For several years, we wrote about the prior Texas comptroller’s position that the commissions marketplace providers charge sellers are taxable “data processing services.” The practical result was a tax on both the full price paid by the customer and the share of that price retained by the marketplace as its commission – a result we have described as taxing as much as 130% of a marketplace sale. The prior comptroller, without any public notice, began asserting this position in audits after revoking a contrary 2012 ruling in 2020, then incorporated the position into 34 Tex. Admin. Code § 3.330(b)(5), effective October 1, 2025.

On September 30, 2026, the new comptroller, Don Huffines, signed Executive Order DH-2026-01 directing his office to reverse course. Comptroller Huffines filed the proposed amendments to 34 Tex. Admin. Code § 3.330 with the secretary of state on October 5, 2026, and they were published in the Texas Register on October 16, 2026. The earliest possible adoption date is November 15, 2026. This is a significant and welcome taxpayer-friendly development as the proposal also provides an opportunity to clarify several related questions, including the treatment of earlier periods.

What the proposal does

The proposal makes two principal changes. First, it deletes 34 Tex. Admin. Code § 3.330(b)(5), the 2025 provision that stated that marketplace provider services “may be included in taxable data processing services” and identified as taxable examples services that store product listings and photographs, maintain transaction records, and compile analytics.

Second, it adds 34 Tex. Admin. Code § 3.330(j), “Platforms and Platform Provider facilitation fees.” Proposed paragraph (j)(2) provides that a “fee, commission, or other charge imposed by a platform provider, upon a platform seller for listing, offering, or facilitating sales through the platform, is not a taxable data processing service or a taxable information service under §3.342 of this title (relating to Information Services).” The exclusion applies “without regard to how the charge is calculated, whether a sale occurs, or whether the charge is collected directly or netted against amounts owed to the platform seller.”

The definition of “platform provider” is intentionally broader than the statutory definition of “marketplace provider” in Tex. Tax Code § 151.0242 because it reaches platforms that facilitate sales of nontaxable items. The proposal identifies a wide range of industries, including e-commerce marketplaces, food and grocery delivery, short-term lodging, ride-hailing, vehicle sharing, pet care, gig and freelance platforms, and equipment and parking rentals. A platform provider must own or operate a platform and directly or indirectly process sales or payments for platform sellers. Processing payments is not independently required when the platform processes sales.

The preamble states: “The transaction fees charged by the marketplace providers are commissions, not data processing services.” The executive order describes the prior treatment as “a hidden, duplicative tax on ordinary Texas commerce” and characterizes the double-tax result as one “the Legislature never authorized and that no statute compels.” The fiscal note estimates general revenue losses of approximately $17.9 [...]

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