83R3308 CJC-F
By: Deuell S.B. No. 730
A BILL TO BE ENTITLED
AN ACT
relating to the temporary exemption of certain tangible personal
property related to data centers from the sales and use tax.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter H, Chapter 151, Tax Code, is amended
by adding Section 151.357 to read as follows:
Sec. 151.357. PROPERTY USED IN CERTAIN DATA CENTERS;
TEMPORARY EXEMPTION. (a) In this section:
(1) "County average weekly wage" means the average
weekly wage in a county for all jobs during the most recent four
quarterly periods for which data is available, as computed by the
Texas Workforce Commission, at the time a data center creates a job
used to qualify under this section.
(2) "Data center" means a facility:
(A) located in this state on or after September
1, 2013;
(B) composed of one or more buildings
specifically constructed or refurbished and actually used
primarily to house servers and related equipment and support staff;
(C) used or to be used primarily by a business
engaged in:
(i) data processing, hosting, and related
services described by industry code 518210 of the North American
Industry Classification System;
(ii) an Internet activity described by
industry code 519130 of the North American Industry Classification
System; or
(iii) computer software publishing and
reproduction described by industry code 511210 of the North
American Industry Classification System; and
(D) that has an uninterruptible power source, a
generator, a sophisticated fire suppression and prevention system,
and enhanced physical security that includes restricted access,
permanent security guards, video surveillance, and electronic
systems.
(3) "Permanent job" means an employment position that
will exist for at least five years after the date the job is
created.
(4) "Qualifying data center" means a data center that
meets the qualifications prescribed by Subsection (d).
(5) "Qualifying data center tenant" means a tenant who
contracts with a qualifying data center for at least 500 kilowatts
over a term of at least two years.
(6) "Qualifying job" means a full-time, permanent job
that pays at least 150 percent of the county average weekly wage in
the county in which the job is based.
(b) Except as otherwise provided by this section, beginning
on the date a data center or a data center tenant becomes a
qualifying data center or qualifying data center tenant and is
issued a registration number and ending on the 10th anniversary of
that date, the following items are exempted from the taxes imposed
by this chapter if sold, leased, or rented to a qualifying data
center or a qualifying data center tenant:
(1) tangible personal property necessary to manage or
operate the data center, including an electrical system, a cooling
or environmental control system, a generator, hardware or a
distributed mainframe computer or server, a data storage device,
and network connectivity equipment; and
(2) any component part of tangible personal property
described by Subdivision (1).
(c) This section does not apply to:
(1) office equipment or supplies; or
(2) equipment or supplies used in sales or
distribution activities or transportation activities.
(d) A data center is eligible to be a qualifying data center
for purposes of this section if, on or after September 1, 2013, the
data center:
(1) creates at least 25 qualifying jobs in the county
in which the data center is located; and
(2) certifies in writing to the comptroller that the
data center will invest at least $150 million in the data center
facility over a five-year period beginning on the date the data
center becomes a qualifying data center.
(e) A data center may apply to the comptroller for
qualification as a qualifying data center and for issuance of a
registration number issued by the comptroller. The application
must be made on a form prescribed by the comptroller and include the
information required by the comptroller. The application may
include information relating to colocation tenants or a colocation
tenant may apply separately to the comptroller for qualification as
a qualifying colocation tenant and for issuance of a registration
number.
(f) A registration number issued under this section expires
on the 10th anniversary of the date of issuance, unless revoked at
an earlier time by the comptroller as provided by Subsection (h).
(g) To claim an exemption under this section, the
registration number issued by the comptroller must be stated on the
exemption certificate provided by the purchaser of the item.
(h) The comptroller shall revoke and may not reinstate:
(1) a registration number issued to a qualifying data
center if the data center fails to comply with the requirements
prescribed by Subsection (d); and
(2) a registration number issued to a qualifying data
center tenant if:
(A) the data center tenant no longer meets the
qualifications prescribed by Subsection (a)(5); or
(B) the comptroller revokes the registration
number of the qualifying data center with whom the data center
tenant contracts.
(i) A qualifying data center or a qualifying data center
tenant whose registration number is revoked for a reason specified
by Subsection (h) is liable for payment of the taxes imposed under
this chapter on the purchase price of each taxable item the data
center or data center tenant purchased and claimed an exemption for
under this section, regardless of whether the purchase occurred
before the date the registration number was revoked.
(j) The comptroller shall adopt rules necessary to
implement this section, including rules relating to the:
(1) qualification of a data center and a data center
tenant for the exemption under this section;
(2) issuance and revocation of a registration number
issued under this section; and
(3) reporting and other procedures necessary to ensure
that a qualifying data center and a qualifying data center tenant
comply with this section and remain entitled to the exemption
authorized by this section.
SECTION 2. The change in law made by this Act does not
affect tax liability accruing before the effective date of this
Act. That liability continues in effect as if this Act had not been
enacted, and the former law is continued in effect for the
collection of taxes due and for civil and criminal enforcement of
the liability for those taxes.
SECTION 3. This Act takes effect September 1, 2013.