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A BILL TO BE ENTITLED
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AN ACT
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relating to an exemption for certain tangible personal property |
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related to medical data centers from the sales and use tax. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Sections 151.317(a) and (b), Tax Code, are |
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amended to read as follows: |
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(a) Subject to Sections 151.359, 151.360, and 151.1551 and |
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Subsection (d) of this section, gas and electricity are exempted |
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from the taxes imposed by this chapter when sold for: |
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(1) residential use; |
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(2) use in powering equipment exempt under Section |
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151.318 or 151.3185 by a person processing tangible personal |
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property for sale as tangible personal property, other than |
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preparation or storage of prepared food described by Section |
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151.314(c-2); |
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(3) use in lighting, cooling, and heating in the |
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manufacturing area during the actual manufacturing or processing of |
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tangible personal property for sale as tangible personal property, |
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other than preparation or storage of prepared food described by |
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Section 151.314(c-2); |
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(4) use directly in exploring for, producing, or |
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transporting, a material extracted from the earth; |
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(5) use in agriculture, including dairy or poultry |
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operations and pumping for farm or ranch irrigation; |
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(6) use directly in electrical processes, such as |
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electroplating, electrolysis, and cathodic protection; |
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(7) use directly in the off-wing processing, overhaul, |
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or repair of a jet turbine engine or its parts for a certificated or |
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licensed carrier of persons or property; |
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(8) use directly in providing, under contracts with or |
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on behalf of the United States government or foreign governments, |
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defense or national security-related electronics, classified |
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intelligence data processing and handling systems, or |
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defense-related platform modifications or upgrades; |
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(9) use directly by a data center or medical data |
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center that is certified by the comptroller as a qualifying data |
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center or qualifying medical data center under Section 151.359 or |
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151.360 in the processing, storage, and distribution of data; |
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(10) a direct or indirect use, consumption, or loss of |
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electricity by an electric utility engaged in the purchase of |
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electricity for resale; or |
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(11) use in timber operations, including pumping for |
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irrigation of timberland. |
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(b) The sale, production, distribution, lease, or rental |
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of, and the use, storage, or other consumption in this state of, gas |
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and electricity sold for the uses listed in Subsection (a)[,] are |
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exempted from the taxes imposed by a municipality under Chapter 321 |
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except as provided by Sections 151.359(j), 151.360(k), and 321.105. |
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SECTION 2. Subchapter H, Chapter 151, Tax Code, is amended |
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by adding Section 151.360 to read as follows: |
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Sec. 151.360. PROPERTY USED IN CERTAIN MEDICAL DATA |
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CENTERS; EXEMPTION. (a) In this section: |
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(1) "Medical data center" means at least 75,000 square |
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feet of space in a single building or portion of a single building, |
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or cumulatively in multiple buildings or portions of multiple |
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buildings that are owned by a single qualifying owner, operated by a |
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single qualifying operator, and occupied by a single qualifying |
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occupant, which space: |
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(A) is located in this state; |
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(B) is specifically constructed or refurbished |
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and actually used primarily to house servers and related equipment |
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and support staff for the processing, storage, and distribution of |
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data and services used to directly and indirectly support health |
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care, including electronic patient records, medical data, and |
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business records; |
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(C) is used by a single qualifying occupant for |
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the purposes described by Paragraph (B); |
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(D) is not used primarily by a telecommunications |
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provider to place tangible personal property that is used to |
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deliver telecommunications services; and |
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(E) has an uninterruptible power source, |
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generator backup power, a sophisticated fire suppression and |
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prevention system, and enhanced physical security that includes |
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restricted access, video surveillance, and electronic systems. |
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(2) "Qualifying medical data center" means a medical |
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data center that meets the qualifications prescribed by Subsection |
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(e). |
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(3) "Qualifying occupant" means a person who: |
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(A) contracts with a qualifying owner or |
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qualifying operator to place, or cause to be placed, and to use |
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tangible personal property at the qualifying medical data center; |
