HB276: HB276 Income tax; change certain definitions

26 LC 44 3513S The House Committee on Ways & Means offers the following substitute to HB 276: A BILL TO BE ENTITLED AN ACT To amend Title 48 of the Official Code of Georgia Annotated, re lating to revenue and1 taxation, so as to provide for a tax credit for woody biomass power generators; to provide for2 limits; to provide for taxpayer certification; to provide for transfer of credits, reimbursement3 of related audit costs, and recapture of tax credits wrongfully allowed; to authorize4 promulgation of regulations; to provide for definitions; to pro vide for limitations of 5 exemptions for certain high-technology companies and high-tech nology data centers; to6 extend such exemption for on-site woody biomass power generatio n; to provide for7 definitions; to provide for related matters; to repeal conflicting laws; and for other purposes.8 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:9 SECTION 1.10 Title 48 of the Official Code of Georgia Annotated, relating to revenue and taxation, is11 amended in Article 2 of Chapter 7, relating to imposition, rate, computation, exemptions, and12 credits, by adding a new Code section to read as follows:13 "48-7-40.38.14 (a) As used in this Code section, the term:15 H. B. 276 (SUB) - 1 - 26 LC 44 3513S (1) 'Capacity' means the ratio of the net energy produced by a generating facility to the16 amount of energy that could have been produced, in the absence of any scheduled or17 unscheduled outages, in any selected time period.18 (2) 'Power generator' means any equipment owned and operated b y a customer of an19 electric service provider for the production of electrical energy that:20 (A) Operates on woody biomass;21 (B) Has a minimum capacity of 50 megawatts; and22 (C) Is used at least 50 percent capacity during the prior taxable year.23 (3) 'Woody biomass' means wood residuals that include land-cle aring residue, urban24 wood residue, and pellets and do not include wood from any United States national forest.25 (b)(1)(A) A taxpayer shall be allowed tax credits for expendit ures made for the26 purchase, installation, and readying of a power generator and r elated components27 against the tax imposed by Code Section 48-7-20 in an amount of $500,000.00 per28 megawatt of capacity for a maximum of five taxable years.29 (B) The aggregate amount of tax credits allowed per taxpayer p ursuant to this Code30 section shall not exceed $200 million.31 (2) The aggregate amount of tax credits allowed pursuant to this Code section shall not32 exceed $1.6 billion.33 (c) In order to claim the tax credits provided for in this Cod e section, a taxpayer shall34 attach to such taxpayer's state tax return certification from t he taxpayer that the35 requirements of this Code section have been met and any other information required by the36 commissioner.37 (d)(1) Any tax credits allowed pursuant to this Code section s hall be claimed on or38 before December 31, 2036.39 (2)(A) The total amount of the tax credits allowed pursuant to this Code section for a40 taxable year may exceed the taxpayer's income tax liability.41 H. B. 276 (SUB) - 2 - 26 LC 44 3513S (B) Tax credits claimed pursuant to this Code section may be carried forward for ten42 years from the close of the taxable year in which the credits are claimed, provided that43 no such tax credit may be claimed after December 31, 2036.44 (e) Tax credits claimed pursuant to this Code section but neit her used by the taxpayer45 against its income tax liability nor refunded may be transferre d or sold one time to one46 single other Georgia taxpayer, subject to the following conditions:47 (1) Only the taxpayer that claimed the tax credits allowed pursuant to this Code section48 shall make the transfer or sale of such tax credits;49 (2) The taxpayer that claimed the tax credits allowed pursuant to this Code section shall50 submit to the commissioner written notification of any transfer or sale of such tax credits51 within 30 days after the transfer or sale of the tax credits. Such written notification shall52 include:53 (A) Such taxpayer's credit balance prior to transfer;54 (B) The credit certificate number;55 (C) The remaining balance of credits after transfer;56 (D) The tax identification number of the transferee;57 (E) The date of transfer;58 (F) The amount of credits transferred; and59 (G) Other information as may be required by the department;60 (3) Failure to comply with any provision of this subsection sh all result in the61 disallowance of the tax credits allowed pursuant to this Code section until the taxpayer62 that claimed the credits is in full compliance;63 (4) The transfer or sale of the tax credits shall not extend the time during which such tax64 credits may be used. The carry-forward period for tax credits that are transferred or sold65 shall begin on the date on which such tax credits were originally claimed; and66 (5) A transferee shall have only such rights to claim and use the tax credits that were67 available to the transferor at the time of the transfer; provided, however, that a transferee68 H. B. 276 (SUB) - 3 - 