TITLE 63

REVENUE AND TAXATION

CHAPTER 36

SALES TAX

63-3622VV.  idaho information technology equipment. (1) On and after July 1, 2020, there is exempted from the taxes imposed by this chapter the purchase or use of eligible server equipment and new data center facilities, as defined in this section. The exemption provided in this section shall be available only to qualifying business entities and contractors installing eligible server equipment or building new data center facilities for qualifying business entities. The exemption provided in this section shall not be available for property that has been the subject of business incentives granted to a taxpayer or its affiliates, pursuant to the Idaho reimbursement incentive act, sections 67-4737 through 67-4744, Idaho Code.

(2)  As used in this section:

(a)  "Business entity" means a separate legal entity or separately operated segment of business that exists for the primary purpose of engaging in a commercial activity for profit and whose sole purpose is the operation of a data center. For the purposes of this section, a separately operated segment of business is a segment of a business for which separate records are maintained and that is operated by an employee or employees whose primary employment responsibility is to operate the business segment.

(b)  "Cabling" means a fiber or copper cable used in data centers to connect information sources to a server or storage device.

(c)  "Capital investment" means real or tangible personal property that is purchased for use in Idaho and is used by a business entity for the purpose of operating a data center.

(d)  "Chiller" means a cooling system used in data centers to remove heat from an element and deposit it into another element.

(e)  "Commencement of operations" means the date on which a certificate of occupancy is issued for a data center.

(f)  "Data center" means a facility comprised of one (1) or more buildings in Idaho that is used to house eligible server equipment for the transmission and storage of data where the facility has the following characteristics:

(i)   Uninterruptible power supplies, generator power, or both;

(ii)  Sophisticated fire suppression and prevention systems; and

(iii) Enhanced physical security and restricted access.

(g)  "Eligible server equipment" means new server equipment acquired by a qualifying business entity as described in this subsection that is maintained and operated in a data center located in Idaho for the sole purpose of data transmission and storage services, providing data and transaction processing services, information technology services, or computer collocation services. "Eligible server equipment" includes servers, rack servers, chillers, storage devices, generators, cabling, and enabling software integral to or installed on such equipment.

(h)  "Generator" means an engine used in data centers to convert mechanical energy into electricity.

(i)  "New data center facilities" means buildings or structural components of buildings, including equipment, materials, and fixtures thereof, that are used in or intended for use primarily as a data center in Idaho.

(j)  "New jobs" means new jobs created in Idaho that are nonseasonal, full-time jobs that collectively pay an average weekly wage that equals or exceeds the average weekly wage for the county where the data center is located, as determined by the most recent report of the United States bureau of labor statistics. A job that merely changes locations within the state of Idaho shall not be considered a new job under this section. New jobs must exceed the business entity’s highest number of full-time employees in Idaho during the twenty-four (24) months immediately preceding the commencement of operations of the data center.

(k)  "Qualifying business entity" means a business entity that certifies to the state tax commission that it will make capital investments in one (1) or more data centers after July 1, 2020, in amounts of at least two hundred fifty million dollars ($250,000,000) in the aggregate within the first five (5) years after commencement of construction and that it will create and maintain at least thirty (30) new jobs at the data center within two (2) calendar years after the commencement of operations. Such business entities shall be entitled to a provisional exemption pursuant to this section during the period in which they make capital investments in data center property. If a business entity fails to meet the investment and job creation requirements provided within the time periods required in this section, it shall pay sales or use taxes that would have been due if not for the granting of the provisional exemption. If a business entity meets the investment and job creation requirements provided within the time periods required in this section, its provisional exemption shall become final without further action, and thereafter the exemption shall also apply to all additional purchases of eligible server equipment and purchases associated with constructing new data center facilities.

(l)  "Rack server" means a computer in a data center dedicated to use as a server and designed to be installed in a framework called a rack.

(m)  "Server" means a computer or computer program used in data centers that manages access to a centralized resource or service in a network.

(n)  "Storage device" means a piece of computer equipment on which information can be stored and that is used in data centers.

(3)  The state tax commission may promulgate rules to administer and enforce the provisions of this section, including the promulgation of rules relating to the provision of information necessary to certify that the taxpayer satisfies the criteria for a qualifying business entity. For the purpose of carrying out its duties to administer and enforce the provisions of this section, the state tax commission shall have the powers and duties provided by sections 63-217, 63-3038, 63-3039, 63-3042 through 63-3067, 63-3068, 63-3071, and 63-3074 through 63-3078, Idaho Code.

History:

[63-3622VV, added 2020, ch. 335, sec. 1, p. 973.]