HB 276: Income tax; change certain definitions

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, relating to revenue and taxation, so as to provide for a tax credit for woody biomass power generators; to provide for limits; to provide for taxpayer certification; to provide for transfer of credits, reimbursement of related audit costs, and recapture of tax credits wrongfully allowed; to authorize promulgation of regulations; to provide for definitions; to provide for limitations of exemptions for certain high-technology companies and high-technology data centers; to extend such exemption for on-site woody biomass power generation; to provide for definitions; to provide for related matters; to repeal conflicting laws; and for other purposes.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:

SECTION 1.

Title 48 of the Official Code of Georgia Annotated, relating to revenue and taxation, is amended in Article 2 of Chapter 7, relating to imposition, rate, computation, exemptions, and credits, by adding a new Code section to read as follows:

"48-7-40.38.

(a) As used in this Code section, the term:

(1) 'Capacity' means the ratio of the net energy produced by a generating facility to the amount of energy that could have been produced, in the absence of any scheduled or unscheduled outages, in any selected time period.

(2) 'Power generator' means any equipment owned and operated by a customer of an electric service provider for the production of electrical energy that:

(A) Operates on woody biomass;

(B) Has a minimum capacity of 50 megawatts; and

(C) Is used at least 50 percent capacity during the prior taxable year.

(3) 'Woody biomass' means wood residuals that include land-clearing residue, urban wood residue, and pellets and do not include wood from any United States national forest. (b)(1)(A) A taxpayer shall be allowed tax credits for expenditures made for the purchase, installation, and readying of a power generator and related components against the tax imposed by Code Section 48-7-20 in an amount of $500,000.00 per megawatt of capacity for a maximum of five taxable years.

(B) The aggregate amount of tax credits allowed per taxpayer pursuant to this Code section shall not exceed $200 million.

(2) The aggregate amount of tax credits allowed pursuant to this Code section shall not exceed $1.6 billion.

(c) In order to claim the tax credits provided for in this Code section, a taxpayer shall attach to such taxpayer's state tax return certification from the taxpayer that the requirements of this Code section have been met and any other information required by the commissioner.

(d)(1) Any tax credits allowed pursuant to this Code section shall be claimed on or before December 31, 2036.

(2)(A) The total amount of the tax credits allowed pursuant to this Code section for a taxable year may exceed the taxpayer's income tax liability.

(B) Tax credits claimed pursuant to this Code section may be carried forward for ten years from the close of the taxable year in which the credits are claimed, provided that no such tax credit may be claimed after December 31, 2036.

(e) Tax credits claimed pursuant to this Code section but neither used by the taxpayer against its income tax liability nor refunded may be transferred or sold one time to one single other Georgia taxpayer, subject to the following conditions:

(1) Only the taxpayer that claimed the tax credits allowed pursuant to this Code section shall make the transfer or sale of such tax credits;

(2) The taxpayer that claimed the tax credits allowed pursuant to this Code section shall submit to the commissioner written notification of any transfer or sale of such tax credits within 30 days after the transfer or sale of the tax credits. Such written notification shall include:

(A) Such taxpayer's credit balance prior to transfer;

(B) The credit certificate number;

(C) The remaining balance of credits after transfer;

(D) The tax identification number of the transferee;

(E) The date of transfer;

(F) The amount of credits transferred; and

(G) Other information as may be required by the department;

(3) Failure to comply with any provision of this subsection shall result in the disallowance of the tax credits allowed pursuant to this Code section until the taxpayer that claimed the credits is in full compliance;

(4) The transfer or sale of the tax credits shall not extend the time during which such tax credits may be used. The carry-forward period for tax credits that are transferred or sold shall begin on the date on which such tax credits were originally claimed; and

(5) A transferee shall have only such rights to claim and use the tax credits that were available to the transferor at the time of the transfer; provided, however, that a transferee shall not be eligible to transfer or receive a refund of such tax credits. To the extent that the transferor did not have rights to claim or use the tax credits at the time of the transfer, the commissioner shall disallow the tax credits claimed by the transferee or recapture the tax credits from the transferee or transferor. The transferee's recourse shall not be against the commissioner.

(f)(1) A taxpayer claiming, transferring, or selling tax credits allowed pursuant to this Code section shall be required to reimburse the department for any department initiated audits relating to the tax credits, provided that such amount shall not exceed the value of the credits claimed by the taxpayer. This paragraph shall not apply to routine tax audits of such taxpayer that may include the review of the tax credits provided in this Code section.

(2) The commissioner may pursue all remedies available by law as necessary to recapture tax credits wrongfully allowed or claimed by a taxpayer or a taxpayer's transferee.

