Which charges for surveying and drafting to locate a pipeline right-of-way are subject to Texas sales tax, and which are not?

Plain-English summary

A company that surveys and drafts the route for pipelines asked the Comptroller which of its charges are taxable. Under Texas law, surveying of real property is a taxable service — it covers work done to determine or confirm the boundaries of real property, or to locate structures and improvements relative to those boundaries.

Establishing the right-of-way for a pipeline is exactly that kind of work: it determines the boundaries of the right-of-way and of every parcel the pipeline will cross. So it is a taxable service, and so is all the drafting done after the ground survey — drawing plats, writing centerline descriptions, and preparing permit drawings to get permission to cross highways, railroads, and the like. As-built surveys (restaking and confirming boundaries after the pipeline is installed) are taxable too.

Some related work is not taxable: staking the centerline, and drawing the alignment sheets and piping drawings (showing valve connections, meter runs, and similar detail) that the contractor uses to actually build the pipeline. If you draft from another company's survey notes, taxability follows the work you do — if you establish or confirm boundaries, your service is taxable.

Two other points: you must separately state the taxable and nontaxable charges on your invoice, or the Comptroller will treat the whole amount as taxable; and if you survey property located out of state for a Texas customer, you do not charge Texas sales tax.

What this means for you

Pipeline and land-surveying firms

Any part of your job that determines or confirms boundaries — the route survey, the right-of-way work, and the as-built survey — is a taxable real-property survey. Drafting that flows from that boundary work (plats, centerline write-ups, highway/railroad permit drawings) is taxable along with it.

Separating taxable from nontaxable charges

Break out the nontaxable items — centerline staking and the contractor's construction drawings (alignment sheets, piping drawings) — as clearly stated separate line items. If taxable and nontaxable charges are lumped into one price, the entire charge becomes taxable.

Out-of-state surveys

Surveying land physically located outside Texas is not a Texas taxable service even when your customer is in Texas, so no Texas tax applies to that work.

Common questions

Q: Is surveying to establish a pipeline right-of-way taxable in Texas?
A: Yes. It determines the boundaries of the right-of-way and of the land crossed, which is taxable surveying of real property.

Q: Is staking the centerline taxable?
A: No. Centerline staking is not taxable, and neither are the alignment sheets and piping drawings the contractor uses to build the line.

Q: What happens if I don't separate the taxable and nontaxable charges?
A: The total charge is treated as taxable. You should state the taxable and nontaxable amounts separately.

Q: Do I charge Texas tax on surveying land in another state for a Texas customer?
A: No. If the property is located out of state, you do not charge Texas sales tax.

Q: Can I rely on this 1988 letter for my own business?
A: Treat it as guidance only. The opinion is based on the specific 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 states the Comptroller's position on taxable real-property surveying but does not cite a specific rule or Tax Code section 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/8810L0903F12

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TX 78774

BOB BULLOCK
Comptroller October 11, 1988

Dear ****:

Thank you for your letter concerning the taxability of various
charges related to pipeline surveys.

Taxable surveying of real property includes activities performed
to determine or confirm the boundaries of real property, or to
determine or confirm the location of structures or other
improvements in relation to the boundaries of property.

As we discussed in our telephone conversation October 11, 1988,
establishing the right of way for a pipeline actually involves
determining the boundaries of the right of way and the boundaries
of property that the pipeline will cross. Therefore this is a
taxable service. All of the related work done after the actual
ground survey, including drafting or drawing plats, writing
centerline descriptions, and permit drawings to obtain permission
to cross highways, railroads, etc. is taxable as well.

Staking the centerline is not taxable. Drawing alignment sheets
and piping drawings that show the valve connections, meter runs,
etc. at the end of each pipeline for use by the contractor in
building the pipeline are not taxable. You should separate the
taxable and nontaxable charges or the total will be considered
taxable.

As built surveys, which include restaking and confirming the
boundaries after a pipeline is installed, are taxable. If you draw
or draft from notes of a survey done by another company the
taxability will be based on the work done. In other words, if
you establish or confirm the boundaries of real property then your
service is taxable.

If you survey property located out-of-state for a customer located
in Texas, you will not charge Texas sales tax.

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

Please feel free to contact me if you have any additional questions.
You may write me, call toll-free 1-800-531-5441 from anywhere in the
United States or phone 512/463-4685.

Sincerely,
Julie Pesl
Tax Correspondence