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or |
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(B) in the case of a qualifying occupant who is |
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also the qualifying owner and the qualifying operator, places, or |
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causes to be placed, and uses tangible personal property at the |
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qualifying medical data center. |
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(4) "Qualifying operator" means a person who controls |
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access to a qualifying medical data center, regardless of whether |
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that person owns each item of tangible personal property located at |
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the qualifying medical data center. A qualifying operator may also |
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be the qualifying owner. |
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(5) "Qualifying owner" means a person who owns a |
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building in which a qualifying medical data center is located. A |
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qualifying owner may also be the qualifying operator. |
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(b) For purposes of this section: |
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(1) multiple buildings occupied by a qualifying |
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occupant or a subsidiary or affiliate of the occupant who meets the |
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requirements prescribed by Subsection (a)(3) are considered to be |
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occupied by a single qualifying occupant; |
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(2) multiple buildings operated by a qualifying |
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operator or a subsidiary or affiliate of the operator who meets the |
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requirements prescribed by Subsection (a)(4) are considered to be |
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operated by a single qualifying operator; and |
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(3) multiple buildings owned by a qualifying owner or |
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a subsidiary or affiliate of the owner who meets the requirements |
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prescribed by Subsection (a)(5) are considered to be owned by a |
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single qualifying owner. |
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(c) Except as otherwise provided by this section, tangible |
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personal property that is necessary and essential to the operation |
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of a qualified medical data center is exempted from the taxes |
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imposed by this chapter if the tangible personal property is |
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purchased for installation at, incorporation into, or in the case |
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of Subdivision (1), use in a qualifying medical data center by a |
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qualifying owner, qualifying operator, or qualifying occupant, and |
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the tangible personal property is: |
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(1) electricity; |
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(2) an electrical system; |
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(3) a cooling system; |
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(4) an emergency generator; |
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(5) hardware or a distributed mainframe computer or |
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server; |
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(6) a data storage device; |
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(7) network connectivity equipment; |
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(8) a rack, cabinet, and raised floor system; |
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(9) a peripheral component or system; |
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(10) software; |
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(11) a mechanical, electrical, or plumbing system that |
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is necessary to operate any tangible personal property described by |
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Subdivisions (2)-(10); |
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(12) any other item of equipment or system necessary |
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to operate any tangible personal property described by Subdivisions |
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(2)-(11), including a fixture; or |
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(13) a component part of any tangible personal |
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property described by Subdivisions (2)-(10). |
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(d) The exemption provided by this section does not apply |
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to: |
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(1) office equipment or supplies; |
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(2) maintenance or janitorial supplies or equipment; |
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(3) equipment or supplies used primarily in sales |
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activities or transportation activities; |
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(4) tangible personal property on which the purchaser |
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has received or has a pending application for a refund under Section |
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151.429; |
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(5) tangible personal property not otherwise exempted |
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under Subsection (c) that is incorporated into real estate or into |
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an improvement of real estate; or |
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(6) tangible personal property that is rented or |
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leased for a term of one year or less. |
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(e) Subject to Subsection (l), a medical data center may be |
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certified by the comptroller as a qualifying medical data center |
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for purposes of this section if, on or after September 1, 2015: |
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(1) a single qualifying occupant: |
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(A) contracts with a qualifying owner or |
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qualifying operator to lease space in which the qualifying occupant |
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will locate a medical data center; or |
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(B) occupies a space that was not previously used |
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as a medical data center in which the qualifying occupant will |
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locate a medical data center, in the case of a qualifying occupant |
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who is also the qualifying operator and the qualifying owner; and |
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(2) the qualifying owner, qualifying operator, or |
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qualifying occupant jointly or independently makes or agrees to |
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make a capital investment, on or after September 1, 2015, of at |
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least $200 million in that medical data center over a five-year |
