On September 30, 2026, Texas Comptroller Don Huffines announced that he signed an executive order directing the comptroller’s office to propose an amendment to Rule 3.330 that would remove marketplace and platform fees from the definition of “data processing services” subject to sales and use tax.
The move represents a significant reversal of the comptroller’s prior approach to marketplace fees. As we discussed in prior Inside SALT posts in 2023 and 2024, the comptroller took the position that commissions charged by marketplace providers could themselves constitute taxable data processing services, even where sales tax was separately collected on the underlying marketplace transaction. The practical result could be tax on as much as 130% of a marketplace sale: tax on 100% of the underlying sale and a second tax on the portion of the proceeds retained by the marketplace provider as its commission.
The comptroller subsequently amended Rule 3.330 in 2025 to formalize that position, providing that marketplace provider services may constitute taxable data processing services when they involve activities such as the computerized entry, retrieval, search, compilation, manipulation, or storage of data or information.
Comptroller Huffines is now directing the agency to reverse course. In announcing the executive order, he criticized the prior interpretation, stating that the agency had “cast a huge net” and adding, “That’s not tax policy. That’s tax invention. A Comptroller doesn’t get to invent new taxes by rulemaking any more than a judge gets to invent new crimes that aren’t on the books.”
The proposed change would take a substantially narrower approach to the taxation of marketplace services and eliminate the additional tax on marketplace fees that resulted from the prior interpretation. According to the comptroller’s announcement, the amendment would remove marketplace and platform fees associated with online retail marketplaces, prepared food and grocery delivery, short-term lodging, ride-hailing and other transportation services, vehicle rental or sharing, pet care, and household and personal services from the definition of taxable data processing services.
The announcement also signals that the new comptroller intends to take a fresh look at the broader sales and use tax treatment of data processing services in Texas. Comptroller Huffines stated that his office will continue reviewing how the tax is interpreted and may propose additional changes in the future. For taxpayers navigating a statute enacted for a very different technological era, a clearer delineation of what constitutes taxable data processing would be a welcome development.
The executive order does not amend Rule 3.330. The comptroller will file a proposed amendment with the Texas secretary of state for publication in the Texas Register, after which the proposal will be subject to a 30-day public comment period.
Companies that previously conceded or otherwise accepted the comptroller’s prior treatment of marketplace fees in an audit or other proceeding should contact the authors to discuss potential next steps, including whether any refund or other procedural avenues may be available.
