Bill Text: TX HB2096 | 2015-2016 | 84th Legislature | Engrossed

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Bill Title: Relating to the temporary exemption of certain tangible personal property related to certain multi-user data centers from the sales and use tax.

Spectrum: Slight Partisan Bill (Republican 5-3)

Status: (Engrossed - Dead) 2015-05-19 - Referred to Finance [HB2096 Detail]

Download: Texas-2015-HB2096-Engrossed.html

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By: Button, Bonnen of Brazoria, Gonzales, H.B. No. 2096
Martinez Fischer, Parker, et al.

A BILL TO BE ENTITLED
AN ACT
relating to the temporary exemption of certain tangible personal
property related to certain multi-user 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 151.3591 to read as follows:
Sec. 151.3591. PROPERTY USED IN CERTAIN MULTI-USER 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 multi-user data center
creates a job used to qualify under this section.
(2) "Multi-user data center" means all or part of a new
or redeveloped facility that:
(A) is located in this state;
(B) is composed of a building or a series of
buildings and related improvements located on a parcel of land or on
parcels of land that are in close proximity to each other;
(C) is specifically constructed or refurbished,
repaired, restored, remodeled, or otherwise modified and actually
used primarily to house servers and related equipment and support
staff for the processing, storage, and distribution of data;
(D) is designed for use by one or more qualifying
occupants for the processing, storage, and distribution of data;
(E) is not used primarily by a telecommunications
provider to place tangible personal property that is used to
deliver telecommunications services; and
(F) has an uninterruptible power source,
generator backup power, a sophisticated fire suppression and
prevention system, and enhanced physical security that includes
restricted access, video surveillance, and electronic systems.
(3) "Permanent job" means an employment position that
will exist for at least three years after the date the job is
created.
(4) "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.
(5) "Qualifying multi-user data center" means a
multi-user data center that meets the qualifications prescribed by
Subsection (d).
(6) "Qualifying occupant" means a person who:
(A) contracts with a qualifying owner or
qualifying operator:
(i) for at least 1,000 kilowatts of
critical IT load capacity per month for a period of at least two
years; and
(ii) to place, or cause to be placed, and to
use tangible personal property at the qualifying multi-user data
center; 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 multi-user data center.
(7) "Qualifying operator" means a person who controls
access to a qualifying multi-user data center, regardless of
whether that person owns each item of tangible personal property
located at the qualifying multi-user data center. A qualifying
operator may also be the qualifying owner.
(8) "Qualifying owner" means a person who owns the
building or buildings in which a qualifying multi-user data center
is located. A qualifying owner may also be the qualifying operator.
(b) Except as otherwise provided by this section, tangible
personal property that is necessary and essential to the operation
of a qualifying multi-user data center 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 multi-user data center 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) hardware or a distributed mainframe computer or
server;
(6) a data storage device;
(7) network connectivity equipment;
(8) a rack, cabinet, and raised floor system;
(9) a peripheral component or system;
(10) software;
(11) a mechanical, electrical, or plumbing system that
is necessary to operate any tangible personal property described by
Subdivisions (2)-(10);
(12) any other item of equipment or system necessary
to operate any tangible personal property described by Subdivisions
(2)-(11), including a fixture; and
(13) a component part of any tangible personal
property described by Subdivisions (2)-(10).
(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; or
(7) notwithstanding Section 151.3111, a taxable
service that is performed on tangible personal property exempted
under this section.
(d) Subject to Subsection (l), a multi-user data center may
be certified by the comptroller as a qualifying multi-user data
center for purposes of this section if, on or after September 1,
2015, the qualifying owner, qualifying operator, or qualifying
occupants of the multi-user data center, independently or jointly:
(1) create at least five qualifying jobs in the county
in which the multi-user data center is located, not including jobs
moved from one county in this state to another county in this state;
and
(2) make or agree to make, on or after September 1,
2015, a capital investment if:
(A) the capital investment is at least $100
