A BILL TO BE ENTITLED
AN ACT to make certain large-scale datacenter purchases of machinery and equipment subject to the privilege tax and exempt from sales and use tax.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 105‑164.3 is amended by adding a new subdivision to read:
"(8f)	Eligible datacenter. – A facility that satisfies each of the following conditions:
a.	The facility is created and maintained to meet, is certified by a third party as meeting, and does meet the standards for Tier 4 classification under the classification system promulgated by the Uptime Institute, Inc., for datacenter site infrastructure functionality as that classification existed as of January 1, 2007.
b.	The Secretary of Commerce has made a written determination of the following:
1.	For development tier one areas, that at least one hundred fifty million dollars ($150,000,000) in private funds has been or will be invested in improvements to real property or installed datacenter machinery and equipment, or a combination of both, within five years after commencement of construction of the facility.
2.	For development tier two or three areas, that at least three hundred million dollars ($300,000,000) in private funds has been or will be invested in improvements to real property or installed datacenter machinery and equipment, or a combination of both, within five years after commencement of construction of the facility."
SECTION 2.  G.S. 105‑164.13 is amended by adding a new subdivision to read:
"(56)	Sales of machinery and equipment to be located and used at an eligible datacenter. If the level of investment required by G.S. 105‑164.3(8f)b. is not timely made, then the exemption provided under this subdivision is forfeited. If the level of investment required by G.S. 105‑164.3(8f)b. is timely made but any machinery and equipment is not located and used at an eligible datacenter, then the exemption provided for such machinery and equipment under this subdivision is forfeited. A taxpayer that forfeits an exemption under this subdivision is liable for all past taxes avoided as a result of the forfeited exemption, computed from the date the taxes would have been due if the exemption had not been allowed, plus interest at the rate established under G.S. 105‑241.1(i). If the forfeiture is triggered due to the lack of a timely investment required by G.S. 105‑164.3(8f)b., then interest is computed from the date the taxes would have been due if the exemption had not been allowed. For all other forfeitures, interest is computed from the time as of which the machinery or equipment was put to a disqualifying use. The past taxes and interest are due 30 days after the date the exemption is forfeited. A taxpayer that fails to pay the past taxes and interest by the due date is subject to the provisions of G.S. 105‑236."
SECTION 3.  Article 5F of Chapter 105 of the General Statutes is amended by adding a section to read:
"§ 105‑187.51C.  Tax imposed on datacenter machinery and equipment.
(a)	Tax. – A privilege tax is imposed on an eligible datacenter that purchases machinery or equipment to be located and used at the datacenter.
(b)	Rate. – The tax is one percent (1%) of the sales price of the equipment and machinery to be located and used at the datacenter. The maximum tax is eighty dollars ($80.00) per article."
SECTION 4.  Section 2 of this act becomes effective July 1, 2007, and applies to sales made on or after that date.  Section 3 of this act becomes effective July 1, 2007.  The remainder of this act is effective when it becomes law.