Is a mobile app operator's fee to truck-stop fuel sellers — charged for running the discount-fuel app that generates codes and transaction reports — taxable as a Texas data processing service?

Plain-English summary

A company runs a mobile app that lets independent truck drivers buy discounted fuel at partner truck stops: the app shows nearby stops, prices, and amenities, generates a one-time fuel code per driver/stop, and gives fuel stops a dashboard with downloadable transaction reports. The fuel stops (not the app company) actually sell the fuel and collect fuel and sales tax on it; the app company charges the fuel stops a percentage-based fee on each discounted sale.

The Comptroller ruled that fee is taxable as a data processing service. Generating and verifying driver-specific fuel codes, and compiling/producing transaction reports for the fuel stops, are exactly the kind of data compilation, manipulation, and storage activities Texas taxes under Tex. Tax Code § 151.0035(a). The company argued it functioned like a payment processor (which gets a narrow exclusion under § 151.0035(b)(3) for settling electronic payment transactions), but its own agreement with the fuel stops specifically disclaimed being a money transmitter or payment services business — so that exclusion didn't apply. Because data processing services get a standard 20% exemption, the company owes sales tax on 80% of its fee.

What this means for you

Operators of discount/loyalty apps that charge merchants a fee

If your app's value to the merchant includes generating codes, verifying transactions, or compiling/reporting transaction data — even as a side effect of running a discount program — that fee is likely to be treated as a taxable Texas data processing service, taxable on 80% of the charge after the standard exemption. Explicitly disclaiming "payment processor" status in your merchant agreements (as this company did, for other legal reasons) can cut against you here, since it forecloses the one statutory exclusion that might otherwise apply.

Fuel stops and other merchants paying app fees

This ruling addresses the app operator's tax obligation on its own fee, not the fuel stop's sales/fuel tax obligations on the underlying fuel sale, which continue separately and are unaffected by this ruling.

Accountants and tax professionals

The key move is the exclusion in § 151.0035(b)(3) for payment processors "settling" electronic payment transactions — narrowly available, and unavailable here because the taxpayer's own Master Services Agreement disclaimed money-transmitter/payment-processor status. Compare against Comptroller's Decision No. 112,613 (2018), cited in the ruling, for a similar transaction-report-compilation fact pattern found taxable.

Common questions

Q: Does the fuel stop have to charge sales tax on the app fee it pays?
A: No — sales tax applies to the app operator's own sale of its service (the fee), not something the fuel stop separately charges. The app operator is responsible for collecting/remitting tax on 80% of its fee.

Q: Would this come out differently if the company registered as a payment processor?
A: Possibly, if it genuinely fell within the § 151.0035(b)(3) exclusion for entities settling electronic payment transactions — but merely calling itself one isn't enough; the ruling looked at what its contract said it was (specifically not a payment processor) and what it actually did (generate codes and compile reports).

Q: Can another fintech/discount-app company rely on this ruling?
A: No. It binds the Comptroller only for the taxpayer and facts described. A company that genuinely settles payment transactions, rather than merely facilitating and reporting on sales made by someone else, could reach a different result under § 151.0035(b)(3).

Citations and references

Statutes and rules:

• Tex. Tax Code § 151.051 (Sales Tax Imposed); § 151.010 (Taxable Item)
• Tex. Tax Code § 151.0101(a)(12) (data processing as a taxable service)
• Tex. Tax Code § 151.0035(a) (definition of "data processing service"); § 151.0035(b)(3) (payment-processor exclusion)
• Tex. Tax Code § 151.351 (20% exemption for data processing services)
• 34 Tex. Admin. Code § 3.330(a)(1) (Data Processing Services)

Cited prior guidance:

• Comptroller's Decision No. 112,613 (2018) — similar transaction-data compilation/reporting service found taxable

Source

• Landing page (STAR search): https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/202508025L

Original ruling text

August 22, 2025

Attorney

RE: Private Letter Ruling No. PLR20241031152954

Dear **:

We issue this private letter ruling in accordance with Rule 3.1, Private Letter Rulings and General Information Letters. [ENDNOTE 1] We are responding to your request dated Oct. 2, 2024, and supplemental information provided on Dec. 17th and 19th, 2024. Detrimental reliance relief is provided in accordance with Rule 3.10, Taxpayer Bill of Rights.

You requested guidance on the taxability of charges to fuel stops related to the sales through a mobile application that allows truck drivers to purchase discounted fuel.

Facts Presented

** (Taxpayer), incorporated outside Texas, partners with fuel stops who want to earn more business from independent owner-operator truck drivers (Operators) by selling fuel to Operators at a discounted price. Taxpayer operates a mobile application (app) that Operators use to purchase the discounted fuel from the fuel stops.

