Current law provides a retail sale and use tax exemption for qualifying businesses operating data centers and qualifying tenants of those data centers. The exemption includes purchases of eligible server equipment and power infrastructure, labor, and services for installing eligible server equipment, and for constructing, installing, repairing, altering, or improving eligible power infrastructure.
To qualify and maintain an exemption, a facility must meet certain criteria regarding employment and facility size, be in a rural county, and commence construction during a certain period. Limits under current law on the number of data centers receiving an incentive have been met.
Within six years of being issued an exemption certificate, an eligible data center must show it has established or increased family wage employment positions by an amount dependent on the size of the data center. Family wage employment positions are defined as new permanent full-time jobs with employer-provided health care, requiring 40 hours of work and with a wage that is 150 percent of the per capita personal income of the county where the center is located. If the number of family wage jobs has not increased or been met within those six years, all previously exempted sales and use taxes are immediately due and payable.
The bill as referred to committee not considered.
An exemption to the sales and use tax is established for qualifying businesses and tenants of eligible data centers. To qualify, a business must be in a county with a population between 900,000 and 1 million people as determined in the April 1, 2020, population estimate provided by the Office of Financial Management. Pierce County meets that population criteria.
An application must be made to the Department of Revenue (DOR) for the exemption certificate. A qualifying business must submit records of available power for customers at the time of application, which demonstrates it has a minimum of 1.5 megawatts of available power. A tenant must contract for a minimum electrical capacity of 150 kilowatts for server and computer equipment in a qualifying business.
The exemption certificate is effective on the date the application is received by DOR, which is deemed its date of issuance. No new exemption certificates may be issued by DOR on or after July 1, 2027, and the exemptions fully expire July 1, 2037. The exemption certificate may be used to build, repair, or refurbish a data center. The number of exemption certificates is limited to two the first year, and one per year for years three through six. The certificate is available on a first-in-time basis.
Construction must commence within two years of certificate issuance. Within six years, the qualifying business or tenant must show it has increased or established at least three jobs per 20,000 square feet of space. The amount of family wage jobs the qualifying tenant must have created may be based on the proportion of the space they occupy in the data center.
Family wage jobs are defined similarly to the current law program except the wage must be at least 125 percent of the per capita personal income of the county where the project is located.
Certificate holders may transfer their certificate with consent of DOR if certain requirements are met.
Tax Performance Statement and Review. A tax preference performance statement is established. The specific public policy objective of this tax preference is to:
The Joint Legislative Audit and Review Committee (JLARC) will perform the tax preference review. If JLARC finds the tax preference increases the tax base of the county because of the construction, leasing, and other investment of eligible computer data centers, the Legislature intends to extend the expiration date and expand the preference to the entire state of Washington.