Does a Texas business have to charge sales tax for pumping out grease traps/septic tanks or clearing stoppages in sewer lines?

Plain-English summary

This January 14, 1993 Texas Comptroller letter ruling addresses sales tax on two related but distinct services: (1) pumping waste out of septic tanks and grease traps, and (2) clearing stoppages in sewer lines.

The Comptroller drew a clear line: removing waste from a septic tank or grease trap that is part of a sewer system is non-taxable, while cleaning out a sewer line is a taxable service when performed for a non-residential (commercial) customer. Where the two services overlap — for example, pumping grease from a holding tank that sits inline with a commercial sewer line — the tax treatment depends on how the work is billed:

• If you only pump grease from the tank (no line cleaning), it stays non-taxable.
• If you pump the tank and clean the sewer line in the same visit for one undivided charge, the entire charge becomes taxable, unless the line-cleaning is done on a regular, scheduled basis.
• If you separately itemize the charge for cleaning the line, only that separately-stated line-cleaning charge is taxable.
• Removing grease from a holding tank that is not part of the sewer line is always treated as a taxable waste removal service, regardless of billing method.

What this means for you

Septic/grease trap and drain cleaning businesses

Whether you owe tax turns on (1) what you're removing (waste from a septic/grease tank that's part of the sewer system, versus a separate holding tank) and (2) whether the customer is residential or non-residential, and (3) how you bill combined services. Keeping grease-trap pump-outs and sewer line cleaning as separately stated charges — or performing sewer line service on a regular schedule — can keep the pump-out portion non-taxable even when line cleaning happens at the same job.

Commercial property owners and managers

If you hire someone to clean out a sewer line at a commercial property, expect to pay sales tax on that service. If the same visit also includes pumping a grease trap that's part of the sewer system, ask for a separate line-item for the grease removal, since an undivided charge for both services is taxable in full unless the line cleaning is scheduled/periodic.

Accountants and tax professionals

Note that the letter distinguishes only by customer type for sewer line cleaning (taxable for non-residential customers) but does not state that grease-trap/septic waste removal is taxed differently by customer type — it says that service is simply non-taxable when the tank is part of the sewer system. The ruling does not cite any specific Tax Code section or Comptroller rule; it is a direct-response letter, not a rule-based holding, and per the standard STAR disclaimer only binds the Comptroller for the original requestor.

Common questions

Q: Is pumping a septic tank or grease trap taxable in Texas?
A: No, according to this ruling, removing wastes from a septic tank or grease trap that is part of a sewer system is a non-taxable service.

Q: Is cleaning out a clogged sewer line taxable?
A: Yes, if performed for a non-residential (commercial) customer. The letter does not state the residential sewer-line-cleaning treatment beyond implying the taxable rule applies specifically to non-residential customers.

Q: What if I pump the grease trap and clean the line during the same visit?
A: The entire charge is taxable unless (a) the line cleaning is done on a scheduled, periodic basis, or (b) you separately state the charge for cleaning the line from the charge for removing the grease.

Q: Is removing grease from a holding tank that isn't part of the sewer line taxable?
A: Yes. The letter states this is considered a taxable waste removal service, and if you perform this type of service you must collect tax on it.

Citations and references

No specific Tax Code sections or Comptroller rules are cited verbatim in this letter; it is a short direct-response ruling addressing the requestor's specific facts.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9301L1237E04

Original ruling text

January 14, 1993

Dear *****

Thank you for your inquiry concerning the removal of wastes from
grease traps and septic tanks and the removal of stoppages in sewer
lines. The removal of wastes from septic tanks and grease traps that
are part of a sewer system is a non-taxable service. Sewer line
cleaning services are taxable if performed for a non-residential
customer.

If you only remove the grease from a commercial customer's grease
holding tank in a sewer line, it will be non-taxable. However, if you
simultaneously clean out the sewer line, the entire charge will be
taxable unless the service is performed on a scheduled, periodic basis
or you separate out the charge to the customer for cleaning out the
line. If you separate out the charge for cleaning the line of grease,
the charge is subject to tax.

Removing grease from a grease holding tank that is not part of the
sewer line is considered a taxable waste removal service. While you
may not perform this type service, if you do, you must collect tax on
it.

I hope this satisfactorily answers your questions.

Sincerely,

Wade Anderson
Assistant Director of Tax Administration

NOTE: Previous Accession Number 93070007.2 and/or 9307007L