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A BILL TO BE ENTITLED
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AN ACT
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relating to the temporary exemption of certain tangible personal |
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property related to certain multi-user data centers from the sales |
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and use tax. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter H, Chapter 151, Tax Code, is amended |
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by adding Section 151.3591 to read as follows: |
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Sec. 151.3591. PROPERTY USED IN CERTAIN MULTI-USER DATA |
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CENTERS; TEMPORARY EXEMPTION. (a) In this section: |
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(1) "County average weekly wage" means the average |
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weekly wage in a county for all jobs during the most recent four |
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quarterly periods for which data is available, as computed by the |
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Texas Workforce Commission, at the time a multi-user data center |
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creates a job used to qualify under this section. |
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(2) "Multi-user data center" means all or part of a new |
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or redeveloped facility that: |
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(A) is located in this state; |
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(B) is composed of a building or a series of |
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buildings and related improvements located on a parcel of land or on |
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parcels of land that are in close proximity to each other; |
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(C) is specifically constructed or refurbished, |
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repaired, restored, remodeled, or otherwise modified and actually |
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used primarily to house servers and related equipment and support |
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staff for the processing, storage, and distribution of data; |
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(D) is designed for use by one or more qualifying |
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occupants for the processing, storage, and distribution of data; |
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(E) 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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(F) 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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(3) "Permanent job" means an employment position that |
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will exist for at least three years after the date the job is |
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created. |
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(4) "Qualifying job" means a full-time, permanent job |
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that pays at least the county average weekly wage in the county in |
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which the job is based. |
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(5) "Qualifying multi-user data center" means a |
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multi-user data center that meets the qualifications prescribed by |
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Subsection (d). |
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(6) "Qualifying occupant" means a person who: |
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(A) contracts with a qualifying owner or |
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qualifying operator: |
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(i) for at least 1,000 kilowatts of |
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critical IT load capacity per month for a period of at least two |
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years; and |
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(ii) to place, or cause to be placed, and to |
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use tangible personal property at the qualifying multi-user data |
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center; 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 multi-user data center. |
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(7) "Qualifying operator" means a person who controls |
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access to a qualifying multi-user data center, regardless of |
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whether that person owns each item of tangible personal property |
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located at the qualifying multi-user data center. A qualifying |
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operator may also be the qualifying owner. |
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(8) "Qualifying owner" means a person who owns the |
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building or buildings in which a qualifying multi-user data center |
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is located. A qualifying owner may also be the qualifying operator. |
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(b) 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 qualifying multi-user 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 electricity, use in a qualifying multi-user 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; and |
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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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(c) 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 (b) that is incorporated into real estate or into |
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an improvement of real estate; |
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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; or |
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(7) notwithstanding Section 151.3111, a taxable |
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service that is performed on tangible personal property exempted |
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under this section. |
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(d) Subject to Subsection (l), a multi-user data center may |
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be certified by the comptroller as a qualifying multi-user data |
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center for purposes of this section if, on or after September 1, |
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2015, the qualifying owner, qualifying operator, or qualifying |
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occupants of the multi-user data center, independently or jointly: |
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(1) create at least five qualifying jobs in the county |
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in which the multi-user data center is located, not including jobs |
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moved from one county in this state to another county in this state; |
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and |
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(2) make or agree to make, on or after September 1, |
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2015, a capital investment of at least $100 million in that |
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particular multi-user data center over a five-year period beginning |
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on the date the multi-user data center is certified by the |
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comptroller as a qualifying multi-user data center. |
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(e) A multi-user data center that is eligible under |
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Subsection (d) to be certified by the comptroller as a qualifying |
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multi-user data center shall apply to the comptroller for |
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certification and for the issuance of a registration number or |
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numbers by the comptroller. The application must be made on a form |
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prescribed by the comptroller and must 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 each qualifying occupant, if any, as of |
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the date on which the application is filed with the comptroller, and |
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the name and contact information for the qualifying owner and, if |
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applicable, 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 (d)(2) will be met independently or jointly |
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by the qualifying owner, qualifying operator, or qualifying |
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occupants within the time period prescribed by that subsection. |
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(f) A person who is not listed as a qualifying occupant on an |
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application filed under Subsection (e) may submit an application to |
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the comptroller for a registration number in relation to a |
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certified qualifying multi-user data center on a form prescribed by |
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the comptroller. The comptroller shall issue the registration |
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number to the applicant on receipt of information sufficient for |
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the comptroller to determine that the applicant is a qualifying |
