By Emiliano Vittoriosi / Unsplash
By Peyton Lederman | The Now Daily
Texas Comptroller Targets Marketplace Fees
Texas Comptroller Don Huffines signed an executive order Wednesday directing his agency to move toward ending the state’s tax treatment of fees charged by online marketplaces and app-based platforms. The change could affect businesses and individuals using services ranging from online shopping marketplaces to food-delivery and ride-hailing apps. Texas Comptroller
The order directs the Comptroller’s office to propose an amendment to Rule 3.330, which governs taxable data-processing services. Under the proposed change, marketplace and platform fees would no longer be classified as taxable data-processing services. Texas Comptroller
Online Sellers and Restaurants Could Be Affected
The existing interpretation can apply the tax to fees that sellers pay platforms such as Amazon, eBay and Etsy to reach customers. It can also reach fees associated with prepared-food and grocery-delivery platforms such as DoorDash, Grubhub and Uber Eats. Texas Comptroller
Huffines’ office argues this can result in tax being collected on a platform fee while sales tax, when applicable, is also collected on the underlying purchase. Earlier in September, the comptroller met with small-business owners who said the policy was increasing their costs and hurting their ability to compete. Texas Comptroller
The Change Reaches Beyond Online Shopping
The proposed change isn’t limited to traditional online marketplaces. The comptroller says it would also remove the tax treatment from marketplace fees connected to short-term lodging, ride-hailing, vehicle rentals and sharing, pet care, and certain household and personal services. Texas Comptroller
That means the issue potentially affects a broad range of Texans who earn income through apps and online platforms. Gig workers and small businesses increasingly rely on these services to connect with customers, making the tax treatment of platform fees relevant well beyond major technology companies.
A Tax Rule Created Before Today’s Apps
Texas’ data-processing tax dates back to 1987, decades before today’s app-based economy developed. The comptroller’s office says the original tax was designed around services such as workers converting paper invoices and records into usable electronic databases. Texas Comptroller
A later interpretation expanded how the rule applied to modern marketplace services. Huffines, who became comptroller in August, has made reviewing the state’s tax administration part of his broader Taxpayer First Project. Texas Comptroller
What Happens Next
The tax treatment does not simply disappear immediately because of Wednesday’s announcement. The executive order directs the agency to publish a proposed amendment to Rule 3.330. That proposal must be filed with the Texas Secretary of State and published in the Texas Register. Texas Comptroller
A 30-day public comment period will follow, allowing Texans and affected businesses to weigh in before the rulemaking process moves forward. The Sept. 30 order therefore represents the first major step toward removing marketplace and platform fees from the state’s definition of taxable data-processing services. Texas Comptroller
Excerpt: Texas Comptroller Don Huffines has ordered his agency to begin removing marketplace and platform fees from the state’s taxable data-processing rules, potentially affecting online sellers, restaurants, gig workers and app-based services.
Primary source: Texas Comptroller — Sept. 30 announcement