Texas Determines the Sales and Use Tax Treatment of a Mobile Ordering Application Platform

In a private letter ruling, the Texas Comptroller clarified the sales and use tax requirements for a mobile ordering application platform where restaurants receive food orders. On the application, users choose restaurants to order from, checkout, and make their payment. The taxpayer, the application, is responsible for receiving the customers’ payments and remitting them to the restaurant on a weekly basis, deducting the fees they charge the restaurants. The fees include a service fee, credit card fee, offers fee, earn plus, and setup fee. The Comptroller determined that the subscription fee, service fee, setup fee, and credit card fee are all taxable data processing services. The remaining fees are nontaxable advertising services. (Texas Comptroller of Public Accounts, Private Letter Ruling No. PLR20200218100745, September 17, 2021)

Posted on December 14, 2021