Was a service that gathered information and produced a map or diagram of a client's computer network taxable in Texas?

Plain-English summary

The business interviewed clients and toured their facilities, then compiled the information into maps or diagrams of their computer networks. The Comptroller treated the resulting map or diagram as tangible personal property, making the total charge for obtaining and compiling the information taxable.

Tax applied whether the map was sold to the equipment owner, another vendor, or maintenance personnel. A periodic update was also taxable when it produced a new map.

Consulting alone was not taxable when the business only recommended how to set up a mapping project without selling a tangible item or taxable service. Employee training on how to set up a mapping project was also not taxable.

What this means for you

The final deliverable controlled the result. Information-gathering charges became part of the taxable sale when the engagement produced a map or diagram.

Common questions

Was only the physical map taxable? No. The total charge for obtaining the information and compiling the map was taxable.

Were updated maps taxable? Yes, when the update created a new map.

Was stand-alone consulting or training taxable? No, on the facts stated in the letter.

Citations and references

The letter cited no specific statute or rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9203L1162F10

Original ruling text

March 25, 1992

Dear ****:

Thank you for your letter of February 18, 1992, regarding the
taxability your mapping/diagramming service.

As I understand, your service entails compiling information from
clients based on interviews and tours of their facilities. This
information is compiled in order to provide the client a
map/diagram of their computer network.

The total charge for obtaining the necessary information and
compiling it into a map or a diagram is subject to tax. The
resulting map/diagram is considered to be tangible personal
property. You should collect tax on each sale of the map/diagram
whether sold to the owners of the equipment, other vendors, or
maintenance personnel. If the periodic update results in the
creation of a new map, tax should be collected on the sale of the
new map.

Generally speaking, consulting services are not taxable. This is
the case if you are only recommending how to set up a mapping
project and are not selling any type of tangible item or
providing a taxable service. A charge for training employees how
to set up a mapping project is not taxable.

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

If you have any questions or need additional information, you may
call toll free 1-800-252-5555 or the regular Austin number is
512-463-4600. You may also write to Tax Administration Division.

Sincerely,

Lindey Osborne
Tax Administration Division