SB-0617, As Passed Senate, December 3, 2015

SUBSTITUTE FOR

SENATE BILL NO. 617

(As amended December 3, 2015)

A bill to amend 1937 PA 94, entitled

"Use tax act,"

by amending section 14b (MCL 205.104b), as amended by 2008 PA 439,

and by adding section 4cc.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 4cc. (1) Beginning January 1, 2016 through December 31,

2030, the tax << >> under this act does not apply

to the storage, use, or consumption of data center equipment sold

to an Internet data center or a colocated business for use or

consumption in the operations of the Internet data center.

(2) As used in this section:

(a) "Colocated business" means a person that has entered into

a contract with the owner or operator of an Internet data center to

deploy and use data center equipment physically located within the

Internet data center for a period of 1 or more years.

(b) "Data center equipment" means high-technology equipment

consumed or used physically within an Internet data center

including, but not limited to, computers, servers, routers,

switches, peripheral computer devices, and their associated tools,

racks, shelving, cabling, and wiring. Data center equipment also

includes any construction materials used to construct the Internet

data center, including, but not limited to, any heating, cooling,

or ventilation fixtures, fire suppression systems, security

systems, and materials handling equipment. Data center equipment

also includes storage batteries, back-up generators, uninterrupted

power supply units, and other redundant power supply equipment.

Data center equipment does not include any equipment owned by a

third party that is used to supply the Internet data center's

primary power or any third-party communication nodes that are used

to connect an Internet data center to the exogenous Internet

environment.

storage, processing, or manipulation of digital data.

(d) "Internet data center" means a facility that satisfies all

of the following:

(i) The facility physically houses networked computer servers

assembled for the purpose of centralizing the storage, processing,

management, or dissemination of data owned or controlled by the

customers of the Internet data center.

(ii) The facility is specifically designed and constructed to

provide a high-security environment for the location of servers and

similar equipment.

(iii) The facility is owned or operated by an entity whose

primary business, or the primary business of its parent company, is

that of an Internet data center and that entity generates 75% or

more of its revenue from the operations and business of an Internet

data center.

Sec. 14b. (1) If an exemption from the tax under this act is

claimed, the seller shall obtain identifying information of the

purchaser and the reason for claiming the exemption at the time of

the purchase or at a later date. The seller shall obtain the same

information for a claimed exemption regardless of the medium in

which the transaction occurred.

(2) A seller shall use a standard format for claiming an

exemption electronically as adopted by the governing board under

the streamlined sales and use tax agreement.

(3) A purchaser is not required to provide a signature to

claim an exemption under this act unless a paper exemption form is

used.

(4) A seller shall maintain a proper record of all exempt

transactions and shall provide them when requested by the

department.

(5) A seller who complies with the requirements of this

section is not liable for the tax under this act if a purchaser

improperly claims an exemption. A purchaser who improperly claims

an exemption is liable for the tax due under this act. This

subsection does not apply if a seller does any of the following:

(a) Fraudulently fails to collect the tax under this act.

(b) Solicits a purchaser to make an improper claim for

exemption.

entity-based exemption if both of the following occur:

(i) The subject of the transaction sought to be covered by the

exemption form is actually received by the purchaser at a location

operated by the seller.

(ii) The state in which the location operated by the seller is

located provides an exemption form that clearly and affirmatively

indicates that the claimed exemption is not available in that

state.

(6) A seller who obtains a fully completed exemption form or

captures the relevant data elements as outlined in this section

within 120 days after the date of sale is not liable for the tax

under this act.

(7) If the seller has not obtained an exemption form or all

relevant data elements, the seller may either prove that the

transaction was not subject to the tax under this act by other

means or obtain a fully completed exemption form from the

purchaser, by the later of the following:

(a) 120 days after a request by the department.

(b) The date an assessment becomes final.

(d) In the instance of a credit audit, the issuance of an

audit determination letter or informal conference decision and

order of determination.

(e) The date of a final order of the court of claims or the

Michigan tax tribunal, as applicable, with respect to an

assessment, order, or decision of the department.

(8) The department may, in its discretion, allow a seller

additional time to comply with subsection (7).

(9) A seller is not liable for the tax under this act if the

seller obtains a blanket exemption form for a purchaser with which

the seller has a recurring business relationship. Renewals of

blanket exemption forms or updates of exemption form information or

data elements are not required if there is a recurring business

relationship between the seller and the purchaser. For purposes of

this section, a recurring business relationship exists when a

period of not more than 12 months elapses between sales

transactions.