Bill Text: TX HB1223 | 2013-2014 | 83rd Legislature | Enrolled
Bill Title: Relating to the temporary exemption of certain tangible personal property related to data centers from the sales and use tax.
Spectrum: Moderate Partisan Bill (Republican 5-1)
Status: (Passed) 2013-06-14 - Effective on 9/1/13 [HB1223 Detail]
Download: Texas-2013-HB1223-Enrolled.html
H.B. No. 1223 |
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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 151.359 to read as follows: | ||
Sec. 151.359. 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 at least 100,000 square feet | ||
of space in a single building or portion of a single building, which | ||
space: | ||
(A) is located in this state; | ||
(B) is specifically constructed or refurbished | ||
and actually used primarily to house servers and related equipment | ||
and support staff for the processing, storage, and distribution of | ||
data; | ||
(C) is used by a single qualifying occupant for | ||
the processing, storage, and distribution of data; | ||
(D) is not used primarily by a telecommunications | ||
provider to place tangible personal property that is used to | ||
deliver telecommunications services; and | ||
(E) 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 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 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. | ||
(6) "Qualifying operator" means a person who controls | ||
access to a qualifying data center, regardless of whether that | ||
person owns each item of tangible personal property located at the | ||
qualifying data center. A qualifying operator may also be the | ||
qualifying owner. | ||
(7) "Qualifying owner" means a person who owns the | ||
building in which a qualifying data center is located. A qualifying | ||
owner may also be the qualifying operator. | ||
(8) "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 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 data center. | ||
(b) Except as otherwise provided by this section, tangible | ||
personal property that is necessary and essential to the operation | ||
of a qualified 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 Subdivision | ||
(1), use in a qualifying 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 (k), a data center may be | ||
certified by the comptroller as a qualifying data center for | ||
purposes of this section if, on or after September 1, 2013: | ||
(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 data center; or | ||
(B) occupies a space that was not previously used | ||
as a data center in which the qualifying occupant will locate a data | ||
center, in the case of a qualifying occupant who is also the | ||
qualifying operator and the qualifying owner; and | ||
(2) the qualifying owner, qualifying operator, or | ||
qualifying occupant, jointly or independently: | ||
(A) creates at least 20 qualifying jobs in the | ||
county in which the data center 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, | ||
on or after September 1, 2013, of at least $200 million in that | ||
particular data center over a five-year period beginning on the | ||
date the data center is certified by the comptroller as a qualifying | ||
data center. | ||
(e) A data center that is eligible under Subsection (d) to | ||
be certified by the comptroller as a qualified data center shall | ||
apply to the comptroller for certification as a qualifying data | ||
center 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)(2)(B). | ||
(f) The exemption provided by this section begins on the | ||
date the data center is certified by the comptroller as a qualifying | ||
data center 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 | ||
$200 million but less than $250 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 $250 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 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. | ||
(i) The comptroller shall adopt rules consistent with and | ||
necessary to implement this section, including rules relating to: | ||
(1) a qualifying 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 data center, qualifying owner, qualifying | ||
operator, and qualifying occupant comply with this section and | ||
remain entitled to the exemption authorized by this section. | ||
(j) The exemption in this section does not apply to the | ||
taxes imposed under Chapter 321, 322, or 323. | ||
(k) A 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. | ||
SECTION 2. Sections 151.317(a), (b), and (d), Tax Code, are | ||
amended to read as follows: | ||
(a) Subject to Sections 151.359 and [ |
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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 that is certified by | ||
the comptroller as a qualifying data center under Section 151.359 | ||
in the processing, storage, and distribution of data; | ||
(10) [ |
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loss of electricity by an electric utility engaged in the purchase | ||
of electricity for resale; or | ||
(11) [ |
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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) and [ |
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(d) To qualify for the exemptions in Subsections (a)(2)-(9) | ||
[ |
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using the gas or electricity in the exempt manner. For purposes of | ||
this subsection, the use of gas or electricity in an exempt manner | ||
by an independent contractor engaged by the purchaser of the gas or | ||
electricity to perform one or more of the exempt activities | ||
identified in Subsections (a)(2)-(9) [ |
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use by the purchaser of the gas or electricity. | ||
SECTION 3. Section 151.1551(a), Tax Code, is amended to | ||
read as follows: | ||
(a) This section applies to an exemption provided by: | ||
(1) Sections 151.316(a)(6), (7), (8), (10), (11), and | ||
(12); | ||
(2) Section 151.316(b) for tangible personal property | ||
used in the production of agricultural products for sale; | ||
(3) Section 151.3162(b) for tangible personal | ||
property used in the production of timber for sale; | ||
(4) Sections 151.317(a)(5) and (11) [ |
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electricity used in agriculture or timber operations; and | ||
(5) Section 151.3111 for services performed on | ||
tangible personal property exempted under Section 151.316(a)(6), | ||
(7), (8), (10), (11), or (12), 151.316(b), or 151.3162(b). | ||
SECTION 4. Subchapter A, Chapter 313, Tax Code, is amended | ||
by adding Section 313.010 to read as follows: | ||
Sec. 313.010. CERTAIN ENTITIES INELIGIBLE. An entity that | ||
has been issued a registration number under Section 151.359 is not | ||
eligible to receive a limitation on appraised value under this | ||
chapter. | ||
SECTION 5. 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 [ |
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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 [ |
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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. This Act takes effect September 1, 2013. | ||
______________________________ | ______________________________ | |
President of the Senate | Speaker of the House | |
I certify that H.B. No. 1223 was passed by the House on May 9, | ||
2013, by the following vote: Yeas 137, Nays 3, 2 present, not | ||
voting; and that the House concurred in Senate amendments to H.B. | ||
No. 1223 on May 24, 2013, by the following vote: Yeas 143, Nays 1, | ||
1 present, not voting. | ||
______________________________ | ||
Chief Clerk of the House | ||
I certify that H.B. No. 1223 was passed by the Senate, with | ||
amendments, on May 22, 2013, by the following vote: Yeas 23, Nays | ||
8. | ||
______________________________ | ||
Secretary of the Senate | ||
APPROVED: __________________ | ||
Date | ||
__________________ | ||
Governor |