H.B. No. 2712
 
 
 
 
AN ACT
  relating to the temporary exemption of certain tangible personal
  property related to large data center projects 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 151.3595 to read as follows:
         Sec. 151.3595.  PROPERTY USED IN CERTAIN LARGE DATA CENTER
  PROJECTS; 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 large data center project
  creates a job used to qualify under this section.
               (2)  "Large data center project" means a project that:
                     (A)  is located in this state;
                     (B)  is composed of one or more buildings
  comprising at least 250,000 square feet of space located or to be
  located on a single parcel of land or on contiguous parcels of land
  that are commonly owned or owned by affiliation with the qualifying
  operator;
                     (C)  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;
                     (D)  is used by a single qualifying occupant for
  the processing, storage, and distribution of data;
                     (E)  is not used primarily by a telecommunications
  provider to place tangible personal property used to deliver
  telecommunications services; and
                     (F)  has an uninterruptible power source, a backup
  generator, a fire suppression and prevention system, and 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 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. The term includes a new
  employment position staffed by a third-party employer if a written
  contract exists between the third-party employer and a qualifying
  owner, qualifying operator, or qualifying occupant that provides
  that the employment position is permanently assigned to an
  associated qualifying large data center project.
               (5)  "Qualifying large data center project" means a
  large data center project that meets the qualifications prescribed
  by Subsection (d).
               (6)  "Qualifying operator" means a person who controls
  access to a qualifying large data center project, regardless of
  whether that person owns each item of tangible personal property
  located at the qualifying large data center project. A qualifying
  operator may also be the qualifying owner.
               (7)  "Qualifying owner" means a person who owns a
  building in which a qualifying large data center project 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 large data center
  project; 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 large data center project.
         (b)  Except as otherwise provided by this section, tangible
  personal property that is necessary and essential to the operation
  of a qualifying large data center project 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 large data center project 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 (j), a large data center project
  may be certified by the comptroller as a qualifying large data
  center project for purposes of this section if, on or after June 1,
  2015:
               (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 large data center project; or
                     (B)  occupies a space that was not previously used
  as a data center in which the qualifying occupant will locate a
  large data center project, 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, independently or jointly:
                     (A)  creates at least 40 qualifying jobs in the
  county in which the large data center project is located, not
  including jobs moved from one county in this state to another county
  in this state;
                     (B)  on or after May 1, 2015, makes or agrees to
  make a capital investment of at least $500 million in that
  particular large data center project, the amount of which may not
  include a capital investment to replace personal property
  previously placed in service in that large data center project,
  over a five-year period beginning on the earlier of:
                           (i)  the date the large data center project
  submits the application described by Subsection (e); or
                           (ii)  the date the large data center project
  is certified by the comptroller as a qualifying large data center
  project; and
                     (C)  agrees to contract for at least 20 megawatts
  of transmission capacity for operation of the large data center
  project.
         (e)  A large data center project that is eligible under
  Subsection (d) to be certified by the comptroller as a qualifying
  large data center project 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 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 large data center project is certified by the comptroller
  as a qualifying large data center project and expires on the 20th
  anniversary of that date, if the qualifying occupant, qualifying
  owner, or qualifying operator, independently or jointly makes the
  capital investment of at least $500 million 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 large data center project
  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 large data center project, 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 large data center project, qualifying owner,
  qualifying operator, and qualifying occupant comply with this
  section and remain entitled to the exemption authorized by this
  section.
         (j)  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.  Section 151.317(a), Tax Code, is amended to read
  as follows:
         (a)  Subject to Sections 151.1551, 151.359, and 151.3595
  [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 large data center
  project that is certified by the comptroller as a qualifying data
  center under Section 151.359 or a qualifying large data center
  project under Section 151.3595 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.
         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 ELIGIBLE.  An entity that
  has been issued a registration number under Section 151.359 or
  Section 151.3595 is not eligible to receive a limitation on
  appraised value under this chapter.
         SECTION 4.  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 5.  This Act takes effect immediately if it receives
  a vote of two-thirds of all the members elected to each house, as
  provided by Section 39, Article III, Texas Constitution.  If this
  Act does not receive the vote necessary for immediate effect, this
  Act takes effect September 1, 2015.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 2712 was passed by the House on May
  12, 2015, by the following vote:  Yeas 114, Nays 26, 3 present, not
  voting; and that the House concurred in Senate amendments to H.B.
  No. 2712 on May 27, 2015, by the following vote:  Yeas 130, Nays 11,
  2 present, not voting.
 
  ______________________________
  Chief Clerk of the House   
 
         I certify that H.B. No. 2712 was passed by the Senate, with
  amendments, on May 25, 2015, by the following vote:  Yeas 23, Nays
  8.
 
  ______________________________
  Secretary of the Senate   
  APPROVED: __________________
                  Date       
   
           __________________
                Governor