Is a land survey to locate a farm/ranch fence line taxable, even though the fence materials themselves are exempt?

Subject

Land Survey For A Farm/Ranch Fence Line Is A Taxable Real Property Service

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9309L1258A10

Plain-English Summary

A taxpayer asked the Comptroller for an exemption for a survey performed to determine where to put in a fence. The fenced-in area was going to be used as a hayfield in the summer and a heifer pasture in the fall and winter months — clearly a farm or ranch use.

The Comptroller's response draws a distinction between the fence itself and the service of surveying for it. A land survey to determine or confirm property boundaries is a taxable real property service (citing Rule 3.356 - Real Property Services). The letter acknowledges that fences and the materials used to construct them are exempt when used on a farm or ranch. But it states there is no exemption in the statute for real property services — such as surveying — used on a farm or ranch. Because the survey in question was done to determine the boundary between the taxpayer's property and a neighbor's property, the letter concludes the survey is taxable.

The letter closes with the standard caveat that the opinion is based on the facts presented, and that other facts, though similar, may provide a different result.

What This Means For You

Materials vs. services are treated differently. Even where a farm-or-ranch exemption applies to tangible items — here, fence lumber, wire, and posts — that exemption does not automatically extend to related services performed in connection with those items. This letter shows that a real property service like a boundary survey remains taxable even when it is performed solely to figure out where an exempt fence should go.

Boundary surveys are called out specifically. The letter treats a survey done "to determine or confirm property boundaries" as falling within Rule 3.356's real property services, and taxable on that basis — regardless of the ultimate farm or ranch use of the fenced land.

Don't assume a farm/ranch exemption is a blanket exemption. If you are a rancher, farmer, or a service provider working with agricultural clients, this letter is a reminder to check whether the specific item or service in question has its own exemption. The exemption for fencing materials does not carry over to the surveying service used to site the fence.

Q&A

Q: Is a survey to locate a farm/ranch fence line exempt from Texas sales tax?
A: No. The letter states that a land survey to determine or confirm property boundaries is a taxable real property service under Rule 3.356 - Real Property Services.

Q: Are fences and fencing materials used on a farm or ranch exempt?
A: Yes, according to the letter, fences and the materials to construct the fences are exempt when used on a farm or ranch.

Q: If the fencing materials are exempt, why is the survey taxable?
A: The letter explains there is no exemption provided in the statute for real property services used on a farm or ranch, even though the fence materials themselves are exempt.

Q: What kind of survey was at issue in this letter?
A: A survey performed to determine where to put in a fence, on land that would be used as a hayfield in summer and a heifer pasture in fall and winter.

Q: Does this opinion apply to every similar situation?
A: No. The letter states that the opinion is based on the facts presented, and that other facts, though similar, may provide a different result.

Original ruling text

ALERT: This document may be affected by changes to the Tax Code which was amended by H.B. 268, 82nd Reg. Legislative Session, 2011. The amendment required persons claiming a sales tax exemption for certain agricultural and timber products to apply for and provide a registration number issued by the Comptroller, effective 01/01/2012.

September 16, 1993

Dear *:

This is in response to your letter requesting an exemption for a
survey that you had done in order to determine where to put in a
fence. The fenced in area will be used as a hayfield in the summer and
a heifer pasture in the fall and winter months.

RESPONSE: A land survey to determine or confirm property boundaries is
a taxable real property service (see Rule 3.356 - Real Property
Services, enclosed). While fences and the materials to construct the
fences are exempt when used on a farm or ranch, there is no exemption
provided in the statute for real property services used on a farm or
ranch. The survey to determine where the boundary is between your
property and your neighbor is taxable.

This opinion is based on the facts presented. Other facts though
similar may provide a different result.

If you have other questions or need more information, you may call me
at 1-800-5315441, extension 3-4502. The regular number is
512/463-4502. You may also write to Tax Administration Division at the
above address.

Sincerely,

Gilbert Zamora
Tax Administration Division

NOTE: Previous Accession Number 93070172L.2 and/or 9307172L