Regular Session 2021-2022 House Bill 0952 P.N. 1310

PRIOR PRINTER'S NO. 965

PRINTER'S NO. 1310

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

952

Session of

2021

INTRODUCED BY OBERLANDER, MUSTELLO, KAUFER, RYAN, MILLARD,

LONGIETTI, JAMES, NEILSON, SAYLOR, PICKETT, SANKEY,

BERNSTINE, METCALFE, MARSHALL, WHEELAND, SAINATO, FARRY,

LABS, MIHALEK, HENNESSEY, D. WILLIAMS, CIRESI, KAUFFMAN,

SHUSTERMAN AND HOWARD, MARCH 17, 2021

AS REPORTED FROM COMMITTEE ON FINANCE, HOUSE OF REPRESENTATIVES,

AS AMENDED, APRIL 20, 2021

AN ACT

Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An

act relating to tax reform and State taxation by codifying

and enumerating certain subjects of taxation and imposing

taxes thereon; providing procedures for the payment,

collection, administration and enforcement thereof; providing

for tax credits in certain cases; conferring powers and

imposing duties upon the Department of Revenue, certain

employers, fiduciaries, individuals, persons, corporations

and other entities; prescribing crimes, offenses and

penalties," in computer data center equipment incentive

program, further providing for definitions and for review of

application, providing for applicability and for sales and

use tax exemption program; imposing duties on the Department

of Revenue; and making editorial changes.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Article XXIX-D of the act of March 4, 1971

(P.L.6, No.2), known as the Tax Reform Code of 1971, is amended

by adding a subarticle heading to read:

SUBARTICLE A

PRELIMINARY PROVISIONS

Section 2. The definition of "tax refund" in section 2901-D

of the act is amended and the section is amended by adding

definitions to read:

Section 2901-D. Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

* * *

"Tax exemption." The tax exemption provided under Subarticle

"Tax refund." The tax refund provided for under [this

article] Subarticle B.

"Telecommunications provider." A provider of

telecommunications services as defined in 61 Pa. Code § 60.20

(relating to telecommunications service).

* * *

Section 3. Article XXIX-D of the act is amended by adding a

subarticle heading to read:

SUBARTICLE B

SALES AND USE TAX REFUND PROGRAM

Section 4. Section 2902-D of the act is renumbered to read:

Section [2902-D] 2911-D. Sales and use tax refund.

(a) Application.--Beginning July 1, 2017, an owner or

operator or qualified tenant of a computer data center certified

under this article may apply for a tax refund of taxes paid

under Article II upon the sale at retail or use of computer data

center equipment for installation in a computer data center,

purchased by:

(1) An owner or operator of a computer data center

certified under this article.

(2) A qualified tenant certified under this article.

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(b) Applicability.--Taxes paid under Article II during the

qualification period shall be eligible for a refund under this

article.

refund:

(1) Computer data center equipment used by the computer

data center to:

(i) generate electricity for resale purposes to a

power utility, except for sales incidental to the primary

sale to computer data centers and which qualify under

subparagraph (ii); or

(ii) generate, provide or sell more than 5% of its

electricity outside of the computer data center.

(2) (Reserved).

Section 5. Sections 2903-D, 2904-D and 2905-D of the act are

amended to read:

Section [2903-D] 2912-D. Application for certification.

To be considered for a certification, an owner or operator of

a computer data center shall submit to the department an

application on a form prescribed by the department that includes

the following:

(1) The owner's or operator's name, address and

telephone number.

(2) The address of the site where the facility is or

will be located, including, if applicable, information

sufficient to identify the specific portion or portions of

the facility comprising the computer data center.

(3) If the computer data center is to qualify under

section [2906-D(1)] 2915-D(1), the following information:

(i) The anticipated investment associated with the

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computer data center for which the certification is being

sought.

(ii) An affirmation, signed by an authorized

executive representing the owner or operator, that the

computer data center is expected to satisfy the

certification requirements prescribed in section [2906-

D(1)] 2915-D(1).

(4) If the computer data center is to qualify under

section [2906-D(2)] 2915-D(2), an affirmation, signed by an

authorized executive representing the owner or operator, that

the computer data center has satisfied, or will satisfy, the

certification requirements prescribed in section [2906-D(2)]

2915-D(2).

(5) The department shall begin accepting applications no

later than 90 days after the effective date of this section.

Section [2904-D] 2913-D. Review of application.

(a) General rule.--Within 60 days after receiving a complete

and correct application, the department shall review the

application and either issue a written certification that the

computer data center qualifies for the certification or provide

written reasons for its denial.