million over a 10-year period beginning on the date the multi-user
data center is certified by the comptroller as a qualifying
multi-user data center;
(B) the capital investment is in a particular
multi-user data center; and
(C) the amount of the capital investment will
exclusively serve qualifying occupants that execute contracts on or
after September 1, 2015, and who were not under contract with the
qualified owner or qualified operator before September 1, 2015.
(e) A multi-user data center that is eligible under
Subsection (d) to be certified by the comptroller as a qualifying
multi-user data center shall apply to the comptroller for
certification and for the issuance of a registration number or
numbers by the comptroller. The application must be made on a form
prescribed by the comptroller and must include the information
required by the comptroller. The application must include the name
and contact information for each qualifying occupant, if any, as of
the date on which the application is filed with the comptroller, and
the name and contact information for the qualifying owner and, if
applicable, 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) will be met independently or jointly
by the qualifying owner, qualifying operator, or qualifying
occupants within the time period prescribed by that subsection.
(f) A person who is not listed as a qualifying occupant on an
application filed under Subsection (e) may submit an application to
the comptroller for a registration number in relation to a
certified qualifying multi-user data center on a form prescribed by
the comptroller. The comptroller shall issue the registration
number to the applicant on receipt of information sufficient for
the comptroller to determine that the applicant is a qualifying
occupant of the certified qualifying multi-user data center.
(g) The exemption provided by this section begins on the
date the multi-user data center is certified by the comptroller as a
qualifying multi-user data center and expires:
(1) on the 10th anniversary of that date, if the
qualifying owner, qualifying operator, or qualifying occupants,
independently or jointly, make a capital investment of at least
$100 million but less than $150 million as provided by Subsection
(d)(2); or
(2) on the 15th anniversary of that date, if the
qualifying owner, qualifying operator, or qualifying occupants,
independently or jointly, make a capital investment of $150 million
or more as provided by Subsection (d)(2).
(h) 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.
(i) The comptroller shall revoke all registration numbers
issued in connection with a qualifying multi-user data center that
the comptroller determines does not meet the requirements
prescribed by Subsection (d). Each person who has the person's
registration number revoked by the comptroller 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 shall adopt rules consistent with and
necessary to implement this section, including rules relating to:
(1) a qualifying multi-user data center, qualifying
owner, qualifying operator, and qualifying occupant;
(2) issuance and revocation of a registration number
required under this section; and
(3) reporting and other procedures necessary to ensure
that a qualifying multi-user data center, qualifying owner,
qualifying operator, and qualifying occupant comply with this
section and remain entitled to the exemption authorized by this
section.
(k) Except as provided by Section 321.211, the exemption
provided under this section does not apply to the taxes imposed
under Chapter 321, 322, or 323.
(l) A multi-user data center is not eligible to receive an
exemption under this section if the data center is subject to an
agreement limiting the appraised value of the data center's
property under Subchapter B or C, Chapter 313.
(m) A qualifying owner, qualifying operator, or qualifying
occupant of a qualifying multi-user data center may apply to the
comptroller for a refund of the taxes imposed by this chapter paid
on the purchase of an item of tangible personal property described
by Subsection (b) that occurred before the date the qualifying
multi-user data center is certified by the comptroller if the item
was purchased after the earlier of:
(1) the date the multi-user data center submits the
application described by Subsection (e); or
(2) the 180th day before the date the multi-user data
center is certified by the comptroller.
(n) Notwithstanding any other law, a data center that was
certified as a qualifying data center under Section 151.359 between
January 1, 2014, and December 31, 2014, and that otherwise meets the
qualifications for certification as a qualifying multi-user data
center prescribed by Subsection (d), may elect, on written notice
to the comptroller, to become a certified qualifying multi-user
data center subject to this section. Any capital investment made,
and any qualifying jobs created, by the certified qualifying data
center before the date the data center provides written notice to
