Minnesota – Omnibus Tax Bill Enacted

SALT Report 1152 – A recent Minnesota tax bill adds to, and expands, IT and computer software exemptions. The Bill is part of a budget package agreed upon by the Minnesota Legislature and the Governor to end the government shutdown.

The bill will allow exemptions to the following:

Qualified Data Centers:

  • Effective June 30, 2012 purchases of enterprise information technology equipment and computer software for use in a qualified data center will be exempt.  This exemption applies to IT equipment and computer software purchased to replace or upgrade existing equipment and software in qualified data centers.
  • The tax on qualified purchases will be imposed and collected and then refunded after June 30, 2013.
  • Only owners of a qualified data center may apply for the refund.  If the tax is paid by a contractor, subcontractor, or builder, then the contractor, subcontractor, or builder must provide the owner with a statement that includes the cost of the exempt items and the taxes paid.

A Qualified Data Center must have the following characteristics:

  • Comprised of one or more buildings with a minnimum of 30,000 square feet and located on one single, or several contiguous parcels
  • The required square footage must be constructed or substantially refurbished after June 30, 2012
  • The total cost of construction, refurbishment, enterprise information technology equipment, and computer software is at least $50 million
  • The QDC must be used to house the enterprise information technology equipment
  • The facility must have an uninterruptible power supply, generator backup, or both
  • Sophisticated fire suppression and prevention systems; and
  • Enhanced security

Enhanced security means the facility has restricted access; permanent security guards; video camera surveillance; and an electronic system requiring pass codes, keycards, or biometric scans.

A qualified data center may claim these exemptions on purchases made either within 20 years of the date of purchase or by June 30, 2042, whichever is earlier.

For Further Information:

Minnesota Omnibus Tax Bill Ch. 7 (H.F. 20), Laws 2011, 1st Special Session