88R4033 CJD-F
By: Capriglione H.B. No. 2223
A BILL TO BE ENTITLED
AN ACT
relating to the temporary exemption of certain tangible personal
property related to virtual currency mines from sales and use
taxes.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter H, Chapter 151, Tax Code, is amended
by adding Section 151.360 to read as follows:
Sec. 151.360. PROPERTY USED IN CERTAIN VIRTUAL CURRENCY
MINES; 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, on the date a virtual currency mine
creates a job used to qualify under this section.
(2) "Permanent job" means an employment position that
will exist for at least five years after the date the job is
created.
(3) "Qualifying job" means a full-time, permanent job
that pays at least 120 percent of the county average weekly wage in
the county in which the job is based. The term includes a new
employment position staffed by a third-party employer if a written
contract exists between the third-party employer and a qualifying
owner, qualifying operator, or qualifying occupant that provides
that the employment position is permanently assigned to an
associated qualifying virtual currency mine.
(4) "Qualifying occupant" means a person who:
(A) contracts with a qualifying owner or
qualifying operator to place, or cause to be placed, and to use
tangible personal property at the qualifying virtual currency mine;
or
(B) in the case of a qualifying occupant who is
also the qualifying owner and the qualifying operator, places or
causes to be placed and uses tangible personal property at the
qualifying virtual currency mine.
(5) "Qualifying operator" means a person who controls
access to a qualifying virtual currency mine, regardless of whether
that person owns each item of tangible personal property located at
the qualifying virtual currency mine. A qualifying operator may
also be the qualifying owner.
(6) "Qualifying owner" means a person who owns the
building in which a qualifying virtual currency mine is located. A
qualifying owner may also be the qualifying operator.
(7) "Qualifying virtual currency mine" means a virtual
currency mine that meets the qualifications prescribed by
Subsection (d).
(8) "Virtual currency" has the meaning assigned by
Section 12.001, Business & Commerce Code.
(9) "Virtual currency mine" means at least 5,000
square feet of space on a single parcel of land that is:
(A) located in this state; and
(B) specifically constructed or refurbished and
actually used primarily to house servers and related equipment and
support staff for the purpose of validating virtual currency
transactions.
(b) Except as otherwise provided by this section, tangible
personal property that is necessary and essential to the operation
of a qualifying virtual currency mine is exempted from the taxes
imposed by this chapter if the tangible personal property is
purchased for installation at, incorporation into, or in the case
of electricity, use in a qualifying virtual currency mine by a
qualifying owner, qualifying operator, or qualifying occupant, and
the tangible personal property is:
(1) electricity;
(2) an electrical system;
(3) a cooling system;
(4) an emergency generator;
(5) an electrical substation;
(6) on-site power generation; or
(7) a mechanical, electrical, or plumbing system that
is necessary to operate any systems related to virtual currency
mining.
(c) The exemption provided by this section does not apply
to:
(1) office equipment or supplies;
(2) maintenance or janitorial supplies or equipment;
(3) equipment or supplies used primarily in sales
activities or transportation activities;
(4) tangible personal property on which the purchaser
has received or has a pending application for a refund under Section
151.429;
(5) tangible personal property not otherwise exempted
under Subsection (b) that is incorporated into real estate or into
an improvement of real estate;
(6) tangible personal property that is rented or
leased for a term of one year or less;
(7) equipment used for the purpose of validating
virtual currency transactions; or
(8) notwithstanding Section 151.3111, a taxable
service that is performed on tangible personal property exempted
under this section.
