TCEQ provides guidance on collection of environmental fees

Source: Texas Commission on Environmental Quality - The Advocate, January-March 2008

Many types of small businesses must pay environmental fees to cover the cost of implementing required state programs to meet rules and regulations.  If you choose to pass the cost of environmental-service fees to your customers, please be aware of the following guidelines.

Texas Tax Code Section 111.016 requires that any monies represented and collected as a "tax" or "fee" must be paid to the state in full.  If you designate an amount on a bill as a fee, you will be required to remit it to the state.  Therefore, any amount you collect from your customers must not be styled as a state "tax" or "fee."  Any amount collected from a customer and specifically identified as being related to an environmental program should be labeled as a reimbursement.

Any additional charge billed to a customer for reimburment of fees that the EPA or TCEQ require is considered part of the total price of the service and is subject to sales tax, even if separately stated (See Tax Code, Sec. 151.007).

For example, the Texas Legislature established the Dry Cleaner Remediation Program, which established dry cleaning facility registration requirements, fees, performance standards, distributor registration, and a method for revenue disbursement.

Some dry cleaners have chosen to pass along the costs of this program to their customers in the form of higher rates for services.  Sales tax is due on the total amount charged.  Others have decided to seperately state a line item charge for "Environmental Fees," or similar language on the invoice or receipt given to their customers.  If the invoice states "environmental fees," the fees must be remitted to the state.

If you have any questions regarding Texas sales, use tax, and environmental fees, please call the Texas Comptroller of Public Accounts toll free at (800) 252-5555 or E-mail the comptroller's office at tax.help@cpa.state.tx.us.