26 LC 44 3513S shall not be eligible to transfer or receive a refund of such tax credits. To the extent that69 the transferor did not have rights to claim or use the tax credits at the time of the transfer,70 the commissioner shall disallow the tax credits claimed by the transferee or recapture the71 tax credits from the transferee or transferor. The transferee's recourse shall not be against72 the commissioner.73 (f)(1) A taxpayer claiming, transferring, or selling tax credi ts allowed pursuant to this74 Code section shall be required to reimburse the department for any department initiated75 audits relating to the tax credits, provided that such amount shall not exceed the value of76 the credits claimed by the taxpayer. This paragraph shall not apply to routine tax audits77 of such taxpayer that may include the review of the tax credits provided in this Code78 section.79 (2) The commissioner may pursue all remedies available by law as necessary to80 recapture tax credits wrongfully allowed or claimed by a taxpay er or a taxpayer's81 transferee.82 (g) The commissioner shall be authorized to promulgate any rul es and regulations83 necessary to implement and administer this Code section."84 SECTION 2.85 Said title is further amended in Code Section 48-8-3, relating to exemptions regarding state86 sales and use tax, by revising paragraphs (68) and (68.1) as follows:87 "(68)(A)(i) The sale or lease of computer equipment to be incorporated into a facility88 or facilities in this state to any high-technology company clas sified under the 201789 North American Industrial Classification System code 334413, 33 4614, 511210,90 517311, 517312, 517410, 517911, 517919, 518210, 522320, 541330, 541511,91 541512, 541513, 541519, 541713, 541715, or 541720, provided that the exemption92 allowed under this paragraph shall be limited to those purchase s or leases made by93 such a high-technology company for calendar years during which the high-technology94 H. B. 276 (SUB) - 4 - 26 LC 44 3513S company made taxable purchases or leases of at least $15 millio n worth of such95 computer equipment.96 (ii) Notwithstanding the provisions of division (i) of this su bparagraph to the97 contrary, on and after January 1, 2024, and ending on December 31, 2028, t h e98 exemption allowed under this paragraph shall be limited such th at each person99 claiming the exemption allowed by this paragraph shall be subje ct to paying 10100 percent of all taxes imposed by this chapter on the first $15 m illion of its eligible101 purchases or leases for which an exemption is claimed under this paragraph.102 (iii)(I) Notwithstanding the provisions of divisions (i) and (ii) of this subparagraph103 to the contrary, on and after January 1, 2029, and ending on December 31, 2034, the104 exemption provided for by this paragraph shall be limited to hi gh-technology105 companies located in any county that includes a habitable barri er island with no106 bridge to the mainland and owned by the Department of Natural Resources, and in107 counties designated as tier 1 unde r Code Section 48-7-40 and to high-technology108 companies that utilize power generator equipment installed and used behind the109 meter at least 50 percent capacity with a minimum capacity of 50 megawatts during110 the prior taxable year.111 (II) As used in this subparagraph, the term:112 (a) 'Behind the meter' means on the customer's side of the ele ctric service113 provider's meter.114 (b) 'Capacity' means the ratio of the net energy produced by a generating facility115 to the amount of energy that could have been produced, in the a bsence of any116 scheduled or unscheduled outages, in any selected time period.117 (c) 'Power generator' means any equipment owned and operated by a customer of118 an electric service provider for the production of electrical energy that:119 (1) Operates on woody biomass;120 (2) Is located on the customer's premises;121 H. B. 276 (SUB) - 5 - 26 LC 44 3513S (3) Operates in parallel with the electric service provider's distribution facilities;122 (4) Is connected to the electric service provider's distributi on system on the123 customer's side of the electric service provider's meter; and124 (5) Is intended primarily to offset part or all of the customer's requirements for125 electricity.126 (d) 'Woody biomass' means wood residuals that include land-cle aring residue,127 urban wood residue, and pellets and do not include wood from any United States128 national forest.129 (B) Any person making a sale or lease of computer equipment to a high-technology130 company as specified in subparagraph (A) of this paragraph shal l collect the tax131 imposed on the sale by this article unless the purchaser furnis hes such seller with a132 certificate issued by the commissioner certifying that the purc haser is entitled to133 purchase the computer equipment without paying the tax. As a condition precedent to134 the issuance of the certificate, the commissioner, at such comm issioner's discretion,135 may require a good and valid bond with a surety company authorized to do business in136 this state as surety or may require legal