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Ezel / Tax Rulings / TX
TX 8801L0855A14 Sales and/or Use Tax (State,Local,MTA) 1988-01-26

Were demolition-site debris-removal charges taxable, and how did Texas treat a lump-sum demolition-and-removal contract?

Short answer: Debris removal was taxable. A lump-sum contract combining demolition and removal was taxable on the total charge unless the removal portion represented 5% or less of the total contract price.

Apply this to your situation

This page answers the general question as of 1988. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1988
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is a taxpayer-specific January 1988 Texas Comptroller letter. It says the opinion may change if the facts differ and cites no statute or rule. STAR's caption names slabs, concrete, solid waste, rubbish, and garbage collection, but the operative body states only that the contractor demolished and removed structures and classifies debris removal and the mixed contract. Demolition, waste-removal, lump-sum, and mixed-service rules may have changed; verify current law and any current de minimis threshold. STAR documents may no longer represent current policy even when not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

The contractor demolished and removed structures. The Comptroller said the charge to remove debris was taxable.

If demolition and removal were billed under one lump-sum contract, the contractor collected tax on the total charge. The exception was when removal represented 5% or less of the total contract price; then no tax was due under the letter.

What this means for you

The historical result treated debris removal as the taxable component and applied a 5% threshold to a mixed lump-sum contract.

Common questions

Was debris removal taxable? Yes.

Was the entire lump-sum contract taxable? Yes, unless removal was 5% or less of the total contract price.

Citations and references

The letter cites no numbered statute or rule.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

January 26, 1988

Dear ****:

On behalf of Mr. Bullock, I hope you'll accept my apology for the delay
in answering your question involving changes in the sales tax law. This isn't
the way we normally do business.

Our people were, and still are, swamped by a deluge of inquiries as they
attempted to interpret provisions of the new law and draft rules which would
not adversely impact businesses. In many instances, an answer to a question
just wasn't available when the question arrived.

I understand you demolish and remove structures.

The charge to remove the debris will be subject to tax.

If your bid is lump sum for both demolition and removal you should
collect tax on the total charge. However, if your charge for removal
represents 5% or less than the total contract price, no tax will be due.

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 our
toll-free number
1-800-531-5441. The regular number is 512/463-4600. You may write me at
the Tax Policy Division.

Sincerely,
Adina Whittemore
Tax Policy Division

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