(b) Deemed approval.--Failure of the department to approve

or deny an application within 60 days after the date the owner

or operator of a computer data center submits the application to

the department constitutes certification of the computer data

center, and the department shall issue written certification to

the owner or operator within 14 days. The department may not

certify any computer data center after December 31, 2029.

data center under this subarticle after December 31, 2021.

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Section [2905-D] 2914-D. Separation of facilities.

(a) Separate certification.--An owner or operator of a

computer data center may separate a facility into one or more

computer data centers, which may each receive a separate

certification, if each computer data center individually meets

the requirements prescribed in section [2906-D] 2915-D.

(b) Limitation.--A portion of a facility or an article of

computer data equipment shall not be deemed to be a part of more

than one computer data center.

more parcels, buildings or condominiums in a facility into a

single computer data center if, in the aggregate, the parcels,

buildings and condominiums meet the requirements of this

article.

Section 6. Section 2906-D of the act is renumbered to read:

Section [2906-D] 2915-D. Eligibility requirements.

A computer data center must meet one of the following

requirements, after taking into account the combined investments

made and annual compensation paid by the owner or operator of

the computer data center or the qualified tenant:

(1) On or before the fourth anniversary of

certification, the computer data center creates a minimum

investment of:

(i) At least $25,000,000 of new investment if the

computer data center is located in a county with a

population of 250,000 or fewer individuals; or

(ii) At least $50,000,000 of new investment if the

computer data center is located in a county with a

population of more than 250,000 individuals.

(2) One or more taxpayers operating or occupying a

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computer data center, in the aggregate, pay annual

compensation of at least $1,000,000 to employees at the

certified computer data center site for each year of the

certification after the fourth anniversary of certification.

Section 7. Sections 2907-D and 2908-D of the act are amended

to read:

Section [2907-D] 2916-D. Notification.

(a) Requirements satisfied.--On or before the fourth

anniversary of the certification of a computer data center, the

owner or operator of a computer data center shall notify the

department in writing whether the computer data center for which

the certification is requested has satisfied the requirements

prescribed in section [2906-D] 2915-D.

(b) Records.--Until a computer data center satisfies the

requirements prescribed in section [2906-D] 2915-D, the owner,

operator and qualified tenants shall maintain detailed records

of all investments created by the computer data center,

including costs of buildings and computer data center equipment,

and all tax refunds directly received by the owner, operator or

qualified tenant.

Section [2908-D] 2917-D. Revocation of certification.

(a) Revocation.--If the department determines that the

requirements of section [2906-D] 2915-D have not been satisfied,

the department may revoke the certification of a computer data

center.

(b) Appeal.--The owner or operator of the computer data

center may appeal the revocation. Appeals filed under this

section shall be governed by Article II.

section, the qualification period of any owner, operator or

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qualified tenant of the computer data center expires, and the

department may recapture from the owner, operator or qualified

tenant all or part of the tax refund provided directly to the

owner or operator or qualified tenant. The department may give

special consideration or allow a temporary exemption from

recapture of the tax refund if there is extraordinary hardship

due to factors beyond the control of the owner or operator or

qualified tenant.

Section 8. Section 2909-D of the act is renumbered to read:

Section [2909-D] 2918-D. Guidelines.

The department shall publish guidelines and prescribe forms

and procedures as necessary for the purposes of this article.

Section 9. Section 2910-D of the act is amended to read:

Section [2910-D] 2919-D. Confidential information.

Proprietary business information contained in the application

form described in section [2903-D] 2912-D and the written notice

described in section [2907-D] 2916-D, as well as information

concerning the identity of a qualified tenant, are confidential

and may not be disclosed to the public. The department may

disclose the name of a computer data center that has been

certified under this article.

Section 10. Section 2911-D of the act is renumbered to read:

Section [2911-D] 2920-D. List of tenants.

An owner or operator of a computer data center shall provide,

to the extent permissible under Federal law, the department with

a list of qualified tenants, including the commencement and

expiration dates of each qualified tenant's agreement to use or

occupy part of the computer data center. The list shall be

provided to the department annually, upon request by the

department.

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Section 11. Section 2912-D of the act is amended to read:

Section [2912-D] 2921-D. Sale or transfer.

Except as provided in section [2908-D] 2917-D, a computer

data center retains its certification regardless of a transfer,

sale or other disposition, directly or indirectly, of the

computer data center.

Section 12. Sections 2913-D and 2914-D of the act are

renumbered to read:

Section [2913-D] 2922-D. Application.

