News and Insights

Texas Court of Appeals Exempts Asbestos Abatement Services

Tax Development Mar 03, 1999

The Court of Appeals in Rylander v. Associated Technics Company, Inc. et al., 987 S.W.2d 947 (Tex. App. – Austin 1999), has recently reversed the Comptroller’s policy of taxing the labor involved in the removal of asbestos from buildings. The Comptroller contended that this service was taxable repair and remodeling. The Taxpayer contended that the service was specifically exempted by the legislature when it defined the scope of real property services in Texas Tax Code § 151.0048 (emphasis added):

"Real property service" means:

  (3)   the removal or collection of garbage, rubbish, or other solid waste other than:
      (A)   hazardous waste;

The Comptroller recognized that asbestos was a hazardous substance, but contended that it did not become a hazardous waste until it was actually separated from the building. The Court of Appeals held that the Legislature intended to exempt the "removal" of hazardous waste from the time the work-site is prepared until the bags of asbestos are finally placed in a landfill. The Court further held that because the removal of hazardous waste was specifically exempted from the definition of real property services, it could not fall within the general scope of real property repair and remodeling. This decision allows taxpayers to seek refunds of sales and use tax paid on asbestos abatement services for all periods the taxpayer may have open under Texas law. Please contact a Ryan & Company professional for more information.