Is a city's fee for accepting used tires at its 'landfill' taxable, when those tires are actually just stored there temporarily and then hauled away by a contractor to a different disposal site rather than being buried at the landfill itself?

Plain-English summary

A city asked whether it should charge sales tax on the fee it charges for disposing of used tires at its landfill. Under the city's arrangement, tires accumulate at the landfill until there's enough volume for the city's contractor to haul them away, and the city passes the disposal fee through to that contractor.

The Comptroller's answer turned on what actually happens to the tires physically, not on what the site is called. Charges for genuinely using a landfill — where waste is accepted and buried on-site — are not taxable. But here, the tires are never buried at the "landfill"; they're temporarily stored and then hauled away to a different disposal site. That makes the facility function like a transfer station rather than a true final-disposal landfill for this particular waste stream, and Rule 3.356(g) taxes charges for accepting waste that will be collected and moved elsewhere (as distinct from Rule 3.356(f)'s exemption for a landfill's own acceptance of waste it buries on-site). Because the fee here is for the collection/removal of solid waste rather than for final on-site disposal, the city is required to charge sales tax on it.

This tracks the same "moved elsewhere vs. buried on-site" distinction the Comptroller applies to private scrap-tire shredders and haulers: what matters for taxability is whether the accepting facility is the tires' actual final resting place, or just a staging point before the waste continues on to somewhere else.

What this means for you

Cities and municipalities charging tire (or other waste) disposal fees

Don't assume a fee is exempt just because your facility is labeled a "landfill." If the waste is actually just staged there and then hauled to a different site for real disposal, your facility is functioning as a transfer station for that waste stream, and the fee is taxable — regardless of what the facility is called or used for with other waste.

Waste haulers and contractors working with municipalities

The same collection-vs-final-disposal distinction that applies to private shredders and landfills applies to municipal facilities too — verify whether the fee you're paying (or passing through) is for genuine burial/final disposal or for an intermediate collection/transfer step.

Accountants and tax professionals

This letter reinforces the Rule 3.356(f)/(g) distinction seen elsewhere in the scrap-tire disposal chain: a landfill's own acceptance-and-burial fee is exempt, but any facility — public or private — charging to accept waste that will subsequently be moved to another location for actual disposal must collect sales tax on that charge.

Common questions

Q: Is a city's landfill disposal fee always exempt from sales tax?
A: No — only when the waste is actually buried/disposed of at that facility. If the waste is instead staged there and hauled to a different site for final disposal, the fee is taxable as a collection/removal charge.

Q: Does it matter that the facility is officially called a "landfill"?
A: No — the taxability turns on what actually happens to the waste (buried on-site vs. moved elsewhere), not on the facility's name or general classification.

Q: Can I rely on this letter for my own municipal waste-fee arrangement?
A: No. This opinion is based on the facts presented, and additional or different facts may change the result; it binds the Comptroller only as to the taxpayer it was issued to.

Citations and references

• 34 Tex. Admin. Code Rule 3.356(f) (landfill's own final-disposal acceptance fee is exempt)
• 34 Tex. Admin. Code Rule 3.356(g) (taxable charge for accepting waste that will be moved to a disposal site elsewhere)

Subject

Tires — Transporting/Hauling Off Waste/Scrap Tires From Dealers To Recyclers/Third Party — Fee Is Taxable As Solid Waste Collection

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9801392L

Original ruling text

January 15, 1998

Dear Mr. **:

Thank you for your letter of January 7, 1998, asking about the taxability of a
fee charged by the city for disposing of used tires at the city landfill.

The tires are stored at the landfill until there is a sufficient quantity of
tires for the city's contractor to transport the tires. Under the city's
current contract, the city passes on the disposal fee to the contractor that
collects the tires. You ask if the city should charge sales tax on the tire
disposal fee at the landfill.

While charges for use of a landfill are not taxable, this charge is more like a
fee for a transfer station. The used or waste tires will not be buried at the
landfill but hauled away from there to another disposal site. See Rule
3.356(f) and (g) concerning real property services.

The city is required to charge sales tax on the disposal fee because the fee is
for the collection or removal of solid waste.

You may call me toll free 1-800-531-5441, extension 3-4683. The direct line is
512/463-4683. You may also write to Tax Policy Division, Comptroller of Public
Accounts.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

Sincerely,

Eddie C. Washington
Tax Policy Division