(d) Subject to Subsection (j), a virtual currency mine may
be certified by the comptroller as a qualifying virtual currency
mine for purposes of this section if, on or after September 1, 2023:
(1) a single qualifying occupant:
(A) contracts with a qualifying owner or
qualifying operator to lease space in which the qualifying occupant
will locate a virtual currency mine; or
(B) if the qualifying occupant is also the
qualifying operator and the qualifying owner, occupies a space that
was not previously used as a virtual currency mine in which the
qualifying occupant will locate a virtual currency mine;
(2) the qualifying owner, qualifying operator, or
qualifying occupant, independently or jointly:
(A) creates at least 20 qualifying jobs in the
county in which the virtual currency mine is located, not including
jobs moved from one county in this state to another county in this
state; and
(B) makes or agrees to make a capital investment
of at least $100 million in that particular virtual currency mine
over a three-year period beginning on the date the virtual currency
mine is certified by the comptroller as a qualifying virtual
currency mine; and
(3) the virtual currency mine is subject to an
agreement to participate in a flexible load category for a period of
at least 10 years, including:
(A) a large flexible load category developed by
the independent organization certified under Section 39.151,
Utilities Code, for the ERCOT power region; or
(B) a market notice issued for the ERCOT power
region that allows large flexible loads to self-select and
guarantee power curtailment when the reserve capacity on the ERCOT
grid reaches 3,000 megawatts of physical responsive capacity.
(e) A virtual currency mine that is eligible under
Subsection (d) to be certified by the comptroller as a qualified
virtual currency mine shall apply to the comptroller for
certification and for issuance of a registration number or numbers
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 must include the name and
contact information for the qualifying occupant and, if applicable,
the name and contact information for the qualifying owner and the
qualifying operator who will claim the exemption authorized under
this section. The application form must include a section for the
applicant to certify that the capital investment required by
Subsection (d)(2)(B) will be met independently or jointly by the
qualifying occupant, qualifying owner, or qualifying operator
within the time period prescribed by Subsection (d).
(f) The exemption provided by this section begins on the
date the virtual currency mine is certified by the comptroller as a
qualifying virtual currency mine and expires:
(1) on the 10th anniversary of that date, if the
qualifying occupant, qualifying owner, or qualifying operator
independently or jointly makes a capital investment of at least
$100 million but less than $150 million as provided by Subsection
(d)(2)(B); or
(2) on the 15th anniversary of that date, if the
qualifying occupant, qualifying owner, or qualifying operator
independently or jointly makes a capital investment of $150 million
or more as provided by Subsection (d)(2)(B).
(g) Each person who is eligible to claim an exemption
authorized by this section must hold a registration number issued
by the comptroller. The registration number must be stated on the
exemption certificate provided by the purchaser to the seller of
tangible personal property eligible for the exemption.
(h) The comptroller shall revoke all registration numbers
issued in connection with a qualifying virtual currency mine on the
date:
(1) the comptroller determines that the virtual
currency mine does not meet the requirements prescribed by
Subsection (d);
(2) the virtual currency mine fails to cooperate with
an emergency response request from the independent organization
certified under Section 39.151, Utilities Code, for the ERCOT power
region; or
(3) the virtual currency mine's emergency demand
response contract lapses and is not renewed.
(i) Each person who has the person's registration number
revoked by the comptroller under Subsection (h) is liable for
taxes, including penalty and interest from the date of purchase,
imposed under this chapter on purchases for which the person
claimed an exemption under this section, regardless of whether the
purchase occurred before the date the registration number was
revoked.
(j) The comptroller may not certify more than 12 qualifying
virtual currency mines in a state fiscal year. If more than 12
virtual currency mines apply for certification under this section
in a state fiscal year, the comptroller shall give priority to those
applicants that create the most qualifying jobs in the county in
which the virtual currency mine that is the subject of the
application is located.
(k) The comptroller shall adopt rules consistent with and
necessary to implement this section, including rules relating to:
(1) a qualifying virtual currency mine, qualifying
owner, qualifying operator, and qualifying occupant;
(2) certification of a qualifying virtual currency
mine, including the process for prioritizing applicants for
certification under Subsection (j);
(3) issuance and revocation of a registration number
required under this section; and
(4) reporting and other procedures necessary to ensure
that a qualifying virtual currency mine, qualifying owner,
qualifying operator, and qualifying occupant 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, 2023.