When were charges for slicing and disposing of used tires taxable as garbage collection in Texas?

Plain-English summary

A tire-disposal company sliced used tires and either received them from customers at its facility or picked them up. The Comptroller distinguished disposal at one site from garbage collection.

When a customer brought tires to the same location where the company sliced and buried them, the slicing-and-disposal charge was not taxable. When the company picked up the tires at the customer's location, the full charge for collection, slicing, and disposal was taxable.

The full charge was also taxable when the customer delivered the tires to the company but the company then hauled them to a different disposal site. The letter treated that activity as garbage collection.

The same rules applied when another garbage collector hired the company. Rule 3.356 also addressed when the other collector could issue a resale certificate.

What this means for you

Under this letter, the physical movement of the tires mattered. Customer drop-off followed by slicing and burial at that same location was treated differently from pickup or later hauling to another disposal site.

Common questions

Was tire slicing by itself taxable? Not unless it was performed in connection with garbage collection.

What if the customer brought the tires to the disposal site? The charge was nontaxable when the tires were sliced and buried at that same location.

What if the company picked up the tires? The total collection, slicing, and disposal charge was taxable.

What if the customer dropped off the tires but the company hauled them elsewhere? The total charge was taxable as garbage collection.

Citations and references

• 34 Tex. Admin. Code Rule 3.356(c), (f), and (g) (real property services)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9012L1061D07

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TEXAS 78774

BOB BULLOCK
Comptroller December 5, 1990

Dear *:

Thank you for your recent letter concerning the tire disposal
services provided by your company.

You indicated that your company slices tires and disposes of
them. Customers bring tires to your facility for disposal and
your company will also pick up tires from a customer's loca-
tion for disposal. You did not indicate whether your company
disposes of the sliced tires at the same location where the
tires are collected or whether the sliced tires are moved to
a different location for disposal.

First, the fee for slicing tires is not taxable unless it is
done in connection with garbage (used tires) collection. Gar-
bage collection is a taxable real property service. A fee for
slicing and disposing of tires that the customer brings to the
location where the tires are sliced and buried is not taxable.
If you pick up the tires at the customer's location, the to-
tal charge to the customer for collecting, slicing and dispos-
ing of the tires is taxable.

If your customer brings the tires to you and you then slice
them and haul them to a different disposal site, the total
charge to the customer is taxable. This is considered garbage
collection also. Please refer to section (g) of Rule 3.356 on
real property services.

The same guidelines apply to garbage collectors as to other
customers. The fee that another garbage collection service
pays you for slicing and disposing of tires will be taxable or
not taxable based on the guidelines discussed in the previous
paragraphs. Please review section (f) of Rule 3.356. The fee
that another garbage collection service pays you is a part of
the selling price of their service. Section (c) of the rule
discusses when resale certificates may be issued.

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

Please feel free to contact me if you have any additional
questions. You may write me, call toll free 1-800-252-5555
(ext. 3-4685) from anywhere in the United States or phone 512
463-4685.

Sincerely,
Julie Pesl
Tax Correspondence