Tex. Codes » Tax Code · TITLE 2. STATE TAXATION · SUBTITLE E. SALES, EXCISE, AND USE TAXES · CHAPTER 151. LIMITED SALES, EXCISE, AND USE TAX
Texas Codes

Tex. Tax Code § 151.0035 (2026)

"data Processing Service"

✓ current as of May 2026
Find cases: SyfertCases citing this section TX-LEGstatutes.capitol.texas.gov Justiaon Justia CornellLII Search CasesGoogle Scholar

Sec. 151.0035. "DATA PROCESSING SERVICE". (a) "Data processing service" includes:

(1) 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;

(2) the performance of a totalisator service with the use of computational equipment required by Subtitle A-1, Title 13, Occupations Code (Texas Racing Act); and

(3) the use of a computer or computer time for data processing whether the processing is performed by the provider of the computer or computer time or by the purchaser or other beneficiary of the service.

(b) "Data processing service" does not include:

(1) the transcription of medical dictation by a medical transcriptionist;

(2) services exclusively to encrypt electronic payment information for acceptance onto a payment card network described by Subdivision (3)(E) to comply with standards set by the Payment Card Industry Security Standards Council; or

(3) settling of an electronic payment transaction by:

(A) a downstream payment processor or point of sale payment processor that routes electronic payment information to an entity described by Paragraph (C) or (E);

(B) a person who is engaged in the business of money transmission and required to obtain a license under Section 152.101, Finance Code;

(C) a federally insured financial institution, as defined by Section 201.101, Finance Code, that is organized under the laws of this state, another state, or the United States, or an affiliate of the institution;

(D) a person who has entered into a sponsorship agreement with an entity described by Paragraph (C) for the purpose of settling that entity's electronic payment transactions through a payment card network; or

(E) a payment card network that allows a person to accept a specific brand of debit or credit card by routing information and data to settle an electronic payment transaction.

(c) For purposes of Subsection (b)(3):

(1) "Downstream payment processor" means a person described by 7 T.A.C. Section 33.4(c), as that provision existed on January 1, 2021.

(2) "Point of sale payment processor" means a person described by 7 T.A.C. Section 33.4(d), as that provision existed on January 1, 2021.

(3) "Settling of an electronic payment transaction" means the authorization, clearing, or funding of a payment made by credit card, debit card, gift card, stored value card, electronic check, virtual currency, loyalty program currency such as points or miles, or a similar method. The term does not include charges by a marketplace provider, as that term is defined by Section 151.0242.

(d) "Data storage," as used in this section, does not include a classified advertisement, banner advertisement, vertical advertisement, or link when the item is displayed on an Internet website owned by another person.

Added by Acts 1987, 70th Leg., 2nd C.S., ch. 5, art. 1, pt. 4, Sec. 3. Amended by Acts 1997, 75th Leg., ch. 1275, Sec. 53, eff. Sept. 1, 1997; Acts 1997, 75th Leg., ch. 1040, Sec. 11, eff. Sept. 1, 1997; Acts 2003, 78th Leg., ch. 209, Sec. 16, eff. Oct. 1, 2003.

Amended by:

Acts 2017, 85th Leg., R.S., Ch. 963 (S.B. 1969), Sec. 2.12, eff. April 1, 2019.

Acts 2021, 87th Leg., R.S., Ch. 539 (S.B. 153), Sec. 1, eff. October 1, 2021.

Acts 2023, 88th Leg., R.S., Ch. 277 (S.B. 895), Sec. 2.06, eff. September 1, 2023.

