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PRINTER'S NO. 863
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
798
Session of
2015
INTRODUCED BY HUTCHINSON, AUMENT, BARTOLOTTA, GORDNER, RAFFERTY,
SMITH, TEPLITZ, VOGEL, VULAKOVICH AND WHITE, MAY 6, 2015
REFERRED TO FINANCE, MAY 6, 2015
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," providing for a computer data center equipment
incentive program.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Article XXIX-D heading of the act of March 4,
1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, added
October 9, 2009 (P.L.451, No.48) is amended to read:
ARTICLE XXIX-D
[(RESERVED)]
COMPUTER DATA CENTER EQUIPMENT
INCENTIVE PROGRAM
Section 2. The act is amended by adding sections to read:
Section 2901-D. Definitions.
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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:
"Computer data center." All or part of a facility that may
be composed of one or more businesses, owners or tenants, that
is or will be predominantly used to house working servers or
similar data storage systems and that may have uninterruptible
energy supply or generator backup power, or both, cooling
systems, towers and other temperature control infrastructure.
"Computer data center equipment." Equipment that is used to
outfit, operate or benefit a computer data center and component
parts, installations, refreshments, replacements and upgrades to
the equipment, whether any of the equipment is affixed to or
incorporated into real property, including:
(1) All equipment necessary for the transformation,
generation, distribution or management of electricity that is
required to operate computer server or similar data storage
equipment, including generators, uninterruptible energy
supplies, conduit, gaseous fuel piping, cabling, duct banks,
switches, switchboards, batteries and testing equipment.
(2) All equipment necessary to cool and maintain a
controlled environment for the operation of the computer
servers or data storage systems and other components of the
computer data center, including mechanical equipment,
refrigerant piping, gaseous fuel piping, adiabatic and free
cooling systems, cooling towers, water softeners, air
handling units, indoor direct exchange units, fans, ducting
and filters.
(3) All water conservation systems, including facilities
or mechanisms that are designed to collect, conserve and
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reuse water.
(4) All software, including, but not limited to,
enabling software and licensing agreements, computer server
or similar data storage equipment, chassis, networking
equipment, switches, racks, cabling, trays and conduit.
(5) All monitoring equipment and security systems.
(6) Modular data centers and preassembled components of
any item described in this definition, including components
used in the manufacturing of modular data centers.
(7) Other tangible personal property that is essential
to the operations of a computer data center.
"Department." The Department of Revenue of the Commonwealth.
"Existing computer data center." A computer data center in
operation prior to January 1, 2014.
"Facility." One or more parcels of land in this Commonwealth
and any structures and personal property contained on the land.
"New computer data center." A computer data center that
first commences operation on or after January 1, 2014.
"New investment." Construction, expansion or build out of
data center space at either a new computer data center or an
existing computer data center on or after January 1, 2014, 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."
"Owner or operator." Includes a single entity, multiple
entities or affiliated entities.
"Qualification period." As follows:
(1) With respect to the owner or operator of a computer
data center certified under this article, a period of time
beginning on the date of certification of the computer data
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center and expiring at the end of the fifteenth full calendar
year following the calendar year in which the owner or
operator filed the form for certification.
(2) With respect to a qualified tenant of the owner or
operator of a computer data center certified under this
article, a period of time beginning on the date that the
qualified tenant enters into an agreement concerning the use
or occupancy of the computer data center and expiring at the
earlier of the expiration of the term of the agreement or the
end of the 10th full calendar year following the calendar
year in which the qualified tenant enters into the agreement.
"Qualified tenant." An entity that contracts with the owner
or operator of a computer data center that is certified pursuant
to this article to use or occupy part of the computer data
center for at least 100 kilowatts per month for two or more
years.
"Tax exemption." The tax exemption provided for under this
article.
"Telecommunications provider." A provider of
telecommunications services, as defined in 61 Pa. Code ยง 60.20
(relating to telecommunications service).
"Tenant." An entity that contracts with the owner or
operator of a computer data center to use or occupy part of the
computer data center.
Section 2902-D. Sales and use tax exemption.
(a) State sales and use tax.--The tax imposed by section 202
shall not be imposed 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
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certified under this article.
(2) A qualified tenant of a new computer data center
certified under this article.
(b) Local sales and use tax.--The sale at retail or use of
computer data center equipment for installation in a computer
data center shall be exempt from a city or county tax on
purchase price authorized under Article XXXI-B of the act of
July 28, 1953 (P.L.723, No.230), known as the Second Class
County Code, and 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, if purchased by:
(1) An owner or operator of a computer data center
certified under this article.
(2) A qualified tenant of a new computer data center
certified under this article.
(c) Applicability.--A tax exemption shall apply during the
qualification period.
(d) Exclusions.--The following do not qualify for a tax
exemption:
(1) Telecommunications providers' computer data centers
that do not have retail or wholesale customers being billed
or paying for services, and whose majority of services are
for internal services to itself or its subsidiaries.
(2) Computer data center equipment used by the computer
data center to:
(i) generate electricity for resale purposes to a
power utility; or
(ii) generate, provide or sell more than 5% of its
electricity outside of the computer data center.
Section 2903-D. Application.
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To be considered for a tax exemption, 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), the following:
(i) The anticipated investment associated with the
computer data center for which the tax exemption 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).
(4) If the computer data center is to qualify under
section 2906-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).
Section 2904-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 tax exemption or provide
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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 new computer data center after December 31, 2029.
Section 2905-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.
(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.
(c) Aggregation.--An owner or operator may aggregate one or
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 2906-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 a
computer data center or a qualified tenant:
(1) On or before the fourth anniversary of
certification, the computer data center creates a minimum
investment of:
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(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) On or before the fourth anniversary of
certification, one or more taxpayers operating or occupying a
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.
Section 2907-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.
(b) Records.--Until a computer data center satisfies the
requirements prescribed in section 2906-D, the owner, operator
and qualified tenants shall maintain detailed records of all
investment created by the computer data center, including costs
of buildings and computer data center equipment, and all tax
exemption directly received by the owner, operator or qualified
tenant.
Section 2908-D. Revocation of certification.
(a) Revocation.--If the department determines that the
requirements of section 2906-D have not been satisfied, the
department may revoke the certification of a computer data
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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.
(c) Recapture.--If certification is revoked pursuant to this
section, the qualification period of any owner, operator or
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 exemption provided directly to the
owner or operator. The department may give special consideration
or allow a temporary exemption from recapture of the tax
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 to reflect any
recapture of the tax exemption.
Section 2909-D. Regulations.
The department shall promulgate regulations and prescribe
forms and procedures as necessary for the purposes of this
article.
Section 2910-D. Confidential information.
Proprietary business information contained in the application
form described in section 2903-D and the written notice
described in section 2907-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 2911-D. List of tenants.
An owner or operator of a computer data center shall provide,
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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.
Section 2912-D. Sale or transfer.
Except as provided in section 2908-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 2913-D. Exemption certificate.
An owner, operator or tenant must prepare and deliver a
properly executed exemption certificate to a vendor from which
the owner, operator or tenant purchases exempt property.
Section 3. This act shall take effect immediately.
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