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ARIZONA HOUSE OF REPRESENTATIVESFifty-fifth Legislature First Regular Session |
House: WM DPA 7-3-0-0| 3rd Read 41-17-2-0 | Final 46-13-1-0Senate: FIN DPA 6-1-3-0 | 3rd Read 22-6-2-0 |
HB 2649: computer data centers; tax incentives
Sponsor: Representative Toma, LD 22
Transmitted to Governor
Overview
Redefines "tax relief", retroactive to September 13, 2013, as the statutorily prescribed transaction privilege tax (TPT), use tax, prime contracting tax and municipal tax deductions from the gross proceeds of sale or gross income from the sale, use, installation, assembly, repair or maintenance of computer data center (CDC) equipment for use at a CDC. Modifies TPT and use tax exemptions applicable to a qualified CDC.
History
The Legislature established the CDC Program in 2013. The Arizona Commerce Authority (ACA) operates the CDC Program in conjunction with the Arizona Department of Revenue (DOR). A CDC is a facility that is predominately used to house working servers for one or more businesses or owners. A CDC may have uninterruptible energy supply or backup generator power, including temperature control infrastructure.
Current statute exempts the gross proceeds of sales or gross income from CDC equipment that is to be used to outfit, operate or benefit the CDC and that is sold to the owner, operator or qualified colocation tenant of a certified CDC from TPT and use tax (A.R.S. §§ 42-5061 and 42-5159). To qualify for the tax relief, a qualified CDC must submit: 1) an application for CDC certification and receive a letter of certification from the ACA; and 2) a signed affirmation that the CDC will satisfy the applicable capital investment threshold. Tax relief is the statutorily prescribed TPT, use tax and municipal tax deductions from the gross proceeds of sale or gross income from the sale of qualified equipment that is installed in a CDC.
Provisions
1. Redefines "tax relief" to include use, installation, assembly, repair or maintenance, as it relates to a CDC, for deductions in the retail classification, prime contracting classification, use tax and municipal tax. (Sec. 1)
2. Requires the owner or operator of an International Operations Center (IOC) to submit to the ACA outlined information relating to the required investment and the required portion of the power generated by each facility for self-consumption. (Sec. 2)
3. Requires an IOC owner's minimum investment to be completed within a three-year period beginning on the earlier of the date the initial application is received or December 31, 2030 and requires construction of the renewable energy facility to begin within six months of receipt of the application. (Sec. 2)
4. Requires at least 51 percent of the energy produced by a renewable energy facility to be used for self-consumption in an IOC in Arizona by the fifth year of operation. (Sec. 2)
5. Specifies that information required for submittal by an IOC that was already provided to DOR is not required to be resubmitted. (Sec. 2)
6. Defines "affiliated entity", "biomass", "renewable energy facility" and "renewable energy resource". (Sec. 2)
8. Exempts the category of tangible personal property from use tax of CDC equipment that is to be used in the CDC and that is sold to the owner, operator or qualified colocation tenant of a certified CDC or to an authorized agent during the qualification period. (Sec. 6)
9. Expands the credit for renewable energy investment and production for self-consumption by international operation centers to allow third-party investments and to allow power that is generated by a utility-owned renewable energy facility on behalf of or for the direct benefit of the taxpayer. (Sec. 8)
10. Allows the estimated total investment a taxpayer will make to include investments made by third-party entities on behalf of or for the direct benefit of the taxpayer. (Sec. 8)
11. Redefines "renewable energy facility." (Sec. 8)
12. Redefines "renewable energy resource." (Sec. 8)
13. Requires a CDC to submit a claim for refund of TPT or use tax based on the new definition of tax relief, the TPT deduction and the use tax exemption to ADOR by December 31, 2021, and outlines the following refund claim guidelines:
a) Failure to file a claim by the deadline constitutes a waiver of the claim for refund;
b) The maximum aggregate amount of refunds for claims filed from January 1, 2021, through December 31, 2021, is $10,000;
c) If the aggregate amount of claims exceeds $10,000, ADOR will reduce each claim proportionately so the total refund amount is $10,000;
d) Interest is not allowed or compounded on any refundable amount of claims paid before July 1, 2022;
e) If a refundable amount cannot be determined or paid until after June 30, 2022, interest accrues after that date; and
f) The $10,000 aggregate refund amount does not apply to refund claims filed before January 1, 2021, or refund claims that are not in connection with the exemption. (Sec. 9)
14. Contains a legislative intent clause. (Sec. 10)
15. Contains a retroactivity clause. (Sec. 11)
16. Contains a nonseverability clause. (Sec. 12)
17. Contains a conditional enactment clause. (Sec. 13)
18. Makes technical and conforming changes.
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22. HB 2649
23. Initials VP Page 0 Transmitted
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