Did a community association correctly collect tax on residents' share of private garbage collection after a City of Houston reimbursement?

Plain-English summary

The community association hired a private company to collect garbage within its subdivisions. The City of Houston paid the association a monthly lump sum toward the cost, and the association billed residents for the difference between the contractor's charge and the city reimbursement.

The Comptroller confirmed that the association correctly charged the historical 6% state, 1% city, and 1% MTA taxes on the amount billed to residents.

What this means for you

The historical letter applied tax to the residents' net billed amount after the association applied the city payment. The printed combined rate is a 1987 rate, not current guidance.

Common questions

Was the association's resident charge taxable? Yes.

What amount did the association bill? The private contractor's cost minus the City of Houston reimbursement.

What rates did the letter approve? Historical rates of 6% state, 1% city, and 1% MTA on the resident billing.

Citations and references

• No statute or administrative rule is cited in the letter text.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8712L0856B06

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller December 11, 1987

Dear ***:

Thank you for your inquiry regarding your sales tax responsibilities in
Texas.

Your letter states you are a community association who contracts with a
private company who collects garbage within the association boundaries.
The association also receives a lump sum payment from the City of Hous-
ton each month to apply toward the cost of garbage collection in your
subdivisions. You bill the residents for the difference between what
the garbage contractor bills you and the amount reimbursed by the City
of Houston.

You also stated you charge your residents tax at the rate of 6% state,
1% city, and 1% MTA. You are correct in charging this rate on the amount
billed to the residents.

A sales tax application packet is being sent to you under separate cover.
This information will tell you how and when taxes should be reported to
the State.

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,
(Mrs.) Jo Ann Dieck
Tax Policy Division