain-English summary

The requester analyzed environmental damage from fuel spills and hazardous-material dumping, developed cleanup plans, and used microbes or biological nutrients to treat contaminated soil or water. The company cleaned the area but did not completely restore a damaged natural environment.

The Comptroller said treating waste with microbes and leaving it at the site was not garbage collection and disposal, so the service was not subject to sales tax. The provider still owed Texas sales or use tax on all equipment and supplies used to perform the work.

The letter separately noted that garbage and solid-waste collection was taxable and that Rule 3.356 listed excluded waste categories for which customers could provide exemption certificates.

What this means for you

On-site treatment without removing the material was decisive. The nontaxable service result did not exempt the provider's equipment or consumable inputs.

Common questions

Was on-site microbial treatment taxable? No, under the stated facts.

Why was it not garbage collection? The treated waste remained at the site.

Were the provider's equipment and supplies exempt? No.

Could excluded waste use an exemption certificate? Yes, under the rule provision described in the letter.

Citations and references

• 34 Tex. Admin. Code Rule 3.356(a)(4)(A)-(E) — waste excluded from the garbage definition
• 34 Tex. Admin. Code Rule 3.356(h) — exemption-certificate procedure for excluded waste

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9104L1106C05

Original ruling text

April 29, 1991

Dear **:

Thank you for your letter concerning "biological remediation services."

You said in our telephone conversation on April 23 that your company goes
out to locations and analyzes all types of environmental damage caused by fuel
spills, dumping of hazardous materials, etc. After samples are taken and tests
are performed, a clean-up plan is developed. Microbes or biological nutrients
are used to clean the contaminated soil or water. Your company cleans up the
area rather than completely restoring a damaged or destroyed natural
environment.

Sales tax is due on the total charge for the collection and disposal of
garbage and solid waste. Section (a)(4)(A)-(E) of Rule 3.356-Real Property
Services lists the types of waste that are not included in the definition of
garbage for sales tax purposes. According to section (h) of the rule,
customers with waste excluded from the definition of garbage may issue an
exemption certificate in lieu of paying sales tax.

If the waste materials are simply treated with microbes and left at the
site, your company is not providing garbage collection and disposal services.
This service would not be subject to sales tax. Your company will owe Texas
sales or use tax on all equipment and supplies used to provide its services.

This opinion is based upon the facts you presented. If there are
additional or different facts, this opinion may change.

Please feel free to contact me if you have any additional questions. You
may write me, call toll free 1-800-252-5555 from anywhere in the United States
or phone 512/463-4600.

Sincerely,

Julie Pesl
Tax Administration Division