(g) The commissioner shall be authorized to promulgate any rules and regulations necessary to implement and administer this Code section."

SECTION 2.

Said title is further amended in Code Section 48-8-3, relating to exemptions regarding state sales and use tax, by revising paragraphs (68) and (68.1) as follows: "(68)(A)(i) The sale or lease of computer equipment to be incorporated into a facility or facilities in this state to any high-technology company classified under the 2017 North American Industrial Classification System code 334413, 334614, 511210, 517311, 517312, 517410, 517911, 517919, 518210, 522320, 541330, 541511, 541512, 541513, 541519, 541713, 541715, or 541720, provided that the exemption allowed under this paragraph shall be limited to those purchases or leases made by such a high-technology company for calendar years during which the high-technology company made taxable purchases or leases of at least $15 million worth of such computer equipment.

(ii) Notwithstanding the provisions of division (i) of this subparagraph to the contrary, on and after January 1, 2024, and ending on December 31, 2028, the exemption allowed under this paragraph shall be limited such that each person claiming the exemption allowed by this paragraph shall be subject to paying 10 percent of all taxes imposed by this chapter on the first $15 million of its eligible purchases or leases for which an exemption is claimed under this paragraph. (iii)(I) Notwithstanding the provisions of divisions (i) and (ii) of this subparagraph to the contrary, on and after January 1, 2029, and ending on December 31, 2034, the exemption provided for by this paragraph shall be limited to high-technology companies located in any county that includes a habitable barrier island with no bridge to the mainland and owned by the Department of Natural Resources, and in counties designated as tier 1 under Code Section 48-7-40 and to high-technology companies that utilize power generator equipment installed and used behind the meter at least 50 percent capacity with a minimum capacity of 50 megawatts during the prior taxable year.

(II) As used in this subparagraph, the term:

(a) 'Behind the meter' means on the customer's side of the electric service provider's meter.

(b) 'Capacity' means the ratio of the net energy produced by a generating facility to the amount of energy that could have been produced, in the absence of any scheduled or unscheduled outages, in any selected time period.

(c) 'Power generator' means any equipment owned and operated by a customer of an electric service provider for the production of electrical energy that:

(1) Operates on woody biomass;

(2) Is located on the customer's premises;

(3) Operates in parallel with the electric service provider's distribution facilities;

(4) Is connected to the electric service provider's distribution system on the customer's side of the electric service provider's meter; and

(5) Is intended primarily to offset part or all of the customer's requirements for electricity.

(d) 'Woody biomass' means wood residuals that include land-clearing residue, urban wood residue, and pellets and do not include wood from any United States national forest.

(B) Any person making a sale or lease of computer equipment to a high-technology company as specified in subparagraph (A) of this paragraph shall collect the tax imposed on the sale by this article unless the purchaser furnishes such seller with a certificate issued by the commissioner certifying that the purchaser is entitled to purchase the computer equipment without paying the tax. As a condition precedent to the issuance of the certificate, the commissioner, at such commissioner's discretion, may require a good and valid bond with a surety company authorized to do business in this state as surety or may require legal securities, in an amount fixed by the commissioner, conditioned upon payment by the purchaser of all taxes due under this article in the event it should be determined that the sale fails to meet the requirements of this subparagraph.

(C)(i) As used in this paragraph, the term 'computer equipment' means any individual computer or organized assembly of hardware or software, including, but not limited to, a server farm, mainframe or midrange computer, mainframe driven high-speed print and mailing devices, and workstations connected to those devices via high bandwidth connectivity such as a local area network, wide area network, or any other data transport technology which performs one of the following functions: storage or management of production data, hosting of production applications, hosting of application systems development activities, or hosting of applications systems testing.

(ii) Such term shall not include:

(I) Telephone central office equipment or other voice data transport technology, including any wireline or wireless telecommunication system;

(II) Equipment with imbedded computer hardware or software which is primarily used for training, product testing, or in a manufacturing process;

(III) Computers or devices issued to employees, which shall include, but not be limited to, smartphones, tablets, wearables, personal computers, and laptops; or

(IV) Prewritten computer software.

(D) Any corporation, partnership, limited liability company, or any other similar entity which qualifies for the exemption and is affiliated in any manner with a nonqualified corporation, partnership, limited liability company, or any other similar entity must conduct at least a majority of its business with entities with which it has no affiliation.

