When did Texas tax a city's garbage charge, and what if the service was funded or bundled differently?

Plain-English summary

Waste collection became taxable October 1, 1987, so a city's separately charged garbage fee was taxable from that date. No tax was due when the city made no garbage charge and paid from general revenues, because there was no sale. A single flat utility charge including garbage did not require a separate garbage tax, but a separately stated fee did.

The letter also said parking fees and city sales of maps, souvenirs, and other tangible property were already taxable.

What this means for you

The historical result depended on whether garbage collection was sold for a stated charge: general-revenue funding was not a sale, separate billing was taxable, and a flat combined utility charge was treated differently.

Common questions

When did city garbage charges become taxable? October 1, 1987.

What if collection was funded from general revenues? No tax was due because there was no sale.

What if garbage was inside one flat utility charge? The city did not have to collect tax on a separate garbage fee unless that fee was separated.

Citations and references

• House Bill 79 (1986) — cited as allowing certain cities, after a public vote and subject to conditions, to adopt an additional city sales and use tax.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8709L0832D13

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TX 78774

September 15, 1987

Dear *:

Thank you for your letter regarding the new tax laws and their effect on
your city.

Waste collection or removal services become taxable October 1, 1987.
Charges by your city for garbage collection would be taxable starting on
this date. If there is no charge for garbage collection and the
collection
services are paid from general revenues, there is no sale of garbage
collection/removal and no sales tax would be due.

If a city has a flat "utility" charge which includes garbage collection,
then the City is not required to collect tax on the garbage collection
fee.
If the garbage collection fee is separated from the total charge tax must
be
charged on the amount for garbage collection.

Items currently taxable that might involve municipalities include parking
fees and sales of tangible personal property such as maps or souvenirs.
If
you sell tangible personal property or provide taxable services, you
should
request an application for a Texas Sales and Use Tax Permit.

House Bill 79 passed in 1986 allows certain cities to adopt an additional
_
percent city sales and use tax. This increase can only be adopted by
public
vote and there are several stipulations involved. If you would like more
information on this, please let me know.

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

If you have any questions or need more information, please call me at
1-800-252-5555 toll free from anywhere in Texas. The regular number is
512/463-4600. You may write me at the Tax Policy Division.

Sincerely,
Julie Pesl
Tax Policy Division