Sales Tax Exemption for Data Centers

Thanks to Dave Minke for the heads up on this one. The Omnibus Tax Bill signed by the Governor yesterday included a sales tax exemption for data centers. Hmmm. Minnesota has plenty of natural cool to keep the data center machines at a good working temperature. (I know, tough to remember the cold this week, but our cool temperatures and access to lots of cool water is a big seller!) Minnesota (according to Akamai rankings) is top 10 (in US) for average measured connection speed. And the Minnesota Broadband Plan is to be in the top five! And now we have a tax incentive. That sounds like the recipe for an industry cluster!

Here’s a snippet of the bill

Sec. 7. Minnesota Statutes 2010, section 297A.68, is amended by adding a subdivision to read:

Subd. 42. Qualified data centers. (a) Purchases of enterprise information technology equipment and computer software for use in a qualified data center are exempt. The tax on purchases exempt under this paragraph must be imposed and collected as if the rate under section 297A.62, subdivision 1, applied, and then refunded after June 30, 2013, in the manner provided in section 297A.75. This exemption includes enterprise information technology equipment and computer software purchased to replace or upgrade enterprise information technology equipment and computer software in a qualified data center.
(b) Electricity used or consumed in the operation of a qualified data center is exempt.
(c) For purposes of this subdivision, “qualified data center” means a facility in Minnesota:
(1) that is comprised of one or more buildings that consist in the aggregate of at least 30,000 square feet, and that are located on a single parcel or on contiguous parcels, where the total cost of construction or refurbishment, investment in enterprise information technology equipment, and computer software is at least $50,000,000 within a 24-month period;
(2) that is constructed or substantially refurbished after June 30, 2012, where “substantially refurbished” means that at least 30,000 square feet has been rebuilt or modified; and
(3) that is used to house enterprise information technology equipment, where the facility has the following characteristics:
(i) uninterruptible power supplies, generator backup power, or both;
(ii) sophisticated fire suppression and prevention systems; and
(iii) enhanced security. A facility will be considered to have enhanced security if it has restricted access to the facility to selected personnel; permanent security guards; video camera surveillance; an electronic system requiring pass codes, keycards, or biometric scans, such as hand scans and retinal or fingerprint recognition; or similar security features. In determining whether the facility has the required square footage, the square footage of the following spaces shall be included if the spaces support the operation of enterprise information technology equipment: office space, meeting space, and mechanical and other support facilities.
(d) For purposes of this subdivision, “enterprise information technology equipment” means computers and equipment supporting computing, networking, or data storage, including servers and routers. It includes, but is not limited to: cooling systems, cooling towers, and other temperature control infrastructure; power infrastructure for transformation, distribution, or management of electricity used for the maintenance and operation of a qualified data center, including but not limited to exterior dedicated business-owned substations, backup power generation systems, battery systems, and related infrastructure; and racking systems, cabling, and trays, which are necessary for the maintenance and operation of the qualified data center.
(e) A qualified data center may claim the exemptions in this subdivision for purchases made either within 20 years of the date of its first purchase qualifying for the exemption under paragraph (a), or by June 30, 2042, whichever is earlier.
(f) The purpose of this exemption is to create jobs in the construction and data center industries.
(g) This subdivision is effective for sales and purchases made after June 30, 2012, and before July 1, 2042.
EFFECTIVE DATE.This section is effective for sales and purchases made after June 30, 2012, and before July 1, 2042.

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About Ann Treacy

Librarian who follows rural broadband in MN and good uses of new technology (blandinonbroadband.org), hosts a radio show on MN music (mostlyminnesota.com), supports people experiencing homelessness in Minnesota (elimstrongtowershelters.org) and helps with social justice issues through Women’s March MN.

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