Texas 2021 - 87th Regular

Texas House Bill HB3236 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	87R6448 SMT-D
2	2	By: Capriglione H.B. No. 3236
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the temporary exemption of certain tangible personal
8	8	property related to certain colocation data centers from sales and
9	9	use taxes.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Subchapter H, Chapter 151, Tax Code, is amended
12	12	by adding Section 151.3596 to read as follows:
13	13	Sec. 151.3596. PROPERTY USED IN COLOCATION DATA CENTERS;
14	14	TEMPORARY EXEMPTION. (a) In this section:
15	15	(1) "Colocation data center" means all or part of a new
16	16	or redeveloped facility that:
17	17	(A) is located in this state;
18	18	(B) is composed of space in a building or a series
19	19	of buildings and related improvements located or to be located on
20	20	one or more parcels of land;
21	21	(C) is specifically constructed or refurbished,
22	22	repaired, restored, remodeled, or otherwise modified and actually
23	23	used primarily to house servers and related equipment and support
24	24	staff for the processing, storage, and distribution of data;
25	25	(D) if redeveloped, has not been previously used
26	26	for the purpose specified by Paragraph (C);
27	27	(E) is designed for use by one or more tenants for
28	28	the processing, storage, and distribution of data;
29	29	(F) has an uninterruptible power source or
30	30	generator backup power and cooling systems, towers, and other
31	31	temperature control infrastructure; and
32	32	(G) does not generate electricity for resale or
33	33	for use outside the facility.
34	34	(2) "Operator" means a person who controls access to a
35	35	colocation data center, regardless of whether that person owns each
36	36	item of tangible personal property located at the colocation data
37	37	center.
38	38	(3) "Qualifying tenant" means a tenant who is
39	39	certified by the comptroller under Subsection (d).
40	40	(4) "Tenant" means a person who:
41	41	(A) contracts with an operator, for a period of
42	42	at least five years:
43	43	(i) for at least one megawatt of critical IT
44	44	load capacity per month beginning not later than the first
45	45	anniversary of the date the operator and tenant enter into the
46	46	contract; and
47	47	(ii) to place, or cause to be placed, and
48	48	use tangible personal property at the colocation data center; or
49	49	(B) is the operator and who places or causes to be
50	50	placed and uses tangible personal property at the colocation data
51	51	center.
52	52	(b) Except as otherwise provided by this section, tangible
53	53	personal property that is necessary and essential to the operation
54	54	of a colocation data center is exempted from the taxes imposed by
55	55	this chapter if the tangible personal property is purchased by a
56	56	qualifying tenant for installation at, incorporation into, or in
57	57	the case of electricity, use in a colocation data center, and the
58	58	tangible personal property is:
59	59	(1) electricity;
60	60	(2) an electrical system;
61	61	(3) a cooling system;
62	62	(4) an emergency generator;
63	63	(5) hardware or a distributed mainframe computer or
64	64	server;
65	65	(6) a data storage device;
66	66	(7) network connectivity equipment;
67	67	(8) a rack, cabinet, and raised floor system;
68	68	(9) a peripheral component or system;
69	69	(10) software;
70	70	(11) a mechanical, electrical, or plumbing system that
71	71	is necessary to operate any tangible personal property described by
72	72	Subdivisions (2)-(10);
73	73	(12) any other item of equipment or system necessary
74	74	to operate any tangible personal property described by Subdivisions
75	75	(2)-(11), including a fixture; and
76	76	(13) a component part of any tangible personal
77	77	property described by Subdivisions (2)-(10).
78	78	(c) The exemption provided by this section does not apply
79	79	to:
80	80	(1) office equipment or supplies;
81	81	(2) maintenance or janitorial supplies or equipment;
82	82	(3) equipment or supplies used primarily in sales
83	83	activities or transportation activities;
84	84	(4) tangible personal property on which the purchaser
85	85	has received or has a pending application for a refund under Section
86	86	151.429;
87	87	(5) tangible personal property not otherwise exempted
88	88	under Subsection (b) that is incorporated into real estate or into
89	89	an improvement of real estate;
90	90	(6) tangible personal property that is rented or
91	91	leased for a term of one year or less; or
92	92	(7) notwithstanding Section 151.3111, a taxable
93	93	service that is performed on tangible personal property exempted
94	94	under this section.
95	95	(d) A tenant may be certified by the comptroller as a
96	96	qualifying tenant for purposes of this section if:
97	97	(1) the tenant employs at least 500 people full time in
98	98	this state; and
99	99	(2) on or after January 1, 2021, the tenant:
100	100	(A) contracts with an operator or tenant, as
101	101	applicable, to lease space in a facility in which the tenant will
102	102	locate a colocation data center; and
103	103	(B) makes or agrees to make a capital investment
104	104	of at least $15 million in the facility in which the colocation data
105	105	center will be located over a three-year period beginning on the
106	106	date the tenant is certified by the comptroller as a qualifying
107	107	tenant.
108	108	(e) A tenant that is eligible under Subsection (d) to be
109	109	certified by the comptroller as a qualifying tenant shall apply to
110	110	the comptroller for certification and for the issuance of a
111	111	registration number by the comptroller. The application must be
112	112	made on a form prescribed by the comptroller and must include the
113	113	information required by the comptroller. The application must
114	114	include the tenant's name and contact information and the address
115	115	of the colocation data center. The application form must include a
116	116	section for the tenant to certify that the tenant will meet the
117	117	capital investment required by Subsection (d)(2)(B) within the
118	118	period prescribed by that paragraph.