the comptroller under this section shall be considered in
determining whether the data center meets the qualifications
prescribed by Subsection (d), regardless of whether the investment
was made, or the jobs created, before September 1, 2015. For
purposes of Subsections (g) and (m), the date on which a qualifying
data center was certified as a qualifying data center by the
comptroller under Section 151.359 is considered to be the date on
which the qualifying multi-user data center is certified as a
certified qualifying multi-user data center for purposes of this
section.
SECTION 2. Sections 151.317(a) and (b), Tax Code, are
amended to read as follows:
(a) Subject to Sections 151.1551, 151.359, and 151.3591
[151.1551] and Subsection (d) of this section, gas and electricity
are exempted from the taxes imposed by this chapter when sold for:
(1) residential use;
(2) use in powering equipment exempt under Section
151.318 or 151.3185 by a person processing tangible personal
property for sale as tangible personal property, other than
preparation or storage of prepared food described by Section
151.314(c-2);
(3) use in lighting, cooling, and heating in the
manufacturing area during the actual manufacturing or processing of
tangible personal property for sale as tangible personal property,
other than preparation or storage of prepared food described by
Section 151.314(c-2);
(4) use directly in exploring for, producing, or
transporting, a material extracted from the earth;
(5) use in agriculture, including dairy or poultry
operations and pumping for farm or ranch irrigation;
(6) use directly in electrical processes, such as
electroplating, electrolysis, and cathodic protection;
(7) use directly in the off-wing processing, overhaul,
or repair of a jet turbine engine or its parts for a certificated or
licensed carrier of persons or property;
(8) use directly in providing, under contracts with or
on behalf of the United States government or foreign governments,
defense or national security-related electronics, classified
intelligence data processing and handling systems, or
defense-related platform modifications or upgrades;
(9) use directly by a data center or multi-user data
center that is certified by the comptroller as a qualifying data
center under Section 151.359 or a qualifying multi-user data center
under Section 151.3591 in the processing, storage, and distribution
of data;
(10) a direct or indirect use, consumption, or loss of
electricity by an electric utility engaged in the purchase of
electricity for resale; or
(11) use in timber operations, including pumping for
irrigation of timberland.
(b) The sale, production, distribution, lease, or rental
of, and the use, storage, or other consumption in this state of, gas
and electricity sold for the uses listed in Subsection (a), are
exempted from the taxes imposed by a municipality under Chapter 321
except as provided by Sections 151.359(j), 151.3591(k), and
321.105.
SECTION 3. Section 313.010, Tax Code, as added by Chapter
1274 (H.B. 1223), Acts of the 83rd Legislature, Regular Session,
2013, is amended to read as follows:
Sec. 313.010. CERTAIN ENTITIES INELIGIBLE. An entity that
has been issued a registration number under Section 151.359 or
151.3591 is not eligible to receive a limitation on appraised value
under this chapter.
SECTION 4. Section 321.208, Tax Code, is amended to read as
follows:
Sec. 321.208. STATE EXEMPTIONS APPLICABLE. The exemptions
provided by Subchapter H, Chapter 151, apply to the taxes
authorized by this chapter, except as provided by Sections
[151.359(j) and] 151.317(b), 151.359(j), and 151.3591(k), and
subject to Section 321.211.
SECTION 5. Subchapter C, Chapter 321, Tax Code, is amended
by adding Section 321.211 to read as follows:
Sec. 321.211. MULTI-USER DATA CENTER EXCEPTION. The
governing body of a municipality with a population of 35,000 or less
may by ordinance provide that the exemption provided by Section
151.3591 applies to the taxes imposed by the municipality under
this chapter.
SECTION 6. Section 323.207, Tax Code, is amended to read as
follows:
Sec. 323.207. STATE EXEMPTIONS APPLICABLE. The exemptions
provided by Subchapter H, Chapter 151, apply to the taxes
authorized by this chapter, except as provided by Sections
[151.359(j) and] 151.317(b), 151.359(j), and 151.3591(k).
SECTION 7. 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 8. Section 151.3591, Tax Code, as added by this Act,
applies only to:
(1) a multi-user data center that becomes a qualifying
multi-user data center on or after the effective date of this Act;
(2) an occupant of a multi-user data center that
becomes a qualifying occupant on or after the effective date of this
Act; or
(3) a certified qualifying data center under Section
151.359 that elects to become a certified qualifying multi-user
data center under Section 151.3591(n), Tax Code, as added by this
Act.
SECTION 9. This Act takes effect September 1, 2015.