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PRIOR PRINTER'S NO. 471
PRINTER'S NO. 618
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
463
Session of
2021
INTRODUCED BY HUTCHINSON, BROOKS, ARGALL, STEFANO, BARTOLOTTA,
J. WARD, GORDNER, MENSCH, BOSCOLA, DiSANTO, PHILLIPS-HILL,
REGAN, AUMENT, COMITTA, KANE AND YUDICHAK, MARCH 19, 2021
SENATOR HUTCHINSON, FINANCE, AS AMENDED, APRIL 19, 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
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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
C.
"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 ยง 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.
(b) Applicability.--Taxes paid under Article II during the
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qualification period shall be eligible for a refund under this
article.
(c) Exclusions.--The following do not qualify for a tax
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
computer data center for which the certification is being
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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.
(c) Limitation.--The department may not certify any computer
data center under this subarticle after December 31, 2021.
Section [2905-D] 2914-D. Separation of facilities.
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(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.
(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 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
computer data center, in the aggregate, pay annual
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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.
(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
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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.
Section 11. Section 2912-D of the act is amended to read:
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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
(ii) the quotient under paragraph (1).
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(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
(P.L.723, No.230), known as the Second Class County Code, the
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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.
(c) Applicability.--A tax exemption approved under this
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
owner or operator of a computer data center shall submit to the
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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
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 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.
(c) Aggregation.--An owner or operator may aggregate one or
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
certification, the owner or operator or qualified tenant of a
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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.
(c) Limitation.--The department may not certify any computer
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
or qualified tenant shall maintain detailed records of all
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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.
(c) Recapture.--If certification is revoked under this
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.
Proprietary business information contained in the application
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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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