Regular Session 2019-2020 House Bill 1088 P.N. 3068

CORRECTIVE REPRINT

PRIOR PRINTER'S NO. 1322

PRINTER'S NO. 3068

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

1088

Session of

2019

INTRODUCED BY MUSTELLO, NESBIT, OBERLANDER, LONGIETTI, RYAN,

BERNSTINE, MENTZER, RAPP, BARRAR, MILLARD, MULLINS, JAMES,

METCALFE, RADER, MATZIE, SAINATO, MARSHALL AND GABLER,

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.

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 § 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

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certified under this article.

(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.

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.

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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) 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

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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 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.

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

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employees at the certified computer data center site for each

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.

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

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exemptions directly received by the owner, operator or qualified

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.

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

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the identity of a qualified tenant, are confidential and may not

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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