Is the charge a recycling business collects to receive asphalt shingles hauled in by others subject to Texas sales tax?

Subject

Asphalt Shingles — Receiving Charge Paid To Recycling Business By Individuals Hauling Shingles From Job Sites — Not Taxable

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9403L1287G14

Plain-English Summary

The taxpayer runs a business that receives asphalt shingles from individuals who haul the shingles away from job sites, and then processes those shingles into usable products. The individuals hauling the shingles pay the taxpayer a charge to receive them. The taxpayer asked whether this receiving charge is subject to tax.

The Comptroller's answer: it is not. The charge the recycling business collects to receive the asphalt shingles is not taxable.

The letter adds an important related point: this does not let the hauler off the hook. The person who hauls the shingles and pays the recycling business to receive them must still include that receiving charge in the taxable base they charge to the person for whom they are removing the shingles (i.e., the job-site owner or contractor who is paying to have the shingles hauled away).

What This Means For You

If you operate a recycling business that receives materials (like asphalt shingles) for processing: The charge you collect to receive those materials from haulers is not itself subject to tax, according to this ruling.

If you are a hauler who removes shingles or similar material from job sites and pays a recycling business to receive them: You cannot treat what you pay the recycler as a tax-free pass-through. You must fold that receiving charge into the taxable base of what you charge the job-site owner or contractor for the removal service.

If you are a job-site owner or contractor paying someone to haul away shingles: The charge you're billed may include the hauler's cost of paying a recycler to receive the shingles, and that combined charge is part of the hauler's taxable base to you.

Q&A

Q: Is the fee a recycling business charges to receive asphalt shingles from a hauler subject to Texas sales tax?
A: No. The Comptroller specifically stated that this receiving charge "is not" subject to tax.

Q: Does that mean the hauler's charge to the job-site owner is also tax-free?
A: No. The letter states that the person hauling the shingles who pays the recycler to receive them should still include that charge in their taxable base to the person for whom they are removing the shingles.

Q: What kind of business does this ruling apply to?
A: A business that is paid to receive asphalt shingles hauled in by individuals from job sites, and that then processes the shingles into usable products.

Original ruling text

March 10, 1994

Dear **:

We recently met concerning the taxability of receiving asphalt
shingles from individuals hauling such shingles from job sites.
As I understand the facts, you are paid by the person hauling these
shingles to receive them. Thereafter, you process the asphalt shingles
into usable products. You were concerned as to whether or not the
charge to receive the shingles was subject to tax. It is not.

This does not mean that the person hauling the shingles who pays
you to receive them should not include this charge in their taxable
base to the person for whom they are removing the shingles.

I hope this satisfactorily answers your question. If you have any
further questions, please feel free to call me at 1-800-531-5441,
extension 3-4004.

Sincerely,

Wade Anderson
Assistant Director
Tax Administration

NOTE: Previous Accession Number 9403047L