SALT Blog 

The bottom line

The Texas Comptroller has proposed amending Rule 3.330 (34 TAC §3.330, Data Processing Services) to stop taxing the fees online platforms charge their sellers, such as marketplace, delivery, ride-hailing, and short-term rental fees. The change would help both the platforms and the sellers, drivers, hosts, and restaurants that pay those fees. Comments are due November 15, 2026. Because that’s a Sunday, plan for yours to arrive by Friday, November 13.

How we got here

Since October 1, 2025, Rule 3.330 has said that services a marketplace provider gives its sellers may be taxable “data processing.” The rule’s examples include storing product listings and photos, keeping transaction records, and compiling analytics for sellers.

On September 30, 2026, Comptroller Don Huffines signed an executive order directing his office to publish proposed rule amendments that would take marketplace and platform fees out of the tax. The Comptroller’s press release called the 2025 position a “hidden double tax.” The proposed rule change was published in the Texas Register on October 16, 2026.

What would change

According to the Texas Register notice, the proposal would:

• remove subsection (b)(5), the 2025 marketplace provider language;
• add a new subsection (j) saying that a fee, commission, or other charge a platform imposes on sellers for listing, offering, or facilitating sales is not a taxable data processing service or information service; and
• apply that rule no matter how the fee is calculated, whether a sale actually happens, or whether the platform bills the fee directly or takes it out of the seller’s payout.

The notice says its definition of “platform provider” is “intentionally broader” than the Tax Code’s definition of a marketplace provider. That’s because a platform can facilitate a sale whether or not the item sold is taxable.

Who it affects

The proposal lists example industries, including online platforms and apps where sellers offer items for sale, rent, or lease, as well as ride-hailing, food and grocery delivery, short-term lodging, gig and freelance platforms, pet care, and vehicle and equipment rental. The list isn’t exhaustive.

That covers both sides of the transaction: platforms that have been collecting tax on their seller fees, and the sellers, hosts, drivers, and restaurants that have been paying it.

The Comptroller estimates the change would reduce state general revenue by about $17.9 million in fiscal 2027, rising to about $25.2 million in fiscal 2032. Local governments would lose an estimated $5.2 million in fiscal 2027, rising to about $7.3 million in fiscal 2032.

The bigger picture: a targeted fix

This proposal fixes one kind of transaction: platform fees. It doesn’t change the rule’s broad definition of a “data processing service.” The notice says only that further refinement of that definition “may be made in future amendments.”

In my view, that general definition is the underlying problem. The Legislature’s definition in the Tax Code says data processing “includes” specific activities, such as data entry, data retrieval, information compilation, and payroll and business accounting data production, and ends that list with “other computerized data and information storage or manipulation.”

The current rule folds those activities into one broad definition. It then adds tests and examples that aren’t in the statute. For example, it treats data migration, and website creation, repair, and maintenance that involve storing or entering data, as taxable. It also says that, in deciding whether data processing is merely “ancillary” to another service, the provider’s skill or expertise in processing data is “not a factor.”

Removing platform fees addresses one set of transactions that fell within the rule’s broad language. In my view, the rule’s examples and tests read the statute’s catch-all more broadly than the Legislature intended, even though “includes” in the statute is not an exclusive list. Other services swept in by those examples and tests are not addressed by this proposal.

Practical points

• It’s a proposal, not law yet. The Comptroller’s rules page notes that the final rule may differ from the proposal. The executive order says the changes take effect only once rulemaking is complete. The earliest possible adoption date is November 15, 2026.
• As proposed, it looks forward only. The new provision would take effect on the date it’s adopted. It doesn’t address tax already paid or collected on platform fees since October 1, 2025, or how open audits will be handled. Businesses that paid or collected this tax may want to review their records for that period and the refund procedures and deadlines that apply to them.
• Watch bundled fees. The exclusion covers fees for listing, offering, or facilitating sales. Platforms that bundle advertising, analytics, or software tools with those fees may want to consider how each charge fits the new language and the rule’s existing bundling provisions.

How to comment

The notice directs comments, and information on the proposal’s cost, benefit, or effect, to Robin Robinson, Associate Deputy Comptroller for Tax:

• Email: Robinson@cpa.texas.gov
• Mail:O. Box 13528, Austin, Texas 78711

The Comptroller specifically invites “any applicable data, research or analysis.” Comments must be received by November 15. Because that’s a Sunday, email is the safer choice, timed to arrive by Friday, November 13.

Looking ahead

Whether or not it’s adopted as proposed, this is a meaningful shift in the Comptroller’s position on platform fees. Businesses on both sides of these transactions will want to follow it through adoption and watch for any later changes to the broader definition.

Disclaimer: This client alert does not constitute legal advice, does not create an attorney-client relationship, and is intended for informational purposes only.