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occupant of the certified qualifying multi-user data center. |
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(g) The exemption provided by this section begins on the |
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date the multi-user data center is certified by the comptroller as a |
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qualifying multi-user data center and expires: |
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(1) on the 10th anniversary of that date, if the |
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qualifying owner, qualifying operator, or qualifying occupants, |
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independently or jointly, make a capital investment of at least |
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$100 million but less than $150 million as provided by Subsection |
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(d)(2); or |
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(2) on the 15th anniversary of that date, if the |
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qualifying owner, qualifying operator, or qualifying occupants, |
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independently or jointly, make a capital investment of $150 million |
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or more as provided by Subsection (d)(2). |
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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 multi-user data center that |
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the comptroller determines does not meet the requirements |
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prescribed by Subsection (d). Each person who has the person's |
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registration number revoked by the comptroller is liable for taxes, |
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including penalty and interest from the date of purchase, imposed |
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under this chapter on purchases for which the person claimed an |
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exemption under this section, regardless of whether the purchase |
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occurred 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 multi-user 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 multi-user data center, qualifying owner, |
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qualifying operator, and qualifying occupant comply with this |
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section and remain entitled to the exemption authorized by this |
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section. |
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(k) Except as provided by Section 321.211, the exemption |
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provided under this section does not apply to the taxes imposed |
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under Chapter 321, 322, or 323. |
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(l) A multi-user data center is not eligible to receive an |
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exemption under this section if the data center is subject to an |
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agreement limiting the appraised value of the data center's |
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property under Subchapter B or C, Chapter 313. |
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(m) A qualifying owner, qualifying operator, or qualifying |
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occupant of a qualifying multi-user data center may apply to the |
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comptroller for a refund of the taxes imposed by this chapter paid |
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on the purchase of an item of tangible personal property described |
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by Subsection (b) that occurred before the date the qualifying |
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multi-user data center is certified by the comptroller if the item |
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was purchased after the earlier of: |
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(1) the date the multi-user data center submits the |
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application described by Subsection (e); or |
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(2) the 180th day before the date the multi-user data |
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center is certified by the comptroller. |
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(n) Notwithstanding any other law, a data center that was |
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certified as a qualifying data center under Section 151.359 between |
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January 1, 2014, and December 31, 2014, and that otherwise meets the |
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qualifications for certification as a qualifying multi-user data |
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center prescribed by Subsection (d), may elect, on written notice |
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to the comptroller, to become a certified qualifying multi-user |
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data center subject to this section. Any capital investment made, |
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and any qualifying jobs created, by the certified qualifying data |
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center before the date the data center provides written notice to |
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the comptroller under this section shall be considered in |
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determining whether the data center meets the qualifications |
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prescribed by Subsection (d), regardless of whether the investment |
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was made, or the jobs created, before September 1, 2015. For |
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purposes of Subsections (g) and (m), the date on which a qualifying |
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data center was certified as a qualifying data center by the |
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comptroller under Section 151.359 is considered to be the date on |
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which the qualifying multi-user data center is certified as a |
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certified qualifying multi-user data center for purposes of this |
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section. |
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SECTION 2. 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 151.1551, 151.359, and 151.3591 |
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[151.1551] and Subsection (d) of this section, gas and electricity |
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are exempted 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 multi-user data |
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center that is certified by the comptroller as a qualifying data |
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center under Section 151.359 or a qualifying multi-user data center |
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under Section 151.3591 in the processing, storage, and distribution |
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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), 151.3591(k), and |
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321.105. |
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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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151.3591 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) and] 151.317(b), 151.359(j), and 151.3591(k), and |
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subject to Section 321.211. |
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SECTION 5. Subchapter C, Chapter 321, Tax Code, is amended |
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by adding Section 321.211 to read as follows: |
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Sec. 321.211. MULTI-USER DATA CENTER EXCEPTION. The |
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governing body of a municipality with a population of 35,000 or less |
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may by ordinance provide that the exemption provided by Section |
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151.3591 applies to the taxes imposed by the municipality under |
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this chapter. |
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SECTION 6. 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) and] 151.317(b), 151.359(j), and 151.3591(k). |
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SECTION 7. 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 8. Section 151.3591, Tax Code, as added by this Act, |
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applies only to: |
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(1) a multi-user data center that becomes a qualifying |
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multi-user data center on or after the effective date of this Act; |
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(2) an occupant of a multi-user data center that |
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becomes a qualifying occupant on or after the effective date of this |
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Act; or |
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(3) a certified qualifying data center under Section |
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151.359 that elects to become a certified qualifying multi-user |
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data center under Section 151.3591(n), Tax Code, as added by this |
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Act. |
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SECTION 9. This Act takes effect September 1, 2015. |