Who collected and remitted Texas sales tax when a city bought commercial trash collection and billed its own customers?

Plain-English summary

The contractor provided commercial trash collection under a contract with CITY A. The city paid the contractor monthly for all services, whether or not the city collected the amount it billed its customers.

With those additional facts, the Comptroller concluded that the city bought trash-collection services for resale. The city should give the contractor a resale certificate, and the city was responsible for collecting and remitting sales tax to Texas.

An earlier February 4 letter in the same STAR document had found the original facts insufficient because it was unclear who customers contacted, who pursued unpaid bills, and what the written contract required. The February 22 answer resolved the issue after receiving more information.

What this means for you

The historical result followed the contractual and collection relationship: the city bought the service, billed customers, and remained obligated to pay the contractor even if a customer did not pay.

Common questions

Did the contractor charge the city tax? No. The city gave the contractor a resale certificate.

Who collected tax from customers? The city.

Who remitted the tax to Texas? The city.

Citations and references

The document cites no numbered statute or rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8802L0865B07

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

February 22, 1988

Dear ***:

Thank you for the additional information regarding the contract you have
with CITY A.

As I understand from your letter, you have a contract to provide commer-
cial trash collection. The city pays you monthly for all services ren-
dered whether or not the city received payment for the amount the city
bills its customers.

CITY A is purchasing trash collection services for resale. The city
should issue you a resale certificate. The city is responsible for col-
lecting and remitting the sales tax 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 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,
(Mrs.) Jo Ann Dieck
Tax Policy Division

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

February 4, 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.

The following facts were noted from your letter requesting information on
garbage collection:

1) Your waste collection company has contracted with a city.
2) The city charges its customers the fee and the tax and collects both.
3) The city passes these fees on to your company.

Your question is "should the city report the tax?" From the information
provided, we can't tell who is responsible for tax. For example, who
does
the customer contact for service, you or the city? If the customer fails
to
pay, who attempts collection? Is there a written contract between you
and
the city?

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 Telephone Bank Operations.

Sincerely,
Orlando R. Guerrero
Telephone Bank Operations