(a) General rule.--An owner, operator or qualified tenant

may apply for a tax refund under this article on or before July

30, 2017, and each July 30 thereafter.

(b) Notification.--No later than September 30, 2017, and

each September 30 thereafter, the department shall notify each

applicant of the amount of tax refund approved by the

department.

Section [2914-D] 2923-D. Limitations.

(a) Total.--The total amount of State tax refunds approved

by the department under this article shall not exceed $7,000,000

in any fiscal year.

(b) Allocation.--If the total amount of tax refunds approved

for all applicants exceeds the limitation on the amount of tax

refunds in subsection (a) in a fiscal year, the tax refund to be

received by each applicant shall be determined as follows:

(1) Divide:

(i) the tax refund approved for the applicant; by

(ii) the total of all tax refunds approved for all

applicants.

(2) Multiply:

(i) the amount under subsection (a); by

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(ii) the quotient under paragraph (1).

(3) The algebraic form of the calculation under this

subsection is:

Taxpayer's tax refund = amount allocated for those

tax refunds X (tax refund approved for the

applicant/total of all tax refunds approved for all

applicants).

Section 13. Article XXIX-D of the act is amended by adding a

section to read:

Section 2924-D. Applicability.

Notwithstanding any other provision of this article, the

department may not issue a tax refund under this subarticle for

the tax imposed upon the sale at retail or use of computer data

center equipment purchased after December 31, 2021.

Section 14. Article XXIX-D of the act is amended by adding a

subarticle to read:

SUBARTICLE C

SALES AND USE TAX EXEMPTION PROGRAM

Section 2931-D. Sales and use tax exemption.

(a) State sales and use tax.--Beginning January 1, 2022, the

tax imposed under Article II shall not be imposed upon the sale

at retail or use of computer data center equipment purchased for

installation in a certified computer data center, if purchased

by any of the following:

(1) An owner or operator of a computer data center

certified under this subarticle.

(2) A qualified tenant of a computer data center

certified under this subarticle.

(b) Local sales and use tax.--Beginning January 1, 2022, the

tax imposed under Article XXXI-B of the act of July 28, 1953

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(P.L.723, No.230), known as the Second Class County Code, the

tax imposed under Chapter 6 of the act of June 5, 1991 (P.L.9,

No.6), known as the Pennsylvania Intergovernmental Cooperation

Authority Act for Cities of the First Class, and the tax imposed

under Article II-B, shall not be imposed upon the sale at retail

or use of, or the purchase price of, computer data center

equipment purchased for installation in a certified computer

data center if purchased by any of the following:

(1) An owner or operator of a computer data center

certified under this subarticle.

(2) A qualified tenant of a computer data center

certified under this subarticle.

subarticle shall apply during the qualification period.

(d) Exclusions.--The following shall not qualify for a tax

exemption:

(1) A telecommunications provider's computer data center

that does not have retail or wholesale customers being billed

or paying for services and does provide a majority of

services for internal use or use by the telecommunications

provider's subsidiaries.

(2) Computer data center equipment used by the certified

computer data center for any of the following purposes:

(i) Generating electricity for resale purposes to a

power utility.

(ii) Generating, providing or selling more than 5%

of its electricity outside of the certified computer data

center.

Section 2932-D. Application for certification.

(a) Application.--To be considered for a certification, an

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owner or operator of a computer data center shall submit to the

department an application on a form prescribed by the department

that includes all of the following:

(1) The owner's or operator's name, address and

telephone number.

(2) The address of the site where the computer data

center is or will be located, including, if applicable,

information sufficient to identify the specific portion of a

facility comprising the computer data center.

(3) An affirmation, signed by an authorized executive

representing the owner or operator, that the computer data

center is expected to satisfy the certification requirements

prescribed under section 2935-D.

(b) Acceptance.--The department shall begin accepting

applications no later than 30 days after the effective date of

this section.

Section 2933-D. Review of application.

(a) General rule.--Within 60 days after receiving a complete

and correct application, the department shall review the

application and either issue a written certification that the

computer data center qualifies for the certification or provide

written reasons for its denial.

(b) Deemed approval.--Failure of the department to approve

or deny an application within 60 days after the date the owner

or operator of a computer data center submits the application to

the department shall constitute certification of the computer

data center, and the department shall issue written

certification to the owner or operator within 14 days.

Section 2934-D. Separation of facilities.

(a) Separate certification.--An owner or operator of a

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computer data center may separate a facility into one or more

computer data centers, which may each receive a separate

certification, if each computer data center individually meets

the requirements prescribed in section 2935-D.

