Exemption for Data Center Property

 

DEPARTMENT OF REVENUE

Sales and Use Tax

RULE NO.:RULE TITLE:

12AER17-03Exemption for Data Center Property

SPECIFIC REASONS FOR FINDING AN IMMEDIATE DANGER TO THE PUBLIC HEALTH, SAFETY OR WELFARE: Section 213.06(2), Florida Statutes, provides an exception to the prerequisite of a finding of immediate danger to the public health, safety, or welfare of Florida citizens. The statutory provision provides that the Department of Revenue is authorized to adopt an emergency rule, pursuant to Section 120.54, F.S., on behalf of the Department, when the effective date of a legislative change occurs sooner than 60 days after the close of the legislative session in which the change was enacted and when the change affects a tax rate or collection or reporting procedure that affects a substantial number of dealers or persons. Section 26 of Chapter 2017-36, Laws of Florida, provides an exemption from sales tax for purchases of data center property by data center owners, tenants, and contractors, beginning July 1, 2017. The rule provides exemption eligibility requirements, definitions of data center property, the application process, and procedures to document purchases of exempt data center property. The emergency rule incorporates, by reference, Form DR-1214DCP, Application for Data Center Property Temporary Tax Exemption Certificate.

REASON FOR CONCLUDING THAT THE PROCEDURE IS FAIR UNDER THE CIRCUMSTANCES: Emergency rulemaking is fair under the circumstances, as the effective date of the exemption for purchases of data center property is within 60 days after the close of the 2017 Legislative Session. Additionally, the promulgation of this emergency rule ensures that dealers and taxpayers are notified in the most expedient and appropriate manner regarding the data center property exemption provisions of Section 26, Chapter 2017-36, Laws of Florida.

SUMMARY: Emergency Rule 12AER17-03 notifies the general public, data center owners, data center tenants, data center contractors, and retailers of the exemption for purchases of data center property in Section 212.08(5)(s), F.S., which became effective July 1, 2017, provided by Section 26, Chapter 2017-36, Laws of Florida. This emergency rule provides exemption requirements, definitions, and application procedures for data center owners. The sales tax exemption for data center property applies to data center property used exclusively at a data center to construct, outfit, operate, support, power, cool, dehumidify, secure, or protect a data center and any contiguous dedicated substations when certain exemption requirements will be met. The exemption requirements include that: the Data Center’s owners and tenants make a cumulative, minimum capital investment, after July 1, 2017, of $150 million for the data center; that the data center must have a critical IT load of 15 megawatts or higher; and, that each individual owner or tenant within the data center must have a dedicated critical IT load of 1 megawatt or higher. The exemption requirements must be met within 5 years after the commencement of the construction of the data center. The exemption applies to purchases of data center property, defined to include construction materials, component parts, machinery and equipment, computers, servers, installations, redundancies, software, and electricity used exclusively at a data center.

THE PERSON TO BE CONTACTED REGARDING THE EMERGENCY RULE IS: Brinton Hevey [phone]

 

THE FULL TEXT OF THE EMERGENCY RULE IS:

 

STATE OF FLORIDA

DEPARTMENT OF REVENUE

SALES AND USE TAX

EMERGENCY RULE 12AER17-03

12AER17-03 Exemption for Data Center Property.

(1) The sale of “data center property,” as referenced in section 212.08(5)(s)1.d., F.S., used exclusively at a data center to construct, outfit, operate, support, power, cool, dehumidify, secure, or protect a data center and any contiguous dedicated substations is exempt from sales tax when the following requirements will be met:  

(a) The facility meets the definition of “data center,” as provided in s. 212.08(5)(s)1.c., F.S.;

(b) The data center owners and tenants have made a cumulative, minimum capital investment, after July 1, 2017, of $150 million for the data center;

(c) The data center must have a critical IT load of 15 megawatts or higher; and,

(d) Each individual owner or tenant within the data center must have a dedicated critical IT load of 1 megawatt or higher.

(e) Each of the above requirements must be met within 5 years after the commencement of the construction of the data center.

(2) Application Process.

(a) The Department of Revenue hereby adopts and incorporates in this rule by reference Form DR-1214DCP, Application for Data Center Property Temporary Tax Exemption Certificate.

(b) Copies of Form DR-1214DCP are available, without cost, by downloading the selected form from the Department’s website at http://floridarevenue.com/forms/. Persons with hearing or speech impairments may call the Department’s TDD at [phone].