Notes of Decisions
Cited in 9 cases (1 in the last 5 years), 2009–2022 · leading case: 7-Eleven, Inc. v. Combs, 311 S.W.3d 676 (Tex. App. 2010).
Sort: Relevance Newest Treatment
7-Eleven, Inc. v. Combs, 311 S.W.3d 676 (Tex. App. 2010). · cites it 2× “See Tex. Tax Code Ann. § 151.0035 (data-processing services specifically include data entry, data retrieval, data search, information compilation, and other computerized data and information storage or manipulation).”
Glenn Hegar, Comptroller of Pub. Accounts of the State of Texas & Ken Paxton, Attorney Gen. of the State of Texas v. Checkfree Servs. Corp. (Tex. App. 2016). · cites it 3× “Tex. Tax. Code § 151.0035. As part of its role to interpret what may be taxed as “data processing services” under the Code, the Comptroller has enacted Rule 3.”
Glenn Hegar, Comptroller of Pub. Accounts of the State of Texas, & Ken Paxton, Attorney Gen. of the State of Texas v. Black, Mann, & Graham, L.L.P. (Tex. App. 2022). · cites it 3× “” Tex. Tax Code § 151.0035(a)(1). The district court concluded that the Vendors “do not provide data processing services” but rather provide a nontaxable professional service that is “facilitated by use of software and computers.”
Glenn Hegar, Comptroller of Pub. Accounts of the State of Texas The Off. of the Comptroller of Pub. Accounts of the State of Texas Ken Paxton, Attorney Gen. of the State of Texas & the Off. of the Attorney Gen. of the State of Texas v. CSG Forte Payments, Inc. F/K/A Forte Payment Sys., Inc. (Tex. App. 2020). · cites it 2× “(b) Texas Tax Code § 151.0035 [(defining “data processing service” for purpose of sales and use taxes)] does not impose Texas sales and use tax on charges for services that incidentally use computers to store and process data, such as check approval or authorization when…”
Instill Corp. v. Glenn Hegar, Comptroller of Pub. Accounts of the State of Texas & Ken Paxton, Attorney Gen. of the State of Texas (Tex. App. 2019). “The district court held a bench trial and ultimately agreed with the Comptroller, holding that “Instill’s services are ‘data[-]processing services’ as provided by Texas Tax Code § 151.0035 and [34] Texas Administrative Code § 3.”
7-Eleven, Inc. v. Susan Combs, Comptroller of Pub. Accounts of the State of Texas, & Greg Abbott, Attorney Gen. of the State of Texas (Tex. App. 2009). “See Tex. Tax Code Ann. § 151.0035 (data-processing services specifically include data entry, data retrieval, data search, information compilation, and other computerized data and information storage or manipulation).”
7-Eleven, Inc. v. Susan Combs, Comptroller of Pub. Accounts of the State of Texas, & Greg Abbott, Attorney Gen. of the State of Texas (Tex. App. 2009). “See Tex. Tax Code Ann. § 151.0035 (data-processing services specifically include data entry, data retrieval, data search, information compilation, and other computerized data and information storage or manipulation).”
7-Eleven, Inc. v. Susan Combs, Comptroller of Pub. Accounts of the State of Texas, & Greg Abbott, Attorney Gen. of the State of Texas (Tex. App. 2010). “See Tex. Tax Code Ann. § 151.0035 (data-processing services specifically include data entry, data retrieval, data search, information compilation, and other computerized data and information storage or manipulation).”
7-Eleven, Inc. v. Susan Combs, Comptroller of Pub. Accounts of the State of Texas, & Greg Abbott, Attorney Gen. of the State of Texas (Tex. App. 2010). “See Tex. Tax Code Ann. § 151.0035 (data-processing services specifically include data entry, data retrieval, data search, information compilation, and other computerized data and information storage or manipulation).”
— Tex. Tax Code § 151.0035(a)(1) — 1 case
Glenn Hegar, Comptroller of Pub. Accounts of the State of Texas, & Ken Paxton, Attorney Gen. of the State of Texas v. Black, Mann, & Graham, L.L.P. (Tex. App. 2022). “” Tex. Tax Code § 151.0035(a)(1). The district court concluded that the Vendors “do not provide data processing services” but rather provide a nontaxable professional service that is “facilitated by use of software and computers.”
Annotations are extracted automatically from the opinions in the Syfert caselaw corpus and ranked by authority, recency, and treatment. Dots show Syfertize treatment of the citing case itself.