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ARIZONA STATE SENATE
Fifty-Sixth Legislature, First Regular Session
REVISED
AMENDED
computer data centers; TPT; refund
Purpose
Retroactive to taxable periods beginning January 1, 2022, requires a computer data center (CDC) that claims a tax refund beginning January 1, 2022, to submit the refund using the standard tax refund process.
Background
In 2013, the Legislature established the CDC Program. The Arizona Commerce Authority (ACA) operates the CDC Program in conjunction with the Arizona Department of Revenue (ADOR). 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 as well as temperature control infrastructure.
Current statute requires the gross proceeds of sales or gross income
derived from sales 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 to
be deducted from the tax base for the retail classification of transaction
privilege tax (TPT) (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, prime contracting tax and municipal tax deductions from the gross proceeds
of sales or gross income from the sale, use, installation, assembly, repair or
maintenance of CDC equipment for use at a CDC (A.R.S.
§ 41-1519).
Laws 2021, Chapter 266 modified the definition of tax relief and allowed a CDC to claim a TPT or use tax refund by December 31, 2021, based on the new definition, retroactive to taxable periods beginning September 13, 2013. The maximum aggregate amount of refunds for claims filed between January 1, 2021, and December 31, 2021, was $10,000.
The Joint Legislative Budget Committee fiscal note estimates that there is no anticipated fiscal impact to the state General Fund associated with S.B. 1274 (JLBC fiscal note).
Provisions
1. Requires a CDC that claims a tax refund beginning January 1, 2022, to submit the refund using the standard tax refund process and exempts CDC claims after that date from the aggregate cap and related guidelines for refund claims filed during 2021.
2. Makes technical changes.
3. Becomes effective on the general effective date, retroactive to taxable periods beginning January 1, 2022.
Amendments Adopted by Committee
· Makes technical changes.
Revisions
· Updates the fiscal impact statement.
Senate Action
FIN 2/6/23 DPA 7-0-0
Prepared by Senate Research
February 10, 2023
MG/sr