Is a business's fee for picking up and collecting used oil, used oil filters, used antifreeze, and used brake fluid for recycling subject to Texas sales tax?

Subject

Used Oil, Oil Filter, Antifreeze, And Brake Fluid Collection Services — Nontaxable Waste Collection

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9309L1257G05

Plain-English Summary

A recycling business asked the Comptroller whether its service of picking up waste oil, used oil filters, and used antifreeze to be recycled or re-refined was a taxable service under Texas sales tax. The letter states that "[t]hrough further research and analysis, we have determined that your collection services for used oil, used oil filters, used antifreeze, and used brake fluid are not subject to the Texas sales tax."

The letter further explains that the taxpayer "may accept a properly completed exemption certificate or other documentation from your customers stating that these materials are excluded because of regulation under Chapter 26 of the Texas Water Code." In other words, the customers whose used oil, filters, antifreeze, and brake fluid are being collected can document, via exemption certificate, that the materials fall outside the scope of taxable sales because they are governed by the Water Code's Chapter 26 regulatory scheme.

The letter closes with the Comptroller's standard caveat that "[t]his opinion is based on the facts presented" and that "[o]ther facts, though similar, may yield a different response," and notes the letter corresponds to a previous accession number (93070166.1 and/or 9307166L).

What This Means For You

If you operate a used-oil, oil-filter, antifreeze, or brake-fluid collection/recycling business: This letter states that your collection and disposal fee for these specific materials, when collected to be recycled or re-refined, is not subject to Texas sales tax.

If you provide these collection services to customers: You may accept a properly completed exemption certificate or other documentation from customers stating that the materials being collected are excluded because of regulation under Chapter 26 of the Texas Water Code.

Facts matter: As with all STAR letter rulings, the Comptroller notes that this opinion is based on the specific facts presented, and other facts — even if similar — may yield a different result. Businesses with comparable but not identical waste-collection arrangements should not assume the same result applies automatically.

Q&A

Q: Is a fee charged for collecting used oil, used oil filters, and used antifreeze for recycling subject to Texas sales tax?
A: No. The letter states that "your collection services for used oil, used oil filters, used antifreeze, and used brake fluid are not subject to the Texas sales tax."

Q: Does used brake fluid collection get the same treatment as used oil and antifreeze?
A: Yes. The letter groups "used oil, used oil filters, used antifreeze, and used brake fluid" together as materials whose collection services are not subject to sales tax.

Q: What documentation can a collection business get from its customers to support the nontaxable treatment?
A: A properly completed exemption certificate or other documentation stating that the materials are excluded because of regulation under Chapter 26 of the Texas Water Code.

Q: Why did the Comptroller reach this conclusion?
A: The letter states the determination was reached "[t]hrough further research and analysis," and ties the exclusion to the materials' regulation under Chapter 26 of the Texas Water Code, without detailing the specific analytical steps.

Q: Can another business rely on this exact letter for its own waste-collection services?
A: The letter itself cautions that "[t]his opinion is based on the facts presented" and that "[o]ther facts, though similar, may yield a different response," so a business with different facts should not assume identical treatment applies.

Original ruling text

September 23, 1993

Dear **:

I am writing you in reference to our previous conversations and
letters regarding the taxability of your recycling services.
Specifically, the determination of whether the service of picking up
waste oil, used oil filters, and used antifreeze to be recycled or
re-refined is a taxable service under sales tax.

Through further research and analysis, we have determined that your
collection services for used oil, used oil filters, used antifreeze,
and used brake fluid are not subject to the Texas sales tax. You may
accept a properly completed exemption certificate or other
documentation from your customers stating that these materials are
excluded because of regulation under Chapter 26 of the Texas Water
Code.

I apologize for any inconvenience this may have created for you. But,
I hope that this will help in the effort to remove contaminants from
our water supply and environment.

This opinion is based on the facts presented. Other facts, though
similar, may yield a different response.

If you have any other questions concerning this, please give me a call
at our toll-free number 1-800-531-5441, extension 3-4635.

Sincerely,

Hayden Denham
Tax Administration Division

NOTE: Previous Accession Number 93070166.1 and/or 9307166L