securities, in an amo unt fixed by the137 commissioner, conditioned upon payment by the purchaser of all taxes due under this138 article in the event it should be determined that the sale fails to meet the requirements139 of this subparagraph.140 (C)(i) As used in this paragraph, the term 'computer equipment' means any individual141 computer or organized assembly of hardware or software, including, but not limited142 to, a server farm, mainframe or midrange computer, mainframe dr iven high-speed143 print and mailing devices, and workstations connected to those devices via high144 bandwidth connectivity such as a local area network, wide area network, or any other145 data transport technology which performs one of the following functions: storage or146 management of production data, hosting of production applicatio ns, hosting of147 application systems development activities, or hosting of applications systems testing.148 H. B. 276 (SUB) - 6 - 26 LC 44 3513S (ii) Such term shall not include:149 (I) Telephone central office equipment or other voice data tra nsport technology,150 including any wireline or wireless telecommunication system;151 (II) Equipment with imbedded computer hardware or software which is primarily152 used for training, product testing, or in a manufacturing process;153 (III) Computers or devices issued to employees, which shall in clude, but not be154 limited to, smartphones, tablets, wearables, personal computers, and laptops; or155 (IV) Prewritten computer software.156 (D) Any corporation, partnership, limited liability company, or any other similar entity157 which qualifies for the exemption and is affiliated in any manner with a nonqualified158 corporation, partnership, limited liability company, or any oth er similar entity must159 conduct at least a majority of its business with entities with which it has no affiliation.160 (E) Each high-technology company that has been issued a certif icate of exemption161 pursuant to this paragraph shall report annually to the commiss ioner a list of the162 facilities for which all computer equipment exempted by this pa ragraph during the163 preceding calendar year was incorporated, as well as the amount of taxes exempted164 under this paragraph during the preceding calendar year. Such report shall be filed165 within 90 days after the end of the calendar year for which the high-technology166 company utilized a certificate of exemption pursuant to this pa ragraph and shall be167 subject to the confidentiality provisions of Code Section 48-2-15. The commissioner168 shall not issue a certificate of exemption under this paragraph for the calendar year next169 succeeding the reporti ng date to any high-technology company th at has failed to170 comply with the reporting required by this subparagraph.171 (F) The commissioner shall promulgate such rules and regulations as are necessary to172 implement the provisions of this paragraph.173 (68.1)(A) For the period commencing on July 1, 2018, and endin g on174 December 31, 2031, except as otherwise provided by subparagraph ( H ) o f t h i s175 H. B. 276 (SUB) - 7 - 26 LC 44 3513S paragraph, high-technology data center equipment to be incorporated or u sed in a176 high-technology data center that meets the high-technology data center minimum177 investment threshold and other conditions provided in this paragraph.178 (B) Any person making a sale or lease of high-technology data center equipment shall179 collect the tax imposed on such sale by this article unless the purchaser furnishes such180 seller with a certificate issued by the commissioner certifying that such sale or lease is181 exempted pursuant to this paragraph.182 (C)(i) The commissioner shall not issue a certificate of exemption from sales and use183 tax to a high-technology data center or high-technology data ce nter customer as184 provided in this paragraph unless the commissioner makes a dete rmination that the185 high-technology data center will more likely than not meet the high-technology data186 center minimum investment threshold.187 (ii) The commissioner may require any information necessary to determine if such188 high-technology data center is in compliance with its investmen t budgeting plan to189 meet the high-technology data center minimum investment threshold.190 (iii)(I) Within 60 days af ter the end of the seventh year foll owing its exemption191 start date, a high-technology data center shall file a final re port with the192 commissioner listing the expenditures incurred that count towar d its minimum193 investment threshold, the number of new quality jobs created, a nd any other194 information that the commissioner may reasonably require to determine whether the195 high-technology data center has met the minimum investment threshold.196 (II) If the commissioner determines that a high-technology dat a center failed to197 meet its high-technology data center minimum investment thresho ld, such198 high-technology data center shall be required to repay all taxe s exempted or199 refunded pursuant to its certificate of exemption issued pursuant to this paragraph200 within 90 days