Texas moves to exempt marketplace and platform fees from data processing tax

The Texas Comptroller issued an executive order directing the agency to propose an amendment to Rule 3.330. The amendment would carve marketplace and platform fees out of taxable data processing services. The change would reverse the Comptroller’s earlier position that certain fees charged by online marketplaces, including e-commerce and food delivery platforms, are taxable data processing. Under the current rule, a marketplace provider is providing taxable data processing when it enters, retrieves, searches, manipulates, or stores data as part of its services. The agency must file the proposed amendment with the Texas Secretary of State and publish it in the Texas Register. A 30-day public comment period follows before the agency adopts any final rule.

The bottom line: The rule is not final. Marketplace and platform providers selling into Texas should keep collecting tax under the current rule until the Comptroller adopts the amendment. Watch for the published proposal and review which of your fees would qualify for the exemption. You can read more in the Comptroller’s announcement.