(c) To qualify for the exemption for data center property, the data center owner must complete an Application for Data Center Property Temporary Tax Exemption Certificate (DR-1214DCP).  The application must state that a qualifying data center designation is being sought and must be accompanied by information that indicates the exemption requirements of subsection (1), will be met.

(d) The Department will issue a Data Center Property Temporary Tax Exemption Certificate (DR-14TDCP), upon a tentative determination by the Department that the exemption requirements provided in subsection (1) will be met.   

(3) Documenting the Exemption

(a) Data center owners making tax-exempt purchases of data center property are required to present the Data Center Property Temporary Tax Exemption Certificate (DR-14TDCP), to the selling dealer.

(b)Tenants and contractors making tax exempt purchases of data center property are required to present a copy of data center owner’s Data Center Property Temporary Tax Exemption Certificate (DR-14TDCP), issued to the data center owner by the Department, along with a Certificate of Entitlement to each vendor to affirm that the purchaser qualifies for the exemption.  The vendor must maintain copies of the certificates until tax imposed by Chapter 212, F.S., may no longer be determined and assessed pursuant to Section 212.08(5)(s)3.c., F.S.  Possession by a vendor of such a certificate from the purchaser relieves the vendor from the responsibility of collecting tax on the sale, and the Department shall look solely to the purchaser for recovery of tax if it determines that the purchaser was not entitled to the exemption.

(c) The following is the format of the Certificate of Entitlement to be issued by the data center tenant or data center contractor when making exempt purchases of data center property:

CERTIFICATE OF ENTITLEMENT

The undersigned _____________________ (the Purchaser) affirms that it is a tenant or contractor of _______________________ (the Data Center), located at ________________________ (Data Center Address), and is eligible to extend the Data Center Property Temporary Tax Exemption Certificate to lease or purchase data center property exempt from sales tax. 

The Purchaser affirms that the items purchased or rented from _______________ (Vendor) will be used exclusively at the Data Center to construct, outfit, operate, support, power, cool, dehumidify, secure, or protect a data center and any contiguous dedicated substations. 

The Purchaser acknowledges that if the subject purchased or leased data center property does not qualify for the exemption provided in section 212.08(5)(s), F.S., and Rule 12A-1.108, F.A.C., the Purchaser will be subject to the tax, interest, and penalties due on the purchased or leased property.

I understand that if I fraudulently issue this certificate to evade the payment of sales tax, I will be liable for payment of the sales tax plus a penalty of 200% of the tax and may be subject to conviction for a third-degree felony. 

Under the penalties of perjury, I declare that I have read the foregoing Certificate of Entitlement, and the facts stated in it are true.

Signature of Purchaser _____________________   Title _________________________

Purchaser’s Name (Print or Type) __________________________   Date ___________

Purchaser’s Federal Employer Identification Number: ___________________________

Data Center Owner Certificate Number: ______________________

Telephone Number: ______________________

Do not send to the Florida Department of Revenue. This Certificate of Entitlement must be retained in the vendor’s and the tenant’s or contractor’s books and records.

(4)(a) The exemption for purchases and leases of data center property does not include rental consideration made for the lease or license to use real property subject to tax under s. 212.031. F.S.  Rental consideration includes all considerations due and payable by the tenant to its landlord for the privilege of use, occupancy, or the right to use or occupy any real property for any purpose, including pass-through charges for common area maintenance and utilities.  See Rule 12A-1.070(4), F.A.C.

(b)1. Payments for the use of electricity by a tenant to a data center owner, lessor, or utility provider that are not required to be paid for the privilege of use, occupancy, or the right to use or occupy the data center are not subject to sales tax.  Such payments are considered to be for the use of “data center property.” 

2. To document the exempt purchase of electricity from a utility provider, the tenant shall present a copy of the Data Center Property Temporary Tax Exemption Certificate (DR-14TDCP), as provided in subsection (3) of this rule, along with an executed Certificate of Entitlement, as provided in subsection (4) of this rule, to the utility provider.

(5) If the Department determines that the exemption requirements for purchases of data center property are not met, data center owners, tenants, and contractors are liable to pay the tax that was avoided at the time of purchase, as well as penalty and interest from the date of purchase.

Rulemaking Authority: 213.06(2), FS.  Law Implemented 212.08(5)(s), FS. History-New______.

 

THIS RULE TAKES EFFECT UPON BEING FILED WITH THE DEPARTMENT OF STATE UNLESS A LATER TIME AND DATE IS SPECIFIED IN THE RULE.