84R22836 CJC-F
 
  By: Button, Bonnen of Brazoria, Gonzales H.B. No. 2096
 
  Substitute the following for H.B. No. 2096:
 
  By:  Bohac C.S.H.B. No. 2096
 
 
 
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 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 of at least $100 million in that
  particular multi-user data center over a five-year period beginning
  on the date the multi-user data center is certified by the
  comptroller as a qualifying multi-user data center.
         (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.