Could a Texas box seller sell corrugated shipping boxes tax free to recyclers that sent processed material back to manufacturers?

Plain-English summary

The Comptroller said a corrugated-box seller could sell boxes tax free to recyclers that used them to ship recycled materials back to a producer for manufacturing a new product.

Texas treated people engaged in recycling as processors for this purpose. A manufacturer or processor could buy boxes used to package a product for sale without tax by giving the seller a properly completed exemption certificate.

What this means for you

The result depended on both use and documentation: the recycler used the boxes to ship processed material to a producer, and the seller needed an exemption certificate from the recycler. The letter does not announce that every purchase by a recycling business is exempt.

Common questions

Did Texas treat recycling as processing? Yes, for the tax issue addressed in this letter.

Could the box seller simply stop charging tax? The letter says the boxes could be sold tax free if the recycler provided a properly completed exemption certificate.

Did the ruling cover boxes used for unrelated purposes? No. It addressed boxes used to ship recycled materials back to a producer for use in manufacturing a new product.

Citations and references

• The letter does not identify a numbered statute or administrative rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9110L1137B01

Original ruling text

October 2, 1991

Dear **:

Thank you for your recent letter asking about the tax status of
your corrugated box business.

You stated that you sell your boxes to recyclers for their use
in shipping recycled materials back to a producer for use in
manufacturing a new product.

When you sell boxes to manufacturers or processors to package a
product they will wrap or package for sale, you may accept an
exemption certificate from the manufacturer or processor in lieu
of tax.

Persons engaged in recycling are, for tax purposes, processing.
The boxes may be sold to recyclers tax free if they provide you
with a properly completed exemption certificate.

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 more information, you may call
me toll free at 1- 800-252-5555, extension 3-4633. The regular
number is 512/463-4633.

Sincerely,

Wanda Hutcheson
Tax Administration Division