Is a geocoding service — manually matching bus-ridership survey answers to numbered map locations for an out-of-state (Washington) firm, with no computer involved — subject to Texas sales/use tax?

Plain-English summary

A Texas business asked the Comptroller whether its "geocoding" service was subject to Texas sales/use tax. The facts: a firm in Washington state was contracted by a transportation company to conduct bus ridership surveys. The Washington firm designed a 37-question survey (four of the questions asked riders to identify particular locations), then distributed and collected the surveys itself.

The Washington firm then sent the completed surveys to the Texas business, along with a map of a city's service area that had been divided into 500 numerically coded geographic zones. The Texas business's job was to read each survey's location answers (e.g., "A Street and B Street"), find the matching zone on the map, and write that zone's code number next to the answer on the survey form. This was the only work the Texas business performed for the Washington firm, and it was done entirely by hand — no computer was used.

The Comptroller's response: this geocoding service is not subject to Texas sales/use tax.

What this means for you

Businesses performing manual data-matching or coding services

If your service consists of manually cross-referencing information (like matching a written location description to a coded map zone) rather than using a computer or data-processing system, this letter suggests that kind of manual work is not automatically taxed the way computerized "data processing services" can be under Texas law. The letter draws no distinction based on where the customer is located — the key fact emphasized is that "everything is done by hand."

Survey and market-research firms using subcontractors

If you contract out a narrow task like translating survey responses into coded categories, this ruling is a data point that such coding work — done manually — was found not subject to Texas sales/use tax for this taxpayer's specific facts.

Accountants and tax professionals

Note how fact-specific this letter is: the Comptroller explicitly ties its answer to "the facts you presented," and warns that different facts, even if similar, could produce a different result. The presence or absence of a computer in performing the service appears to have been a material fact here.

Common questions

Q: Is a manual geocoding service — matching survey answers to numbered map zones by hand — subject to Texas sales or use tax?
A: No. The Comptroller ruled that this geocoding service, as described, is not subject to Texas sales/use tax.

Q: Did the Comptroller's answer depend on the customer being located in Washington state?
A: The letter doesn't say the out-of-state location of the client firm was the deciding factor; the facts recite it, but the Comptroller's response focuses on the nature of the service performed.

Q: Does it matter that the work was done by hand instead of by computer?
A: The letter specifically notes "Everything is done by hand (a computer is not used)" as part of the facts underlying the ruling, suggesting this was relevant to the analysis.

Q: What exactly did the geocoding service involve?
A: Matching a rider's written answer about an intersection (e.g., "A Street and B Street") on a ridership survey to the corresponding numerically coded geographic zone on a map, and writing that code number next to the answer.

Q: Can another business rely on this letter for its own, similar geocoding work?
A: No. The letter states the opinion is based on the facts presented and that different, although similar, facts may result in different answers. Letters on STAR generally may be relied upon only by the taxpayer to whom they were issued.

Citations and references

No specific statutes or rule numbers were cited in this letter.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9606L1420A08

Original ruling text

June 14, 1996

Dear **:

Thank you for your letter dated June 14, 1996, concerning the taxability of
geocoding services provided by your business.

Facts: The firm you are performing work for is located in the state of
Washington. They are contracted with TRANSPORTATION CO. to perform ridership
surveys. The firm in Washington devised surveys consisting of 37 questions.
Four questions on each survey was to indicate particular locations. The
Washington firm distributes and collects the surveys.

The Washington firm forwards to you the completed surveys and a map of the
CITY A area served by TRANSPORTATION CO.. The map had different areas of
the CITY A area numerically coded with 500 geographical areas.

The geocoding service provided by your firm matched the codes on the map to
the intersection that was indicated on the survey. For example, if a survey
question was answered A STREET and B STREET and that area on the map was coded
340, you would enter the number 340 next to their answer (A STREET and
B STREET) on the survey form. This geocoding service is the only work you
perform for the Washington firm. Everything is done by hand (a computer is
not used).

Comptroller Response: The geocoding service described above that you perform
for the Washington firm is not subject to Texas sales/use tax.

This opinion is based on the facts you presented and current law. Different
facts although similar, may result in different answers.

Please call me if you have any questions or need more information. Our toll
free number is 1-800-531-5441, and my extension is 5-0330. The direct line is
512/475-0330. You may also write to Tax Policy Division, Comptroller of
Public Accounts.

Sincerely,

Bettie Peterson
Tax Policy Division