How did Texas tax septic-tank pumping and drain-line unstopping for business and residential customers?

Plain-English summary

Pumping a septic tank by itself was nontaxable for both business and residential customers, and the provider paid tax on taxable items used in the service.

For a business, unstopping drain lines was taxable real-property repair on the total charge. If pumping had to occur before unstopping and both were billed together, the entire charge was taxable. Separately stating the pumping charge kept that portion nontaxable.

For a homeowner, pumping combined with drain unstopping was nontaxable. Labor-only drain unstopping was also nontaxable. A lump-sum residential charge for materials and labor was nontaxable to the homeowner, with the provider paying tax on materials. If materials were separately stated, the provider collected tax on the materials charge while labor remained nontaxable.

What this means for you

Customer property type and billing format changed the result. Providers should distinguish business from residential work and separately state business septic pumping when performed with taxable drain-line repair.

Common questions

Was septic pumping taxable? No by itself. Was business drain unstopping taxable? Yes. Was residential labor taxable? No. What happened under residential lump-sum billing? The homeowner paid no tax, while the provider paid materials tax. What if residential materials were separated? The materials charge was taxable.

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/9111L1144E11

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