(E) Each high-technology company that has been issued a certificate of exemption pursuant to this paragraph shall report annually to the commissioner a list of the facilities for which all computer equipment exempted by this paragraph during the preceding calendar year was incorporated, as well as the amount of taxes exempted under this paragraph during the preceding calendar year. Such report shall be filed within 90 days after the end of the calendar year for which the high-technology company utilized a certificate of exemption pursuant to this paragraph and shall be subject to the confidentiality provisions of Code Section 48-2-15. The commissioner shall not issue a certificate of exemption under this paragraph for the calendar year next succeeding the reporting date to any high-technology company that has failed to comply with the reporting required by this subparagraph.

(F) The commissioner shall promulgate such rules and regulations as are necessary to implement the provisions of this paragraph.

(68.1)(A) For the period commencing on July 1, 2018, and ending on December 31, 2031, except as otherwise provided by subparagraph (H) of this paragraph, high-technology data center equipment to be incorporated or used in a high-technology data center that meets the high-technology data center minimum investment threshold and other conditions provided in this paragraph.

(B) Any person making a sale or lease of high-technology data center equipment shall collect the tax imposed on such sale by this article unless the purchaser furnishes such seller with a certificate issued by the commissioner certifying that such sale or lease is exempted pursuant to this paragraph.

(C)(i) The commissioner shall not issue a certificate of exemption from sales and use tax to a high-technology data center or high-technology data center customer as provided in this paragraph unless the commissioner makes a determination that the high-technology data center will more likely than not meet the high-technology data center minimum investment threshold.

(ii) The commissioner may require any information necessary to determine if such high-technology data center is in compliance with its investment budgeting plan to meet the high-technology data center minimum investment threshold. (iii)(I) Within 60 days after the end of the seventh year following its exemption start date, a high-technology data center shall file a final report with the commissioner listing the expenditures incurred that count toward its minimum investment threshold, the number of new quality jobs created, and any other information that the commissioner may reasonably require to determine whether the high-technology data center has met the minimum investment threshold.

(II) If the commissioner determines that a high-technology data center failed to meet its high-technology data center minimum investment threshold, such high-technology data center shall be required to repay all taxes exempted or refunded pursuant to its certificate of exemption issued pursuant to this paragraph within 90 days after notification of such failure. Interest shall be due with such repayment at the rate specified in Code Section 48-2-40 computed from the date such taxes would have been due but for this exemption. Such repayment shall be calculated notwithstanding otherwise applicable periods of limitation for assessment of taxes under Code Section 48-2-49.

(iv)(I) As a condition precedent to the issuance of a certificate of exemption, the commissioner, at his or her discretion, may require a good and valid bond with a surety company authorized to do business in this state, in an amount fixed by the commissioner not to exceed $20 million. The commissioner shall consider past performance and in-state investment when determining the value of the bond, if one is required.

(II) The bond that may be required by this division shall be forfeited and paid to the general fund in an amount representing all taxes and interest required to be repaid pursuant to division (iii) of this subparagraph if the high-technology data center fails to meet the high-technology data center minimum investment threshold prior to the expiration of the seven-year period.

(v) The commissioner shall have the authority to revoke the certificate of exemption at any time he or she believes that the high-technology data center is not likely to meet its high-technology minimum investment threshold.

(vi) Each high-technology data center that has been issued a certificate of exemption pursuant to this paragraph shall provide a list of high-technology data center customers that are deploying high-technology data center equipment in its facility and shall notify the commissioner within 30 days of any change to the list. (D)(i) The commissioner shall require annual reporting by the high-technology data center of the amount of taxes exempted under this paragraph, the number of new quality jobs, and the total payroll resulting from construction, maintenance, and operation in and on its facility during the preceding year.

(ii) The commissioner shall issue an annual report to the chairperson of the Senate Finance Committee and the chairperson of the House Committee on Ways and Means concerning the exemption allowed by this paragraph. Notwithstanding the confidentiality provisions of Code Section 48-2-15, such report shall include, for the prior calendar year for each high-technology data center issued a certificate of exemption pursuant to this paragraph, the amount of tax exempted and the number of new quality jobs created by each high-technology data center.

(E) The commissioner shall promulgate such rules and regulations as are necessary to implement the provisions of this paragraph.

(F) A high-technology data center shall not be entitled to claim any credit authorized under Code Sections 48-7-40 through 48-7-40.33 or Code Section 36-62-5.1 on its tax return if it has received a certificate of exemption from the commissioner pursuant to this paragraph. If a determination is made by the commissioner pursuant to division

(iii) of subparagraph (C) of this paragraph that the high-technology data center must repay all taxes exempted or refunded pursuant to this paragraph, such high-technology data center may file amended income tax returns claiming any credit to which it would have been entitled under the foregoing Code sections but for having claimed the exemption under this paragraph.