after notification of such failure. Interest sh all be due with such201 repayment at the rate specified in Code Section 48-2-40 compute d from the date202 H. B. 276 (SUB) - 8 - 26 LC 44 3513S such taxes would have been due but for this exemption. Such repayment shall be203 calculated notwithstanding otherwise applicable periods of limitation for assessment204 of taxes under Code Section 48-2-49.205 (iv)(I) As a condition precedent to the issuance of a certific ate of exemption, the206 commissioner, at his or her discretion, may require a good and valid bond with a207 surety company authorized to do business in this state, in an a mount fixed by the208 commissioner not to exceed $20 million. The commissioner shall consider past209 performance and in-state investment when determining the value of the bond, if one210 is required.211 (II) The bond that may be required by this division shall be forfeited and paid to the212 general fund in an amount representing all taxes and interest required to be repaid213 pursuant to division (iii) of this subparagraph if the high-technology data center fails214 to meet the high-technology data center minimum investment threshold prior to the215 expiration of the seven-year period.216 (v) The commissioner shall have the authority to revoke the certificate of exemption217 at any time he or she believes that the high-technology data ce nter is not likely to218 meet its high-technology minimum investment threshold.219 (vi) Each high-technology data center that has been issued a certificate of exemption220 pursuant to this paragraph shall provide a list of high-technol ogy data center221 customers that are deploying high-technology data center equipment in its facility and222 shall notify the commissioner within 30 days of any change to the list.223 (D)(i) The commissioner shall require annual reporting by the high-technology data224 center of the amount of taxes exempted under this paragraph, th e number of new225 quality jobs, and the total payroll resulting from construction , maintenance, and226 operation in and on its facility during the preceding year.227 (ii) The commissioner shall issue an annual report to the chai rperson of the Senate228 Finance Committee and the chairperson of the House Committee on Ways and Means229 H. B. 276 (SUB) - 9 - 26 LC 44 3513S concerning the exemption allowed by this paragraph. Notwithsta nding the230 confidentiality provisions of Code Section 48-2-15, such report shall include, for the231 prior calendar year for each h igh-technology data center issued a certificate of232 exemption pursuant to this paragraph, the amount of tax exempted and the number of233 new quality jobs created by each high-technology data center.234 (E) The commissioner shall promulgate such rules and regulations as are necessary to235 implement the provisions of this paragraph.236 (F) A high-technology data center shall not be entitled to claim any credit authorized237 under Code Sections 48-7-40 through 48-7-40.33 or Code Section 36-62-5.1 on its tax238 return if it has received a certificate of exemption from the commissioner pursuant to239 this paragraph. If a determination is made by the commissioner pursuant to division240 (iii) of subparagraph (C) of this paragraph that the high-techn ology data center must241 repay all taxes exempted or refunded pursuant to this paragraph, such high-technology242 data center may file amended income tax returns claiming any credit to which it would243 have been entitled under the foregoing Code sections but for ha ving claimed the244 exemption under this paragraph.245 (G) As used in this paragraph, the term:246 (i) 'Exemption start date' means the date on or after July 1, 2018, chosen by the247 high-technology data center and indicated on its application fi led on or after248 January 1, 2019, which begins the seven-year period during whic h the minimum249 investment threshold must be met. A refund claim must be filed for taxes paid on250 purchases qualifying for this exemption for any period on or after July 1, 2018, during251 which the high-technology data center has not yet applied for a nd received its252 certificate of exemption from the commissioner.253 (ii) 'High-technology data center' means a facility, campus of facilities, or array of254 interconnected facilities in this state that is developed to po wer, cool, secure, and255 connect its own equipment or the computer equipment of high-technology data center256 H. B. 276 (SUB) - 10 - 26 LC 44 3513S customers and that has an investment budget plan which meets the high-technology257 data center minimum investment threshold.258 (iii) 'High-technology data center customer' means a client, tenant, licensee, or end259 user of a high-technology data center that signs at least a 36 month contract for260 service with the high-technology data center.261 (iv) 'High-technology data center equipment' means computer equipment as defined262 in paragraph (68) of this Code section of a high-technology dat a center or such263 equipment of a high-technology data center customer to be used or deployed in the264 high-technology data