Could a Texas waste-removal company issue a resale certificate for taxable transfer-station services that it resold to customers?

Plain-English summary

The Comptroller said a taxable waste-removal company could give a transfer station a resale certificate instead of paying sales tax on the station's service. The company was reselling that service to the customers from whom it collected sales tax.

For tax already paid, the letter described several refund paths. The company could give the station a resale certificate and written refund request; the station could refund or credit the tax, recover it through amended or future reports, request a refund from the Comptroller, or assign its refund right to the waste-removal company.

What this means for you

A service provider that buys a taxable service for resale may be able to document the purchase with a properly completed and signed resale certificate. The letter also warns that Rule 3.338 prohibited taking credit for local tax paid to one jurisdiction but collected for another.

Common questions

Could the transfer station accept a resale certificate? Yes, because the waste-removal company resold the station's service to its own taxable-service customers.

Could the company recover tax it had already paid? Potentially. The letter outlines refund, credit, assignment, and amended-report routes involving the transfer station.

Did the local-tax rules matter? Yes. The letter specifically notes Rule 3.338(a)(4)'s restriction on credits involving different local jurisdictions.

Citations and references

• 34 Tex. Admin. Code Rule 3.338 — credits for tax paid to suppliers
• 34 Tex. Admin. Code Rule 3.338(a)(4) — local-tax credit limitation
• 34 Tex. Admin. Code Rule 3.325 — refunds

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9110L1136A12

Original ruling text

October 1, 1991

Dear **:

Thank you for your recent letter. According to your facts, your
company (*) provides taxable waste removal services. Usually,
you pay a fee to dispose of the waste at a landfill, and the
landfill operator does not charge you tax. In one case, however,
you have been paying a fee to leave the waste at a "transfer
station", which has been collecting tax from you. I assume that the
transfer station is not located at the actual disposal site, but
that the operator of the transfer station eventually transports
the waster to the actual disposal site.

Question: May ** issue a resale certificate to the transfer
station, instead of paying tax?

Answer: Yes. * is reselling the transfer station's services
to the customer from whom * is collecting sales tax. In the
future, the transfer station may accept a properly completed and
signed resale certificate from * instead of collecting sales
tax.

I have also enclosed Rule 3.338, which details the procedure for a
seller (such as *) to take credit on its tax reports for tax
paid to a supplier to whom the seller could have properly issued a
resale certificate. Note, however, the prohibition against taking
credit for local tax paid to one jurisdiction, but collected for
another. Rule 3.338(a)(4).

If you wish to seek a refund of tax already paid to the transfer
station, you may simply give the transfer station a resale certificate
and your written request for a refund. The transfer station may
refund to you tax collected on services that you resold to your
customers. Or, the transfer station may, with your written permission,
extend credit in the amount of tax collected.

The transfer station may obtain a refund from this agency of tax
it refunded to you by filing amended tax reports, reducing its reported
taxable sales on future reports until it recovers the amount
of tax refunded to **, or by directing a written refund request
to this agency. Enclosed Rule 3.325 further discusses refunds. The
transfer station may also assign, in writing, its right to a refund
to *. * could then apply directly to this agency for a
refund of tax paid to the transfer station.

This opinion is based on the facts presented. Different facts, though
similar, might lead to different answers. If you have further
questions, feel free to write or call me at 1-800-252-3555,
ext. 3-3889.

Sincerely,

John Christian
Attorney
Tax Administration