The app displays a fuel stop’s location, discounted fuel price, and amenities such as showers, parking spots, and dining options. The app provides a dashboard to the fuel stops with detailed financial reporting to fuel stops that allows them to view and download transaction history. For an Operator to receive the discounted fuel price, the Operator must download the Taxpayer’s app. The app is free for Operators to download and use.

When an Operator arrives at a fuel stop which has partnered with Taxpayer, the Operator opens the app and selects the fuel stop where they are purchasing fuel. Upon use of the app, the app generates a fuel code, which is a numeric code unique to that Operator and the designated fuel stop. To claim the discounted price, the Operator shows the code to the fuel stop clerk, who verifies the Operator has the app. The code displays a locked-in per-gallon price to the clerk, which is valid for 24 hours from the time it is issued.

Once the driver finishes fueling, the clerk inputs the number of gallons pumped into Taxpayer’s system. Taxpayer then charges the driver the locked-in price multiplied by the number of gallons pumped. Once the fuel is pumped, the app charges the Operator’s debit or credit card on file. The Operator can either obtain an emailed receipt or paper receipt from the fuel stop. Taxpayer then transfers the appropriate proceeds to the fuel stop.

The app does not sell fuel to Operators. Only the fuel stops sell fuel to the Operators and receive the proceeds from the sale. The fuel stops pay all applicable fuel tax on a per gallon basis and collect and remit all applicable sales tax. Based on the sample agreement provided by Taxpayer, the fuel stops pay Taxpayer a percentage-based fee on the total sale of fuel to the Operator.

Taxpayer’s agreement with fuel stops specifies that Taxpayer is not a money transmitter, payment instrument seller, or money services business (Master Services Agreement Section 1.2). The fuel stops are not an affiliated entity of the Taxpayer nor is there any common ownership with the fuel stop.

Question, Ruling, and Analysis

Our restatement of your question is shown below, followed by our response and analysis.

Question: Is Taxpayer’s fee to the fuel stops on the total sale of discounted fuel through Taxpayer’s mobile app taxable?

: Yes, Taxpayer’s fee is taxable as the sale of data processing services.

: Texas imposes a tax on each sale of a taxable item in this state. Section 151.051 (Sales Tax Imposed). The term “taxable item” includes tangible personal property and taxable services. Section 151.010 (Taxable Item).

Data processing services are included in the enumerated taxable services in Section 151.0101(a)(12) (Taxable Services). Section 151.0035(a) (Data Processing Service) definesdata processing service to include word processing, data entry, data retrieval, data search, information compilation, payroll and business accounting data production, and other computerized data and information storage or manipulation. See also Rule 3.330(a)(1) (Data Processing Services).

Data processing does not include the settling of an electronic payment transaction by certain payment processors and financial institutions. Section 151.0035(b)(3).

Taxpayer’s app lists the fuel stops’ locations, prices for fuel, and the locations’ amenities. The app generates codes to allow fuel stops to confirm Operators’ purchases through the app. It also compiles and produces reports of transactions made through the app for the fuel stops. These activities involve data compilation, data manipulation, and information storage which fall under the definition of data processing in Section 151.0035.

Similar services involving the manipulation of customer data for the purpose of compiling and producing reports that include records of transactions have been found to be taxable data processing services. See Comptroller’s Decision No. 112,613 (2018).

Taxpayer’s agreement establishes that it is not one of the payment processors or financial institutions listed in the exclusion for settling electronic payment transactions provided by Section 151.0035(b)(3). The exclusion from data processing services, therefore, does not apply to Taxpayer’s charge to fuel stops.

Taxpayer’s charge to the fuel stop is a taxable data processing service. Section 151.351 (Information Services and Data Processing Services) provides a 20 percent exemption for data processing services. Taxpayer is responsible for collecting and remitting sales and use tax on 80 percent of their fee charged to fuel stations.

Comptroller’s Decisions and STAR documents cited can be found on the Comptroller’s State Tax Automated Research (STAR) system. The Texas Tax Code, Texas Administrative Code, and the STAR system are accessible at www.comptroller.texas.gov/taxes/.

If you have questions about this private letter ruling, please email us through our website at https://comptroller.texas.gov/web-forms/tax-help/ and reference Private Letter Ruling No. 20241031152954.

Sincerely,

Tax Policy Division – Indirect Taxes

Texas Comptroller of Public Accounts

ENDNOTE

[1] Unless otherwise indicated, all references to “Section” are to the Texas Tax Code, and all references to “Rule” are to Title 34 of the Texas Administrative Code.