A radiator repair shop wants to charge customers an environmental disposal fee. Is that fee taxable, and does it matter whether the radiator being repaired belongs to a motor vehicle or to other equipment?

Plain-English summary

A radiator repair shop asked whether charging customers an "environmental disposal fee" would be taxable, and if so, whether it should be charged to every customer or only to customers whose underlying repair is taxable.

The Comptroller's answer: the environmental disposal fee is taxable only if the underlying radiator repair is taxable. The reasoning:

• Tex. Tax Code § 151.051(a) imposes sales tax on the sales price of a taxable item; § 151.010 defines taxable items to include tangible personal property and taxable services; § 151.0101(a)(5) defines a taxable service to include labor to repair, restore, remodel, or maintain tangible personal property.
• § 151.007(a)(2) defines the taxable sale price to include the total amount charged, without a deduction for materials, labor, or other expenses — so the environmental disposal fee, being an expense incurred as part of the repair, rides along with the repair charge rather than being separately excluded.
• The key variable is § 151.0101(a)(5)(C), which excludes labor to repair, restore, or maintain a motor vehicle from the definition of a taxable service. So: repairing a radiator that's part of a motor vehicle — the repair labor AND the environmental disposal fee are not taxable. Repairing a radiator that's part of other equipment, like earth-moving equipment — the repair labor AND the environmental disposal fee ARE taxable.

What this means for you

Radiator and equipment repair shops

Whether you should charge sales tax on an environmental disposal fee depends entirely on whether the underlying repair itself is taxable — and that in turn depends on what's being repaired. Motor vehicle repairs fall outside the sales tax definition of a taxable service entirely (per § 151.0101(a)(5)(C)), so no tax applies to either the labor or the environmental fee. Repairs to non-motor-vehicle equipment (like earth-moving machinery) are taxable, environmental fee included.

Businesses that add pass-through fees (environmental, disposal, hazmat, etc.) to a repair invoice

Don't assume a separately labeled fee escapes tax on its own logic — under § 151.007(a)(2), it's simply folded into the taxable sales price of the underlying service, and follows that service's taxability.

Accountants and tax professionals

A clean chain of citations (§§ 151.051(a), 151.010, 151.0101(a)(5), 151.0101(a)(5)(C), 151.007(a)(2)) worth keeping as a reference for how Texas treats ancillary/pass-through fees on a repair invoice, and a good reminder of the motor-vehicle-repair carve-out's reach.

Common questions

Q: Is an environmental disposal fee on a repair invoice separately taxable, apart from the repair itself?
A: No — it follows the taxability of the underlying repair; it isn't analyzed as its own separate charge.

Q: Is radiator repair labor taxable in Texas?
A: It depends what's being repaired. Motor vehicle repair labor is excluded from the definition of a taxable service under § 151.0101(a)(5)(C) and is not taxable. Repair labor on other equipment (like earth-moving equipment) is taxable.

Q: Should the shop charge every customer the environmental fee tax, or only some?
A: Only customers whose underlying repair is taxable (i.e., non-motor-vehicle equipment repairs) should be charged tax on the environmental fee.

Q: Can I rely on this letter for my own shop?
A: No. This opinion is based on the facts presented, and additional or different facts may change the opinion; it can be relied on only by the taxpayer it was issued to.

Citations and references

Statutes:

• Tex. Tax Code § 151.051(a) (imposition of sales tax on sales price of a taxable item)
• Tex. Tax Code § 151.010 (definition of taxable items)
• Tex. Tax Code § 151.0101(a)(5) (taxable services include repair/restore/remodel/maintain labor)
• Tex. Tax Code § 151.0101(a)(5)(C) (excludes motor vehicle repair/restore/maintain labor from taxable services)
• Tex. Tax Code § 151.007(a)(2) (sales price includes materials, labor, and other expenses without deduction)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200002034L

Original ruling text

February 8, 2000

Dear **:

Thank you for your recent email concerning your Texas sales tax
responsibilities.

You repair radiators. You want to know that if you charge an environmental
disposal fee, would that fee be taxable and if so, to every customer or just to
taxable customers.

Response: The fee is taxable only if the radiator repair is taxable. Texas Tax
Code Section 151.051(a) imposes a sales tax on the sales price of a taxable
item. Section 151.010 defines a taxable item to include tangible personal
property and taxable services. Texas Tax Code Section 151.0101(a)(5) defines a
taxable service to include labor to repair, restore, remodel or maintain
tangible personal property. Section 151.007(a)(2) defines the sale price of a
taxable item to include the total amount or which a taxable item is sold
without a deduction for the cost of the materials used, labor or service
employed, interest, losses or other expenses.

The environmental disposal fee is an expense you incur as part of the repair.

Please note that Texas Tax Code Section 151.0101(a)(5)(C) excludes from the
definition of a taxable services, labor to repair, restore or maintain a motor
vehicle. This means that if you repair a radiator for a motor vehicle, the
service and the environmental disposal fee are not taxable. However, if you
repair a radiator for earth-moving equipment, the service and the environmental
disposal fee are taxable.

You may view or down load the sales tax law at and
then click on the following:

1. State Government
2. Texas Statutes
3. Tax Code
4. Chapter 151
5. Scroll down to the referenced statutory section

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

You may call me toll free 1-800-531-5441, extension 3-4683, if you have any
questions or need more information. You may write to Tax Policy Division,
Comptroller of Public Accounts, P.O. Box 13528, Austin, Texas 78711-3825. My
e-mail address is .

Sincerely,

Eddie C. Washington
Tax Policy Division