Texas – Data Center Exemption and Emergency Rule

SALT Report 2947 – The Texas Comptroller adopted an emergency rule to implement the temporary sales and use tax exemption for property used in qualifying data centers. The new rule was adopted to implement House Bill 1223, which enacted Tax Code Section 151.359 and amended Tax Code Section 151.317.

Data Center Exemption Overview

To become a qualified data center an owner, operator, or occupant of the data center must file an application with the Comptroller to have the facility certified and to register as a qualified owner, qualified operator, or qualified occupant.  In addition, the taxpayer must agree to make a capital investment of at least $200 million over a five-year period and to create at least 20 permanent, full-time, qualifying jobs.

Once the data center is certified, the Comptroller will issue a registration number specific to the data center, and to each qualified owner, operator, and occupant who applies for the exemption. Both of these registration numbers must be included on the Qualifying Data Center Exemption Certificate – Form 01-929. This exemption certificate must be provided to all retailers when making qualified purchases on behalf of the data center.

The data center sales tax exemption is temporary and will end either 10 or 15 years from the date the facility is certified by the Comptroller.  The actual end date will be determined by the total amount of capital investment made in the qualified data center by the owner, operator, or occupant.

If you’d like to learn more about the exemption, the Comptroller’s new webpage provides additional guidance on the following:

  • Qualifying for the exemption
  • Application and certification requirements
  • Tax permit or direct payment permit requirement
  • Verification, revocation, and important dates
  • Purchaser’s record keeping
  • How to claim the exemption on eligible purchases
  • Data center exemption certificate
  • Retailer’s good faith acceptance of exemption certificate
  • Sales tax refunds
  • Local taxes
  • Qualifying and non-qualifying purchases

For Further Information

Texas Comptroller of Public Accounts – Emergency Rule 34 TAC 3.335

Texas Comptroller of Public Accounts – Data Center Exemption Webpage