Which cable-system mapping, surveying, blueprint, drafting, and engineering charges were taxable?

Plain-English summary

Field work mapping, locating, and relocating CATV coaxial cables and drawing the system to scale was taxable real-property service. As-built surveys and surveys establishing right-of-way boundaries were taxable.

Separately stated staking of a centerline or determining where new lines should go was not taxable. Separately stated engineering was also nontaxable, whether related to new construction or repair and remodeling.

An original set of blueprints requiring the engineer's certification was nontaxable. Stock blueprints and stand-alone drafting or plotting were taxable. The cable company did not receive an automatic exemption merely because it provided cable television service.

Common questions

Was mapping the existing cable system taxable? Yes.

Was centerline staking taxable? Not when separately stated.

Were engineering services taxable? No, when separately stated from taxable work.

Were all blueprints nontaxable? No. Certified originals were nontaxable; stock plans and stand-alone drafting or plotting were taxable.

Citations and references

• 34 Tex. Admin. Code Rule 3.356(a)(8), (b), and (i)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9001L0972D01

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

January 16, 1990

Dear ***:

Thank you for your letter dated January 5, 1990, concerning the
taxability of the services provided by your client, a drafting and
engineering design service.

I've restated the information provided in your letter and our
telephone conversation below:

Your client has been performing services for a cable television
company that is "constructing and rebuilding its cable television
plant." The cable company claims that it does not owe sales tax
on the services that you described as follows:

1. Field work in mapping, locating and relocating
   CATV coaxial cables (but not construction), and drawing
   the CATV system to scale; and

2. Engineering design, drafting, plotting, and blueprint
   work.

You stated that the cable TV company has hired your client to
locate the existing system and provide blueprints of it, as
well as to design original blueprints for the improvements to
the systems, including new additions and remodeling or renova-
tion of existing areas.

RESPONSE: 1. The field work in mapping, locating, and relocating
the CATV coaxial cables, and drawing the CATV system to scale are
taxable real property services.

Surveys done to determine or confirm the boundaries of real property,
or to determine or confirm the location of structures or other im-
provements in relation to the boundaries are taxable. Therefore,
as-built surveys and surveys to establish the boundaries of a right-
of-way for a cable TV line are taxable. The charge for staking the
centerline or determining where the new lines should be located would
not be taxable, if stated separately on the invoice to the customer.
Please refer to sections (a)(8), (b), and (i) of the enclosed Rule
3.356 on real property services.

2. The sale of an original set of blueprints is not taxable.
   Although your client is providing blueprints or construction specifi-
   cations for an existing structure, the blueprints that he provides
   would be nontaxable if they are original drawings that require his
   certification as an engineer. Sales of stock blueprints are taxable,
   however, as are charges for stand-alone drafting or plotting services.

Engineering services are not taxable, whether related to new construc-
tion or real property repair/remodeling, if separately stated from any
taxable charges.

Your client's customer does not automatically qualify for
exemption from sales tax simply because the customer is a cable TV
company. Cable TV companies must pay tax on items used in
providing the service that are not transferred to the customer.

You also indicated that your client has been collecting sales tax
on the total charge to its customer. Your client may refund sales
tax collected in error from customers according to the enclosed
refund procedure guidelines.

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 1-800-252-5555 (ext.
3-4685) from anywhere in the United States or phone 512/463-4685.

Sincerely,
Julie Pesl
Tax Correspondence