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PRINTER'S NO. 1322
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1088
Session of
2019
INTRODUCED BY NESBIT, OBERLANDER, LONGIETTI, RYAN, BERNSTINE,
MENTZER, RAPP, BARRAR, MILLARD, MULLINS, JAMES, METCALFE,
RADER, MATZIE, SAINATO AND MARSHALL, APRIL 8, 2019
REFERRED TO COMMITTEE ON FINANCE, APRIL 8, 2019
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 providing for
applicability and for sales and use tax exemption; 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 part heading to read:
PART I
PRELIMINARY PROVISIONS
Section 2. Section 2901-D of the act is amended by adding
definitions 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:
* * *
"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).
* * *
Section 3. Article XXIX-D of the act is amended by adding a
part heading immediately before section 2902-D to read:
PART II
SALES AND USE TAX REFUND PROGRAM
Section 4. The act is amended by adding a section to read:
Section 2915-D. Applicability.
Tax refunds shall not be issued under this part for taxable
years beginning after June 30, 2019.
Section 5. Article XXIX-D of the act is amended by adding a
part to read:
PART III
SALES AND USE TAX EXEMPTION PROGRAM
Section 2921-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
certified under this article.
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(2) A qualified tenant of a 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 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 2922-D. Application for certification.
To be considered for a certification, an owner or operator of
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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) 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 2925-D.
(4) The department shall begin accepting applications no
later than 90 days after the effective date of this section.
Section 2923-D. Review of application for certification.
(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.
Section 2924-D. Separation of facilities.
(a) Separate certification.--An owner or operator of a
computer data center may separate a facility into one or more
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computer data centers, which may each receive a separate
certification, if each computer data center individually meets
the requirements prescribed in section 2925-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 2925-D. Computer data center certification
requirements.
(a) General rule.--In order to be certified under this part,
a computer data center owner or operator must meet the following
requirements:
(1) On or before the fourth anniversary of
certification, the combined investments made by the owner or
operator of the computer data center or the qualified tenant
must have created a total minimum investment of:
(i) at least $35,000,000 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 $60,000,000 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, the owner or operator of a computer data
center must pay annual compensation of at least $1,000,000 to
employees at the certified computer data center site for each
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year of certification.
(b) Prior application.--A computer data center that has met
the eligibility requirements as prescribed under section 2906-D
and has, prior to July 1, 2019, submitted an application for
certification as prescribed under section 2903-D shall be deemed
to meet the certification requirements of this section. The
certification shall not be revoked and shall remain in effect
for the remainder of the certification period.
(c) Limitation.--The department may not certify any computer
data center after December 31, 2029.
(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 July 1, 2019, 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 2926-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 2925-D.
(b) Records.--Until a computer data center satisfies the
requirements prescribed in section 2925-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
exemptions directly received by the owner, operator or qualified
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tenant.
Section 2927-D. Revocation of certification.
(a) Revocation.--If the department determines that the
requirements of section 2925-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.
(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 or qualified tenant. 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 in order to reflect any recapture of the tax
exemption.
Section 2928-D. Guidelines.
The department shall publish guidelines and prescribe forms
and procedures as necessary for the purposes of this part.
Section 2929-D. Confidential information.
Proprietary business information contained in the application
form described in section 2922-D and the written notice
described in section 2926-D, as well as information concerning
the identity of a qualified tenant, are confidential and may not
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be disclosed to the public. The department shall maintain, on
its Internet website, a list of the names of computer data
centers that have been certified under this part.
Section 2930-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.
Section 2931-D. Sale or transfer.
Except as provided in section 2927-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 2932-D. Exemption certificate.
A computer data center 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 6. This act shall take effect as follows:
(1) The addition of Part III of Article XXIX-D of the
act shall take effect July 1, 2019.
(2) The remainder of this act shall take effect
immediately.
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