Is collecting and disposing of medical waste, infectious waste, or hazardous waste from a hospital or doctor's office taxable in Texas?

Plain-English Summary

The Texas Comptroller drew a line between three kinds of waste collected from hospitals and doctors' offices, each with a different sales tax result. Charges for collecting and removing "medical waste" — defined as solid waste generated in diagnosing, treating, or immunizing humans or animals, in related research, or in producing/testing biologicals — are taxable. Charges for collecting and removing "infectious waste", by contrast, are not taxable.

The letter then addresses a third category: "hazardous waste." This is waste that requires specific licensing under Tex. Civil Statutes Article 4590f and rules adopted by the Texas Board of Health, or that is listed or identified as hazardous by the EPA or another appropriate federal or state agency. Under the Comptroller's amended Rule 3.356, hazardous waste is excluded from the definition of "garbage," and hauling or collecting it is treated as a nontaxable garbage collection service under section (h) of that rule.

The provider still owes tax on its own purchases of supplies — boxes, liners, and similar materials — that are not transferred into the customer's care, custody, and control as part of a taxable service.

Note: The document as published on STAR carries a later Comptroller website ALERT referencing a 2017 amendment to Rule 3.285 (Resale Certificates; Sales for Resale). That notice was added to the STAR page after the fact and is not part of the original 1994 ruling; it flags that current guidance on care, custody, and control of tangible personal property in taxable services should also be checked against Rule 3.285 as amended.

What This Means For You

Medical and infectious waste haulers

If you collect and remove waste from hospitals or doctors' offices, how you (and your invoices) characterize the waste matters. "Medical waste" collection is taxable; "infectious waste" collection is not. Because the line between these terms can be fact-specific, document exactly what type of waste is being collected and cite the applicable regulatory definition when billing.

Hazardous waste transporters

If the waste you handle requires special licensing under Tex. Civil Statutes Article 4590f and Texas Board of Health rules, or is listed as hazardous by the EPA or another agency, it falls outside the "garbage" definition entirely, and your collection/hauling charges are treated as a nontaxable garbage collection service under Rule 3.356(h).

Accountants and tax professionals

Remember that even when the removal/collection service itself is nontaxable, the provider's own purchases of consumable supplies (boxes, liners, etc.) remain taxable unless those items are transferred to the customer's care, custody, and control as part of a taxable service. Also note this is a 1994 letter; the STAR page's ALERT pointing to the 2017 Rule 3.285 amendment signals that current practice should be cross-checked against that rule, not treated as changing the 1994 holding itself.

Q&A

Q: Is collecting and disposing of medical waste from a hospital taxable in Texas?
A: Yes. Charges for collecting and removing "medical waste" — waste from diagnosing, treating, or immunizing humans or animals, related research, or producing/testing biologicals — are subject to Texas sales tax.

Q: Is collecting and disposing of infectious waste taxable?
A: No. Charges for collecting and removing "infectious waste" are not taxable under this ruling.

Q: What about hazardous waste — is hauling it taxed?
A: No. Waste requiring specific licensing under Tex. Civil Statutes Article 4590f and Texas Board of Health rules (or listed as hazardous by the EPA or another agency) is excluded from the definition of "garbage" under amended Rule 3.356, and its collection or hauling is a nontaxable garbage collection service under section (h) of that rule. The provider still owes tax on non-transferred supplies like boxes and liners used to perform the service.

Citations

• Tex. Civil Statutes Article 4590f (licensing basis for "hazardous waste")
• 34 Tex. Admin. Code Rule 3.356 (as amended) — garbage/solid waste collection services; section (h) addresses hauling of waste excluded from "garbage"
• 34 Tex. Admin. Code Rule 3.285, Resale Certificates; Sales for Resale (amended 11/01/2017) — referenced only in a later STAR website ALERT, not part of the original 1994 letter

Subject

Medical Waste Vs. Infectious Waste — Removed From Hospital/Doctor'S Office — Disposal/Incineration Charges

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9407L1307B01

Original ruling text

ALERT: For specific guidance relating to the care, custody and control of TPP when providing a taxable service, please see Rule 3.285, Resale Certificates; Sales for Resale (amended 11/01/2017.

July 14, 1994

Dear **:

Thank you for your recent letter regarding the tax treatment
of collecting and transporting medical and infectious waste.

Charges for collecting and removing "medical waste" are
subject to sales tax, while charges for collecting and
removing "infectious waste" are not taxable.

Waste which requires specific licensing under Texas Civil
Statutes, Article 4590f, and rules adopted by the Texas
Board of Health under that law is "hazardous waste."
"Hazardous waste" includes materials listed or identified
as hazardous waste by the administrator of the United States
Environmental Protection Agency (EPA) or by other
appropriate federal or state agency.

The term "hazardous waste" means a solid waste, or
combination of solid wastes, which because of its quantity,
concentration, or physical, chemical, or infectious
characteristics may pose a substantial present or potential
hazard to human health or the environment when improperly
treated, stored, transported, or disposed of, or otherwise
managed.

The term "medical waste" means any solid waste which is
generated in the diagnosis, treatment, or immunization of
human beings or animals, in research pertaining thereto, or
in the production or testing of biologicals.

Enclosed is a copy of the amended Rule 3.356 which excludes
hazardous waste from the definition of garbage. Section (h)
of the rule addresses persons providing collection services
for customers having waste that is excluded from the
definition of "garbage or other solid waste" under section
(a) of the rule. Please note that section (h) classifies
the collection or hauling of hazardous waste as a nontaxable
garbage collection service.

You must pay sales tax on your purchases of materials and
supplies (boxes, liners, etc.) that are not transferred to
the care, custody, and control of your customers as part of
a taxable service.

This opinion is rendered based on the facts you submitted.
Other facts, though similar, may yield different results.

You may call me toll free at 1-800-531-5441, ext. 3-4680.
The direct line is 512/463-4680. You may also write to Tax
Administration, Comptroller of Public Accounts.

Sincerely,

Al Van Allen
Tax Administration Division

NOTE: Previous Accession Number 9407451L