center; and the materials, components, mac hinery, hardware,265 software, or equipment, including, but not limited to, emergency backup generators,266 air handling units, cooling towers, energy storage or energy ef ficiency technology,267 switches, power distribution units, switching gear, peripheral computer devices,268 routers, batteries, wiring, cabling, or conduit, which equipment or materials are used269 to:270 (I) Create, manage, facilitate, or maintain the physical and digital environments for271 computer equipment;272 (II) Protect the high-technology data center equipment from ph ysical,273 environmental, or digital threats; or274 (III) Generate or provide constant delivery of power, environmental conditioning,275 air cooling, or telecommunications services for the high-technology data center.276 Such term shall not include real property as defined in Code Se ction 48-8-3.2. A277 high-technology data center may not count high-technology data center equipment278 that it purchases or that is purchased by the high-technology data center customer and279 subsequently leased to another party more than once for purpose s of satisfying the280 high-technology data center minimum investment threshold.281 (v) 'High-technology data center minimum investment threshold' means:282 H. B. 276 (SUB) - 11 - 26 LC 44 3513S (I) For high-technology data cen ters located in a county in th is state having a283 population greater than 50,000 according to the United States decennial census of284 2010 or any future such census, the creation of 25 new quality jobs and $250285 million in aggregate expenditures incurred over any consecutive seven-year period286 between July 1, 2018, and December 31, 2031, on the design and construction of the287 high-technology data center and high-technology data center equipment to be used288 or incorporated in the high-technology data center;289 (II) For high-technology data centers located in a county in t his state having a290 population greater than 30,000 and less than 50,001 according to the United States291 decennial census of 2010 or any future such census, the creation of ten new quality292 jobs and $75 million in aggregate expenditures incurred over an y consecutive293 seven-year period between July 1, 2018, and December 31, 2031, on the design and294 construction of the high-technology data center and high-techno logy data center295 equipment to be used or incorporated in the high-technology data center; and296 (III) For high-technology data centers located in a county in this state having a297 population less than 30,001 according to the United States decennial census of 2010298 or any future such census, the creation of five new quality jobs and $25 million in299 aggregate expenditures incurred over any consecutive seven-year period between300 July 1, 2018, and December 31, 2031, on the design and construc tion of the301 high-technology data center and high-technology data center equipment to be used302 or incorporated in the high-technology data center.303 (vi) 'New quality jobs' shall have the same meaning as provided in paragraph (2) of304 subsection (a) of Code Section 48-7-40.17.305 (H) This paragraph shall stand repealed by operation of law on January 1, 2032.306 (i) On and after January 1, 2032, and ending on December 31, 2037, the exemption307 provided for by this paragraph shall be limited to high-technology data centers located308 in any county that includes a habitable barrier island with no bridge to the mainland309 H. B. 276 (SUB) - 12 - 26 LC 44 3513S and owned by the Department of Natural Resources and in countie s designated as310 tier 1 under Code Section 48-7-40 and to high-technology data c enters that utilize311 power generator equipment installed and used behind the meter a t least 50 percent312 capacity with a minimum capacity of 50 megawatts during the prior taxable year.313 (ii) As used in this subparagraph, the term:314 (I) 'Behind the meter' means on the customer's side of the electric service provider's315 meter.316 (II) 'Capacity' means the ratio of the net energy produced by a generating facility317 to the amount of energy that could have been produced, in the a bsence of any318 scheduled or unscheduled outages, in any selected time period.319 (III) 'Power generator' means any equipment owned and operated by a customer of320 an electric service provider for the production of electrical energy that:321 (a) Operates on woody biomass;322 (b) Is located on the customer's premises;323 (c) Operates in parallel with the electric service provider's distribution facilities;324 (d) Is connected to the electric service provider's distributi on system on the325 customer's side of the electric service provider's meter; and326 (e) Is intended primarily to offset part or all of the custome r's requirements for327 electricity.328 (IV) 'Woody biomass' means wood residuals that include land-cl earing residue,329 urban wood residue, and pellets and do not include wood from an y United States330 national forest;"331 SECTION 3.332 All laws and parts of laws in conflict with this Act are repealed.333 H. B. 276 (SUB) - 13 -