119	119	(f) The comptroller shall:
120	120	(1) act on an application submitted under Subsection
121	121	(e) not later than the 60th day after the date the comptroller
122	122	receives the application from the applicant; and
123	123	(2) issue the certification and registration number to
124	124	the applicant not later than the 14th day after the date the
125	125	comptroller approves the application.
126	126	(g) The exemption provided by this section begins as to a
127	127	qualifying tenant on the date the comptroller issues a registration
128	128	number to the qualifying tenant under Subsection (f) and expires:
129	129	(1) on the 10th anniversary of that date, if the
130	130	qualifying tenant makes a capital investment of at least $15
131	131	million but less than $50 million as provided by Subsection
132	132	(d)(2)(B); or
133	133	(2) on the 15th anniversary of that date, if the
134	134	qualifying tenant makes a capital investment of $50 million or more
135	135	as provided by Subsection (d)(2)(B).
136	136	(h) Each qualifying tenant who is eligible to claim an
137	137	exemption authorized by this section must hold a registration
138	138	number issued by the comptroller. The registration number must be
139	139	stated on the exemption certificate provided by the tenant to the
140	140	seller of tangible personal property eligible for the exemption.
141	141	(i) The comptroller shall revoke a registration number
142	142	issued to a tenant if the comptroller determines that the tenant
143	143	does not meet the requirements prescribed by Subsection (d). Each
144	144	tenant who has the tenant's registration number revoked by the
145	145	comptroller is liable for taxes, including penalties and interest
146	146	from the date of purchase, imposed under this chapter on purchases
147	147	for which the tenant claimed an exemption under this section,
148	148	regardless of whether the purchase occurred before the date the
149	149	registration number was revoked.
150	150	(j) The comptroller shall adopt rules consistent with and
151	151	necessary to implement this section, including rules relating to:
152	152	(1) a colocation data center, operator, and qualifying
153	153	tenant;
154	154	(2) the issuance and revocation of a registration
155	155	number required under this section; and
156	156	(3) reporting and other procedures necessary to ensure
157	157	that a colocation data center, operator, and qualifying tenant
158	158	comply with this section and that the qualifying tenant remains
159	159	entitled to the exemption authorized by this section.
160	160	(k) The exemption provided under this section does not apply
161	161	to the taxes imposed under Chapter 321, 322, or 323.
162	162	(l) Information submitted to the comptroller in an
163	163	application under Subsection (e) is confidential and excepted from
164	164	the requirements of Section 552.021, Government Code.
165	165	SECTION 2. Section 151.317(a), Tax Code, is amended to read
166	166	as follows:
167	167	(a) Subject to Sections 151.1551, 151.359, [and] 151.3595,
168	168	and 151.3596 and Subsection (d) of this section, gas and
169	169	electricity are exempted from the taxes imposed by this chapter
170	170	when sold for:
171	171	(1) residential use;
172	172	(2) use in powering equipment exempt under Section
173	173	151.318 or 151.3185 by a person processing tangible personal
174	174	property for sale as tangible personal property, other than
175	175	preparation or storage of prepared food described by Section
176	176	151.314(c-2);
177	177	(3) use in lighting, cooling, and heating in the
178	178	manufacturing area during the actual manufacturing or processing of
179	179	tangible personal property for sale as tangible personal property,
180	180	other than preparation or storage of prepared food described by
181	181	Section 151.314(c-2);
182	182	(4) use directly in exploring for, producing, or
183	183	transporting, a material extracted from the earth;
184	184	(5) use in agriculture, including dairy or poultry
185	185	operations and pumping for farm or ranch irrigation;
186	186	(6) use directly in electrical processes, such as
187	187	electroplating, electrolysis, and cathodic protection;
188	188	(7) use directly in the off-wing processing, overhaul,
189	189	or repair of a jet turbine engine or its parts for a certificated or
190	190	licensed carrier of persons or property;
191	191	(8) use directly in providing, under contracts with or
192	192	on behalf of the United States government or foreign governments,
193	193	defense or national security-related electronics, classified
194	194	intelligence data processing and handling systems, or
195	195	defense-related platform modifications or upgrades;
196	196	(9) use directly by a data center or large data center
197	197	project that is certified by the comptroller as a qualifying data
198	198	center under Section 151.359 or a qualifying large data center
199	199	project under Section 151.3595 in the processing, storage, and
200	200	distribution of data;
201	201	(9-a) use directly in the processing, storage, and
202	202	distribution of data by a tenant of a colocation data center who is
203	203	certified by the comptroller as a qualifying tenant under Section
204	204	151.3596;
205	205	(10) a direct or indirect use, consumption, or loss of
206	206	electricity by an electric utility engaged in the purchase of
207	207	electricity for resale; or
208	208	(11) use in timber operations, including pumping for
209	209	irrigation of timberland.
210	210	SECTION 3. The change in law made by this Act does not
211	211	affect tax liability accruing before the effective date of this
212	212	Act. That liability continues in effect as if this Act had not been
213	213	enacted, and the former law is continued in effect for the
214	214	collection of taxes due and for civil and criminal enforcement of
215	215	the liability for those taxes.
216	216	SECTION 4. Section 151.3596, Tax Code, as added by this Act,
217	217	applies only to a qualifying tenant of a colocation data center who
218	218	becomes a qualifying tenant on or after the effective date of this
219	219	Act.
220	220	SECTION 5. This Act takes effect September 1, 2021.