Is a construction company's charge for a dump truck with an operator that hauls debris away from a jobsite taxable, even if the truck/operator charge is billed separately from any waste-removal charge?

Plain-English summary

This letter is a Comptroller auditor's written confirmation of a determination made during an audit, sent in response to an e-mail request for something "in writing." The auditor was examining a construction company that does a variety of hauling services, after conflicting answers had apparently been given to the company and its customers on the same question. The facts: the company is dispatched to a jobsite with a dump truck operated by its own employee, charges the contractor/customer an hourly rate for the truck-with-operator, and then hauls the collected debris to the company's own landfill.

The company's position was that this was simply a nontaxable truck-with-operator rental, regardless of what was being transported. The Comptroller rejected that framing: the charge for the truck, operator, and waste removal — if any charge is made — is taxable as a real property service (waste hauling), citing a prior STAR letter (9203L1167A01, Question 13) for the same point. Separately stating the truck/operator charge from a waste-removal charge doesn't change the answer; the hauling of waste stays taxable either way. The auditor also flagged that the company's name ("CONSTRUCTION COMPANY") may be a source of confusion — if the company were actually performing new construction, its labor charges for that construction work would be nontaxable — but on the facts presented, this company was only providing a taxable waste-hauling service, not new construction.

What this means for you

Hauling and waste-removal businesses serving construction sites

Don't assume that billing your service as an hourly "truck and operator" charge, instead of an explicit "waste removal" charge, changes the tax result. If the substance of what you're providing is hauling debris/trash from a jobsite, the Comptroller treats the whole charge as a taxable real property waste-hauling service, regardless of how you label or separate the invoice line items.

Construction companies that also offer hauling as a side service

Having "Construction" in your business name doesn't exempt hauling-only work. The exemption for construction labor applies when you're actually performing new construction — not when your role on a given job is limited to removing debris.

Accountants and tax professionals

This is a useful precedent for the "form vs. substance" issue in service-tax characterization: separately stating a charge doesn't recharacterize a taxable service as a nontaxable equipment rental when the real function being paid for is waste hauling.

Common questions

Q: Is charging for a "truck and operator rental" enough to avoid sales tax on jobsite debris hauling?
A: No — if the substance of the charge is hauling waste away from a construction site, it's taxable as a real property waste-hauling service regardless of how the charge is labeled.

Q: Does separately stating the truck/operator charge from a waste-removal charge change the answer?
A: No — the hauling of waste remains taxable either way.

Q: Does having "Construction" in a company's name exempt its hauling work?
A: No. The exemption for construction labor applies only when the company is actually performing new construction, not when its role is limited to debris removal.

Q: Can other hauling companies rely on this exact letter?
A: No. This is a Texas STAR letter ruling binding on the Comptroller only for the taxpayer it addresses (34 Tex. Admin. Code Rules 3.1, 3.10); confirm your own facts with a tax professional.

Citations and references

Prior guidance:

• STAR document 9203L1167A01 (Question 13), cited for the same waste-hauling taxability point

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200009716L

Original ruling text

September 19, 2000

From: Gilbert Zamora

To: "Hill, Tony"

Subject: CONSTRUCTION COMPANY

Dear Tony:

Thank you for your e-mail inquiry requesting written confirmation on the
following fact situation and questions.

I am auditing a company, ** (CONSTRUCTION COMPANY) that does a
variety of hauling services. The company and its customers have contacted the
Comptroller's Office regarding the taxability of some of the services. It is
apparent from the representative's position and from some of the customers,
that conflicting responses have been received.

I have received several calls from the customers and the taxpayer related to
this issue. The taxpayer wants specific information in writing related to the
taxability of the hauling services. The area of concern is as follows:

CONSTRUCTION COMPANY is dispatched to a job site. CONSTRUCTION COMPANY arrives
at the job site with the dump truck. The operator of the truck is an employee
of CONSTRUCTION COMPANY. CONSTRUCTION COMPANY charges the contractor/customer a
hourly charge for rental of a truck with an operator. The truck returns to
CONSTRUCTION COMPANY landfill to dump the debris. A variety of waste is removed
from the job sites. The company's position is the transportation charge is not
taxable regardless of what is being transported, because the company is only
renting a truck with an operator. Response: The charge for the truck,
operator and waste removal, if any charge is made, is taxable as a real
property service (waste hauling). The fact that the charge for the operator
and truck is separately stated does not cause the hauling of waste to be
nontaxable. See response to Question 13 on the enclosed STAR document

9203L1167A01.

A source of the confusion may be the company name. If the company is actually
doing new construction the charge for labor is not taxable. Based on your
facts CONSTRUCTION COMPANY is only providing a taxable waste hauling service.

This opinion is based on the facts presented. Other facts though similar may
provide a different result.

I hope this information answers your questions. If you need additional
information, You may e-mail our tax help section at .
You may also call me toll-free at 1-800-531-5441, extension 3-4502. The
direct line is 512/463-4502. You may also write to Tax Policy Division,
Comptroller of Public Accounts.

Gilbert Zamora

Tax Policy Division