(G) As used in this paragraph, the term:

(i) 'Exemption start date' means the date on or after July 1, 2018, chosen by the high-technology data center and indicated on its application filed on or after January 1, 2019, which begins the seven-year period during which the minimum investment threshold must be met. A refund claim must be filed for taxes paid on purchases qualifying for this exemption for any period on or after July 1, 2018, during which the high-technology data center has not yet applied for and received its certificate of exemption from the commissioner.

(ii) 'High-technology data center' means a facility, campus of facilities, or array of interconnected facilities in this state that is developed to power, cool, secure, and connect its own equipment or the computer equipment of high-technology data center customers and that has an investment budget plan which meets the high-technology data center minimum investment threshold.

(iii) 'High-technology data center customer' means a client, tenant, licensee, or end user of a high-technology data center that signs at least a 36 month contract for service with the high-technology data center.

(iv) 'High-technology data center equipment' means computer equipment as defined in paragraph (68) of this Code section of a high-technology data center or such equipment of a high-technology data center customer to be used or deployed in the high-technology data center; and the materials, components, machinery, hardware, software, or equipment, including, but not limited to, emergency backup generators, air handling units, cooling towers, energy storage or energy efficiency technology, switches, power distribution units, switching gear, peripheral computer devices, routers, batteries, wiring, cabling, or conduit, which equipment or materials are used to:

(I) Create, manage, facilitate, or maintain the physical and digital environments for computer equipment;

(II) Protect the high-technology data center equipment from physical, environmental, or digital threats; or

(III) Generate or provide constant delivery of power, environmental conditioning, air cooling, or telecommunications services for the high-technology data center. Such term shall not include real property as defined in Code Section 48-8-3.2. A high-technology data center may not count high-technology data center equipment that it purchases or that is purchased by the high-technology data center customer and subsequently leased to another party more than once for purposes of satisfying the high-technology data center minimum investment threshold.

(v) 'High-technology data center minimum investment threshold' means:

(I) For high-technology data centers located in a county in this state having a population greater than 50,000 according to the United States decennial census of 2010 or any future such census, the creation of 25 new quality jobs and $250 million in aggregate expenditures incurred over any consecutive seven-year period between July 1, 2018, and December 31, 2031, on the design and construction of the high-technology data center and high-technology data center equipment to be used or incorporated in the high-technology data center;

(II) For high-technology data centers located in a county in this state having a population greater than 30,000 and less than 50,001 according to the United States decennial census of 2010 or any future such census, the creation of ten new quality jobs and $75 million in aggregate expenditures incurred over any consecutive seven-year period between July 1, 2018, and December 31, 2031, on the design and construction of the high-technology data center and high-technology data center equipment to be used or incorporated in the high-technology data center; and

(III) For high-technology data centers located in a county in this state having a population less than 30,001 according to the United States decennial census of 2010 or any future such census, the creation of five new quality jobs and $25 million in aggregate expenditures incurred over any consecutive seven-year period between July 1, 2018, and December 31, 2031, on the design and construction of the high-technology data center and high-technology data center equipment to be used or incorporated in the high-technology data center.

(vi) 'New quality jobs' shall have the same meaning as provided in paragraph (2) of subsection (a) of Code Section 48-7-40.17.

(H) This paragraph shall stand repealed by operation of law on January 1, 2032.

(i) On and after January 1, 2032, and ending on December 31, 2037, the exemption provided for by this paragraph shall be limited to high-technology data centers located in any county that includes a habitable barrier island with no bridge to the mainland and owned by the Department of Natural Resources and in counties designated as tier 1 under Code Section 48-7-40 and to high-technology data centers that utilize power generator equipment installed and used behind the meter at least 50 percent capacity with a minimum capacity of 50 megawatts during the prior taxable year.

(ii) As used in this subparagraph, the term:

(I) 'Behind the meter' means on the customer's side of the electric service provider's meter.

(II) 'Capacity' means the ratio of the net energy produced by a generating facility to the amount of energy that could have been produced, in the absence of any scheduled or unscheduled outages, in any selected time period.

(III) 'Power generator' means any equipment owned and operated by a customer of an electric service provider for the production of electrical energy that:

(a) Operates on woody biomass;

(b) Is located on the customer's premises;

(c) Operates in parallel with the electric service provider's distribution facilities;

(d) Is connected to the electric service provider's distribution system on the customer's side of the electric service provider's meter; and

(e) Is intended primarily to offset part or all of the customer's requirements for electricity.

(IV) 'Woody biomass' means wood residuals that include land-clearing residue, urban wood residue, and pellets and do not include wood from any United States national forest;"

SECTION 3.

All laws and parts of laws in conflict with this Act are repealed.