Is picking up used oil and oil filters from public collection centers for recycling a taxable waste collection service in Texas?

Subject

Picking Up Used Oil And Oil Filters For Recycling Is A Nontaxable Waste Collection Service

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9308L1253A01

Plain-English Summary

The taxpayer wrote to the Comptroller asking about sales tax on charges to pick up used oil and oil filters for recycling from public collection centers.

The Comptroller responded that the rule covering waste collection service exempts material that is subject to regulation by a permit issued under the Texas Water Code, Chapter 26. Picking up used oil and oil filters from public collection centers for recycling — as an alternative to letting homeowners throw those items into their garbage and then into landfills — is not a taxable waste collection service. The letter adds that public collection centers will not be required to pay tax for voluntarily complying with a request from the Texas Water Commission to become public collection centers for these items.

The Comptroller closes by noting the ruling is meant to help "Public Collection Centers" keep oil contamination out of the environment.

What This Means For You

Used oil and oil filter pickup for recycling is not taxed as waste collection. If you operate or use a public collection center that picks up used oil and used oil filters so they can be recycled instead of going into a landfill, that pickup service falls outside the taxable waste collection service rule because the material is subject to regulation under the Texas Water Code, Chapter 26.

Voluntary public collection centers are not taxed for complying with the Water Commission's request. The letter specifically states that centers that voluntarily agree to become public collection centers at the request of the Texas Water Commission will not owe tax for doing so.

This is about a specific waste stream, not waste collection generally. The nontaxable treatment described here applies to used oil and used oil filters collected for recycling purposes at public collection centers — the letter does not address other types of waste collection service.

Q&A

Q: Is picking up used oil and oil filters from public collection centers for recycling a taxable waste collection service?
A: No. The letter states this pickup, done for recycling as an alternative to landfill disposal, is not a taxable waste collection service.

Q: What rule exempts this material from the waste collection service tax?
A: The rule covering waste collection service exempts material subject to regulation by permit issued under the Texas Water Code, Chapter 26.

Q: Do public collection centers have to pay tax for agreeing to collect used oil and oil filters?
A: No. The letter says those centers will not be required to pay tax for voluntarily complying with a request from the Texas Water Commission to become public collection centers for those items.

Q: Who requested that these centers collect used oil and oil filters?
A: The Texas Water Commission requested that the centers voluntarily become public collection centers for used oil and oil filters.

Q: Who signed this letter, and who can be contacted with further questions?
A: The letter is signed by John Sharp, Comptroller of Public Accounts, and states that further questions can be directed to David Somerville in the Tax Administration Division.

Original ruling text

August 18, 1993

Dear ***:

Thank you for your letter concerning sales tax on charges to pick up
used oil and oil filters for recycling from public collection centers.

The rule covering waste collection service exempts material subject to
regulation by permit issued by the Texas Water Code, Chapter 26. The
pickup of the used oil and oil filters from public collection centers
for recycling, as an alternative to disposal of those items in the
homeowner's garbage and then into the landfills, is not a taxable
waste collection service. Those public collection centers will not be
required to pay tax for voluntarily complying with a request from the
Texas Water Commission to become public collection centers for those
items.

I trust this will help "Public Collection Centers" in the effort to
keep oil contamination out of the environment. Should you have any
further questions, please feel free to contact David Somerville in my
Tax Administration Division toll-free at 1-800 531-5441, extension
5-0030.

If I can be of any further assistance, please let me know.

Sincerely,

JOHN SHARP
Comptroller of Public Accounts

NOTE: Previous Accession Number 93070067L.2 and/or 9307067L