Which surveying services are taxable in Texas, and how should mixed taxable/nontaxable survey jobs be billed?

Plain-English summary

A surveying firm wrote in about the difficulty of applying Texas sales tax to its work. The Comptroller acknowledged there are "gray areas": the legislature did not define "surveying" when it made the service taxable, so the agency crafted a definition (with industry input) of the surveying services that are taxable. The core distinction: surveying that establishes or recovers boundaries is taxable; work that does not involve boundaries is not. Firms that provide the full range of services are only expected to make a fair separation of the taxable from the nontaxable parts.

Applying that to the specific jobs the firm submitted:

• Job 41143 — does not appear to involve establishing or recovering boundaries, so it is not taxable. But if preparing the Replat involves recovering or confirming boundaries at the site, that activity should be separately stated and taxed.
• Another job — appears to be a charge for confirming or recovering boundaries → taxable.
• Another job — involved taxable "as-built" surveying and nontaxable topographic survey; these could have been separately billed and taxed accordingly, but because the charge was lumped together, the firm was correct to tax the full amount.
• The "FNMA deal" job — taxable. The surveying was not billed to or paid by the federal government, and the exemption certificate provided by the abstract company is invalid. (The Comptroller agreed to notify the abstract company.)

The letter also notes, in passing, that the firm's idea of a tax break for renovating existing computer programs is something to take up with the legislature — not a holding.

What this means for you

Surveying firms

The taxable line is boundaries. Work that establishes, confirms, or recovers boundaries (including boundary-related replats and "as-built" surveys) is taxable; topographic and other non-boundary work is not. You're expected to make a fair, good-faith separation.

Separate your billing — or tax the whole thing

When a job mixes taxable boundary work with nontaxable survey work, separately state each part. If you lump them into one charge, the entire charge is taxable — as one of these jobs shows.

"Federal" jobs aren't automatically exempt

A survey tied to a federally related transaction is still taxable when the federal government isn't the one billed or paying, and an exemption certificate from an abstract company (or other third party) is invalid.

Common questions

Q: Which surveying services are taxable in Texas?
A: Those that establish, confirm, or recover boundaries. Non-boundary work such as topographic surveys is not taxable.

Q: What if a job mixes taxable and nontaxable surveying?
A: Separately state the parts. If you lump them into one charge, the full amount is taxable.

Q: Is a survey for a federally related deal exempt?
A: Not when the surveying isn't billed to or paid by the federal government. An exemption certificate from an abstract company is invalid.

Q: Can I rely on this 1988 letter today?
A: Treat it as guidance only. It is based on the facts presented and can change with different facts; on the STAR system it binds the Comptroller only as to the taxpayer it was issued to and may no longer reflect current policy.

Citations and references

Rules and statutes: The letter applies the Comptroller's administrative definition of taxable "surveying" (boundary establishment/recovery), the separately-stated-versus-lump-sum rule, and the invalidity of a third-party exemption certificate on a non-federal-payer job, but does not cite a specific Tax Code section or Comptroller rule by number.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8807L0885C03

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller July 5, 1988

Dear ****:

Your letter to Mr. Wayne McDonald has come to me for reply. As we
discussed
on the telephone, I truly appreciate your concern and efforts in
collecting
and remitting the tax on surveying services.

I agree with you that there are gray areas in the taxing of surveying
services. The legislature did not define "surveying" when the tax was
imposed. Consequently we invited input from the industry when defining
the
services which would be included as taxable "surveying". The resulting
definition was believed to be one that was fair and not overly broad.

The problems you address in your letter primarily involve the difficulty
of
separating the services which are not taxable as surveying from those
services that are taxable. These are problems that are common for firms
that
provide the full range of services that you do. As I stated over the
telephone, all we expect of you is that you make an effort to make a fair
separation.

Your ideas of a tax break for renovating existing computer programs is
one
that needs to be presented to the legislature. I have heard that some
states
have such a provision.

As far as the examples of jobs you submitted, your job number 41143 does
not
appear to involve either establishing or recovering boundaries and
therefore
would not be taxable. If preparing the Replat involves recovering or
confirming the boundaries at the site, then that activity should be
separately stated and taxed.

Your job number ** appears to be a charge for confirming or
recovering
boundaries and would be taxable.

Job number * appears to involve taxable "as built" surveying and
non-taxable topographic survey which could have been separately billed
and
taxed accordingly. Since the charge was lumped together, you were
correct to
tax the full amount.

The FNMA deal, job number *, is taxable. The surveying is not billed
to
or paid by the Federal government. The exemption certificate provided by
the
abstract company is invalid. We will notify the abstract company as you
requested.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions or need more information. please call our
toll-free
number 1-800-531-5441. The regular number is 512/463-4600. You may
write we
at Tax Correspondence, Comptroller of Public Accounts.

Sincerely,
Tom Soto
Tax Correspondence