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period beginning on the date the medical data center is certified by |
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the comptroller as a qualifying medical data center. |
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(f) A medical data center that is eligible under Subsection |
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(e) to be certified by the comptroller as a qualified medical data |
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center shall apply to the comptroller for certification as a |
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qualifying medical data center and for issuance of a registration |
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number or numbers by the comptroller. The application must be made |
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on a form prescribed by the comptroller and include the information |
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required by the comptroller. The application must include the name |
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and contact information for the qualifying occupant and, if |
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applicable, the name and contact information for the qualifying |
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owner and the qualifying operator who will claim the exemption |
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authorized under this section. The application form must include a |
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section for the applicant to certify that the capital investment |
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required by Subsection (e)(2) will be met independently or jointly |
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by the qualifying owner, qualifying operator, or qualifying |
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occupant within the time period prescribed by Subsection (e)(2). |
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(g) The exemption provided by this section begins on the |
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date the medical data center is certified by the comptroller as a |
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qualifying medical data center and expires on the date that the |
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medical data center ceases operating as a medical data center. |
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(h) Each person who is eligible to claim an exemption |
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authorized by this section must hold a registration number issued |
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by the comptroller. The registration number must be stated on the |
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exemption certificate provided by the purchaser to the seller of |
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tangible personal property eligible for the exemption. |
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(i) The comptroller shall revoke all registration numbers |
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issued in connection with a qualifying medical data center that the |
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comptroller determines does not meet the requirements prescribed by |
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Subsection (e). Each person who has the person's registration |
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number revoked by the comptroller is liable for taxes, including |
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penalty and interest from the date of purchase, imposed under this |
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chapter on purchases for which the person claimed an exemption |
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under this section, regardless of whether the purchase occurred |
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before the date the registration number was revoked. |
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(j) The comptroller shall adopt rules consistent with and |
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necessary to implement this section, including rules relating to: |
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(1) a qualifying medical data center, qualifying |
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owner, qualifying operator, and qualifying occupant; |
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(2) issuance and revocation of a registration number |
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required under this section; and |
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(3) reporting and other procedures necessary to ensure |
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that a qualifying medical data center, qualifying owner, qualifying |
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operator, and qualifying occupant comply with this section and |
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remain entitled to the exemption authorized by this section. |
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(k) The exemption in this section does not apply to the |
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taxes imposed under Chapter 321, 322, or 323. |
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(l) A medical data center is not eligible to receive an |
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exemption under this section if the medical data center is subject |
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to an agreement limiting the appraised value of the medical data |
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center's property under Subchapter B or C, Chapter 313. |
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SECTION 3. Section 313.010, Tax Code, as added by Chapter |
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1274 (H.B. 1223), Acts of the 83rd Legislature, Regular Session, |
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2013, is amended to read as follows: |
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Sec. 313.010. CERTAIN ENTITIES INELIGIBLE. An entity that |
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has been issued a registration number under Section 151.359 or |
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151.360 is not eligible to receive a limitation on appraised value |
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under this chapter. |
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SECTION 4. Section 321.208, Tax Code, is amended to read as |
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follows: |
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Sec. 321.208. STATE EXEMPTIONS APPLICABLE. The exemptions |
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provided by Subchapter H, Chapter 151, apply to the taxes |
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authorized by this chapter, except as provided by Sections |
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151.359(j), 151.360(k), and 151.317(b). |
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SECTION 5. Section 323.207, Tax Code, is amended to read as |
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follows: |
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Sec. 323.207. STATE EXEMPTIONS APPLICABLE. The exemptions |
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provided by Subchapter H, Chapter 151, apply to the taxes |
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authorized by this chapter, except as provided by Sections |
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151.359(j), 151.360(k), and 151.317(b). |
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SECTION 6. The change in law made by this Act does not |
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affect tax liability accruing before the effective date of this |
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Act. That liability continues in effect as if this Act had not been |
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enacted, and the former law is continued in effect for the |
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collection of taxes due and for civil and criminal enforcement of |
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the liability for those taxes. |
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SECTION 7. This Act takes effect September 1, 2015. |