Sales And Use Tax Refund For Data Center Purchases

For the state fiscal year beginning July 1, 2025, and for each state fiscal year thereafter through the state fiscal year beginning July 1, 2034, the bill allows a data center business or a data center operator (taxpayer) to claim a refund of all state sales and use tax that the taxpayer paid for construction materials or data center equipment that is for the construction or operation of an eligible data center.

To be eligible to claim a sales and use tax refund, the taxpayer is required to obtain certification from the Colorado office of economic development (office) stating that the data center is an eligible data center and that the taxpayer may claim a refund of state sales and use tax (certification). An "eligible data center" is defined as a data center that creates a specified number of jobs, generates a specified amount of revenue, and requires a specified amount of power. The sales and use tax refund is allowed only for the sale, storage, or use of construction materials or data center equipment that occurs on or after the date that the taxpayer obtains certification from the office.

When a taxpayer believes that the data center that will be identified in a sales and use tax refund application satisfies the criteria to be an eligible data center, the taxpayer may apply to the office for the certification. The taxpayer must demonstrate in the certification application that the data center is an eligible data center and the taxpayer is required to submit any documentation or proof that the office deems necessary to determine whether a data center satisfies the criteria to be an eligible data center.

If, based on the information provided to the office and after consultation with the economic development commission, the office determines that a data center satisfies the criteria to be an eligible data center, the office is required to notify the department of revenue (department) and issue a certification to the taxpayer.

To claim a sales and use tax refund, a taxpayer must submit a refund application and a copy of the certification from the office to the department. A taxpayer is required to submit certain documentation with the application.

The bill allows a taxpayer to assign a certification to specified types of parties after it is awarded.

The bill requires the office and the department to prepare an annual report including information regarding eligible data centers and state sales and use tax refunds allowed. The office is required to submit the report to the finance committees of the house of representatives and senate.

(Note: This summary applies to this bill as introduced.)