Enrolled Bill Summary

House Bill 1223	House Author:  Hilderbran et al.
Effective:  9-1-13	Senate Sponsor:  Hegar et al.

            House Bill 1223 amends the Tax Code to exempt from sales and use taxes tangible personal property that is essential to a qualified data center's operation if the property is purchased for installation or use in the center by a qualifying owner, operator, or occupant and to list the categories of property subject to or excluded from the exemption. The bill authorizes a data center to be certified by the comptroller of public accounts as a qualifying data center if, on or after September 1, 2013, a single qualifying occupant either contracts with a qualifying owner or qualifying operator to lease space for the location of a data center or, in the case of an occupant who also is the qualifying operator and qualifying owner, occupies a space not previously used as a data center and locates a data center in that space and if the qualifying owner, operator, or occupant meets specific job-creation and capital investment criteria with respect to that particular data center over a five-year period.

House Bill 1223 sets out the application requirements for a data center to be certified as a qualified data center and issued a registration number by the comptroller and sets out the terms for the sales tax exemption depending on the amount of the capital investment made by the qualifying occupant, owner, or operator. The bill requires a person to hold a registration number and to present an exemption certificate with that number to the seller of tangible personal property in order to claim an exemption and provides for the number's revocation by the comptroller for the registrant's noncompliance with the conditions of certification and for the resulting imposition of taxes, penalties, and interest on previously claimed exemptions. The bill makes a data center subject to an agreement limiting the appraised value of the data center's property ineligible to receive the exemption and also makes a registrant ineligible to receive a limitation on appraised value under the Texas Economic Development Act. The bill exempts gas and electricity sold for a certified and qualifying data center's direct use from sales and use taxes.