How did Texas tax septic pumping and drain-line unstopping for commercial and residential property?

Plain-English summary

Pumping a septic tank alone was nontaxable for business and residential customers, while the provider paid tax on taxable supplies used.

For businesses, unstopping drain lines was taxable real-property repair. If pumping and unstopping were billed together, the total charge was taxable; separately stating the pumping charge kept that portion nontaxable.

For homeowners, pumping combined with drain unstopping was nontaxable, and labor-only unstopping was nontaxable. A lump-sum materials-and-labor charge was nontaxable to the homeowner, with the provider paying tax on materials. When materials were separately stated, the provider collected tax on the materials but not labor.

What this means for you

Providers should classify the property as business or residential and structure invoices accordingly. Commercial pumping needed separate statement when paired with taxable drain work, while residential materials treatment depended on lump-sum versus separated billing.

Common questions

Was septic pumping taxable? No by itself. Was commercial drain unstopping taxable? Yes. Was residential labor taxable? No. Who paid tax on materials under a residential lump sum? The provider. Were separately stated residential materials taxable? Yes.

Citations and references

• The policy restatement 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/9111L1144E09

Original ruling text

November 12, 1991

Dear **:

The following represents a restatement of comptroller policy regarding the
sales tax responsibilities of persons cleaning septic tanks and unstopping
drain lines.

Pumping septic tanks for businesses (also known as commercial or nonresidential
customers):

A charge for only pumping out a septic tank is not subject to sales tax. The
service provider must pay sales tax on all taxable items used in providing this
service.

Pumping out a septic tank in conjunction with unstopping drain lines will not
be subject to sales tax if the charge for pumping is stated separately to the
customer from the charge for cleaning out the lines.

The charge for unstopping drain lines for a business is taxable as a real
property repair. The person cleaning out the lines must collect sales tax from
the business customer on the total charge for unstopping drain lines. If it was
necessary to pump out the septic tank before the lines may be unstopped, and a
single charge is made to the customer for both activities, the total charge is
taxable.

Pumping septic tanks for home owners (also known as residential customers):

A charge for only pumping out a septic tank for a home owner is not subject to
sales tax. The service provider must pay sales tax on all taxable items used in
providing this service.

Pumping out septic tanks for home owners in conjunction with unstopping drain
lines is not subject to sales tax.

The charge for unstopping drain lines for home owners is not taxable if the
charge is for labor only.

If the charge to the home owner for unstopping drain lines is for materials and
labor, and the bill to the home owner does not separate the charge for
materials from the charge for labor, the lump-sum charge to the customer is not
taxable. The person unstopping the drain lines owes tax on the cost of
materials.

If the charge for materials is separately stated from labor and other charges,
the person cleaning out the drain lines must collect sales tax from homeowners
on the charge for materials. The charges for labor is not be taxable.

Sincerely,

Tax Administration Division