Is a consulting firm's service of physically inspecting a company's buildings, updating its CAD floor-plan/systems database, and maintaining cost-allocation codes for floor space subject to Texas sales tax?

Plain-English summary

A company (referred to as "ABC" in the redacted letter) contracted with a consulting firm to maintain its buildings' floor space inventory using a CAD (computer-aided design) system. The Comptroller broke the arrangement into three operations and found none of them taxable:

1. Floor plan inspections and updates. The consultant visually inspects the company's major buildings roughly every four years (or on request) to verify that existing floor plans match actual building configuration, notes any differences, and enters them into its own CAD system. Contractor-reported changes also get folded in. The updated CAD data is periodically loaded onto the company's own computer system, where the company's Real Estate Division uses it to print blueprints for its architects and contractors. The consultant never sells the company blueprints or any other tangible property — it only provides data updates.
2. Building systems data (electrical, plumbing, etc.). The same CAD system tracks other building systems on separate layers, and the consultant similarly updates this data based on contractor/architect input, again without selling any tangible personal property.
3. Cost-allocation ("Responsibility Code") tracking. The consultant also tags floor space with codes used for internal expense allocation and budgeting purposes.

Because none of these three operations involves selling tangible personal property to the company — the consultant only maintains and updates data, while the company itself prints and uses its own blueprints — none of the charges are subject to sales tax.

What this means for you

Facilities and real estate consulting firms

If your service is limited to maintaining a client's own facility-management database (inspecting, verifying, and updating floor plans or building-systems data) without selling the client any tangible deliverable like printed blueprints or physical materials, this letter supports treating those charges as nontaxable. The moment you start selling actual blueprints, plans, or other tangible property, the analysis could change.

Companies buying facility-management/CAD consulting services

You may be able to treat these service charges as exempt if the consultant is purely updating your own internal database and you print your own outputs, mirroring the fact pattern here.

Accountants and tax professionals

This letter is a useful, if thin, example of the general "no tangible personal property changes hands" test the Comptroller applies to information/data-maintenance services. Watch for facts that would tip a similar arrangement into taxable territory — e.g., if the consultant instead delivers printed plans or physical media to the client.

Common questions

Q: Is a facility-management consultant's floor-plan update service taxable in Texas?
A: Not under this letter's facts — because the consultant doesn't sell the client any tangible personal property (blueprints or otherwise), just data updates to a database the client itself uses to print its own materials.

Q: Does it matter that the data covers electrical and plumbing systems too, not just floor space?
A: No — the Comptroller found all three operations (floor plan updates, other building-systems updates, and cost-code tracking) equally nontaxable for the same reason.

Q: Can I rely on this letter for my own facility consulting arrangement?
A: No — a Texas letter ruling can be the basis of a detrimental reliance claim only for the taxpayer it was issued to, and this letter is notably thin on the legal reasoning behind its conclusion, so a differently structured arrangement could come out differently.

Citations and references

• No specific Tax Code section or Comptroller rule number is cited in the body of this letter; it states the nontaxable result directly without naming a supporting statute or rule.

Subject

Update Of Building Floor Plan/Systems/Space Inventory — Services Provided By Consulting Firm

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9711107L

Original ruling text

November 19, 1997

Dear ***:

Thank you for your recent letter which is restated in part with response below.

ABC (ABC) requests an opinion as to the taxability of a new service being
contracted by ABC. ABC is entering into a contract with a consulting firm to
maintain PHONE's floor space inventory.

The contract primarily consists of three similar operations:

Operation 1: A consulting company will be responsible for maintaining ABC's
floor space inventory. The consultant will perform visual inspections of ABC's
major buildings every four years or as may be requested. The purpose of the
inspections is to insure that the existing floor plans, hard walls only,
properly reflect the configuration of the buildings. Any differences are noted
and entered into a C.A.D. system at the consultant's location. In addition, any
changes made by contractors are forwarded to the consultant who updates the
C.A.D. database. On a weekly basis, or as needed, the C.A.D. information is
loaded onto a ABC computer system. The system is maintained by ABC's Real
Estate Division and ABC uses the system to print blueprints for use by ABC's
architects or by its contractors. The consultant does not sell ABC's blueprints
nor any other tangible property.

Operation 2: The C.A.D. system used by ABC and the consultant is a multi-level
system. One level is for the floor space, another for electrical, another for
plumbing, etc. Changes to the building systems other than floor space are also
provided to the consultant by contractors and architects. These changes are
also loaded into the system and updated onto ABC's C.A.D. system on a periodic
basis. Again no tangible personal property is sold to ABC.

Operation 3: In addition to maintaining the physical configurations of the
buildings the consultant also maintains the Responsibility Code assignments for
the floor space. This consists of noting the floor space with a code that is
used for cost purposes. For example a code is assigned for the space allocated
to the tax department. This in turn allows for expense allocation within the
company for budgeting purposes.

Response: The charges for Operations 1, 2, and 3 are not subject to sales tax.

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

You may call me toll free at 1-800-531-5441, ext. 3-4680. The direct line is
512/463-4680. You may also write to Tax Policy, Comptroller of Public
Accounts. The email address is .

Sincerely,

Al Van Allen
Tax Policy Division