(b) Limitation.--A portion of a facility or an article of

computer data equipment shall not be deemed to be a part of more

than one computer data center for certification under this

subarticle.

more parcels, buildings or condominiums in a facility into a

single computer data center for certification under this

subarticle if, in the aggregate, the parcels, buildings and

condominiums meet the requirements prescribed in section 2935-D.

Section 2935-D. Eligibility requirements.

(a) General rule.--In order to be certified under this

subarticle, an owner or operator of a computer data center must

meet all of the following requirements:

(1) On or before the fourth anniversary of

certification, the combined investment, in the aggregate, of

the owner or operator or qualified tenant of the computer

data center must total a minimum of any of the following:

(i) At least $75,000,000 of new investment if the

computer data center is located in a county with a

population of 250,000 or fewer individuals and creates 25

new jobs.

(ii) At least $100,000,000 of new investment if the

computer data center is located in a county with a

population of more than 250,000 individuals and creates

45 new jobs.

(2) On or before the fourth anniversary of

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certification, the owner or operator or qualified tenant of a

computer data center, in the aggregate, must pay annual

compensation of at least $1,000,000 to employees at the

certified computer data center site for each year of the

certification after the fourth anniversary of certification.

(b) Prior applications.--A computer data center that has met

the eligibility requirements as prescribed under section 2915-D

and has, prior to July 1, 2021, been certified under section

2913-D shall be deemed to meet the certification requirements of

this section. The certification shall not be revoked, except as

provided under section 2917-D, and shall remain in effect for

the remainder of the qualification period.

data center under this subarticle after December 31, 2032.

(d) Definition.--As used in this section, the term "new

investment" means construction, expansion or build out of data

center space at either a new or an existing computer data center

on or after January 1, 2022, and the purchase and installation

of computer data center equipment, except for items described

under paragraph (4) of the definition of "computer data center

equipment" in section 2901-D.

Section 2936-D. Notification.

(a) Requirements satisfied.--On or before the fourth

anniversary of the certification of a computer data center, the

owner or operator of the computer data center shall notify the

department in writing whether the computer data center for which

the certification is requested has satisfied the requirements

prescribed under section 2935-D.

(b) Records.--Until a computer data center satisfies the

requirements prescribed in section 2935-D, the owner or operator

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or qualified tenant shall maintain detailed records of all

investments created by the computer data center, including costs

of buildings and computer data center equipment and all tax

refunds directly EXEMPTIONS received by the owner or operator or

qualified tenant.

Section 2937-D. Revocation of certification.

(a) Revocation.--If the department determines that the

requirements of section 2935-D have not been satisfied, the

department may revoke the certification of a computer data

center.

(b) Appeal.--The owner or operator of the computer data

center may appeal the revocation. Appeals filed under this

section shall be governed by Article II.

section, the qualification period of any owner or operator or

qualified tenant of the computer data center shall expire and

the department may recapture from the owner or operator or

qualified tenant all or part of the tax refund provided directly

to EXEMPTION RECEIVED BY the owner or operator or qualified

tenant. The department may give special consideration or allow a

temporary exemption from recapture of the tax refund EXEMPTION

if there is extraordinary hardship due to factors beyond the

control of the owner or operator or qualified tenant. The

department may require the owner or operator or qualified tenant

to file appropriate amended tax returns in order to reflect any

recapture of the tax exemption.

Section 2938-D. Guidelines.

The department shall publish guidelines and prescribe forms

and procedures as necessary for the purposes of this article.

Section 2939-D. Confidential information.

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Proprietary business information contained in the application

form described under section 2932-D and the written notice

described under section 2936-D, as well as information

concerning the identity of a qualified tenant, shall be

confidential and may not be disclosed to the public. The

department may disclose the name of a computer data center that

has been certified under this subarticle.

Section 2940-D. List of tenants.

An owner or operator of a certified computer data center

shall provide, to the extent permissible under Federal law, the

department with a list of qualified tenants, including the

commencement and expiration dates of each qualified tenant's

agreement to use or occupy part of the certified computer data

center. The list shall be provided to the department annually,

upon request by the department.

Section 2941-D. Sale or transfer.

Except as provided under section 2937-D, a computer data

center retains its certification regardless of a transfer, sale

or other disposition, directly or indirectly, of the computer

data center.

Section 2942-D. Exemption certificate.

The owner or operator or qualified tenant of a certified

computer data center shall prepare and deliver a properly

executed exemption certificate to a vendor from which the owner

or operator or qualified tenant purchases exempt computer data

center equipment.

Section 15. This act shall take effect immediately.

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