How does a Texas roll-off box / solid waste collection company source local sales tax — where the box is placed, or where the office takes orders?

Plain-English summary

A roll-off box (dumpster) service provider called the Comptroller's office asking how to collect local sales tax on its waste collection service. The Comptroller answered that this business is a waste collection service, and local tax should be sourced to where the boxes are placed — not to the location where the company takes customer orders. As an example, the letter says that when a box is placed at a site in Friendswood, the company should collect 7.25 percent total (1 percent local Friendswood tax plus 6.25 percent state tax).

The letter draws a distinction: for the roll-off box/waste collection service itself, tax is based on the box's physical location. But for any sales of tangible personal property and other taxable services the company also provides, the company should keep sourcing local tax the usual way — based on the location where it takes orders from customers.

The letter is brief, states its conclusion without citing a specific statute, and notes it is based on the facts presented — other facts, though similar, could lead to a different result.

What this means for you

Waste collection / roll-off box service providers

If you provide roll-off box or dumpster placement and garbage collection services in Texas, this letter indicates you should source local sales tax to the location where each box is actually placed, not to your office or order-taking location. If a box sits in a city or transit authority area with its own local tax, collect the combined state and local rate that applies at that box's location.

Businesses that also sell tangible goods or other taxable services

If your waste collection business separately sells tangible personal property or other taxable services, this letter says you should continue sourcing local tax for those sales based on where you take the customer's order — the box-placement sourcing rule described here applies specifically to the waste collection/roll-off box service, not to your other sales.

Accountants and tax professionals

This letter treats roll-off box/dumpster service as a form of waste collection service for local tax sourcing purposes, sourcing it to the location of the box rather than the seller's place of business. It does not cite a statute or rule number, so it should be read as informal guidance to one taxpayer on these particular facts rather than a fully reasoned statement of the underlying sourcing rule.

Common questions

Q: Where do I source local sales tax for a roll-off box or dumpster service in Texas?
A: Based on this letter, local tax is sourced to where the box is placed — the location where the waste is collected — not to where the company takes the order.

Q: What if my company also sells tangible personal property or other taxable services besides the box service?
A: The letter says to keep sourcing those sales the usual way, based on the location where you take orders from customers.

Q: What rate did the Comptroller use as an example?
A: The letter uses a box placed in Friendswood as an example, saying to collect 7.25 percent total — 1 percent local Friendswood tax plus 6.25 percent state tax.

Q: Does this letter cite a specific statute or rule?
A: No. The letter states its conclusion directly without referencing a statute or rule number.

Q: Can I rely on this 1994 letter for my own business today?
A: This letter was addressed to a specific taxpayer based on facts they presented, and STAR letters can generally only be relied upon by the original requester. Confirm current sourcing rules with a tax professional or the Comptroller's office before relying on this for your own situation.

Citations and references

The original letter does not cite any specific statute or rule by number.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9404L1300G03

Original ruling text

April 20, 1994

Dear**:

Thanks for your call about local tax on your roll-off box
service.

This service is a waste collection service, and you should
collect local tax based on where the boxes are placed. In
other words, when you put a box on a site in Friendswood,
collect 7.25 percent (1 percent tax for Friendswood and
6.25 percent state tax).

Continue to collect tax on sales of tangible personal
property and other taxable services based on the location
where you take orders from your customers.

This opinion is based on the facts presented other facts,
although similar, may result in a different conclusion.

If you have any questions or need more information, please
call. My number is 512/463-4614. Or you may write to the Tax
Administration Division.

Sincerely,

Adina Whittemore

NOTE: Previous Accession Number 9404342L