Senate Bill S9288

                                 
BILL NUMBER: S9288

SPONSOR: KRUEGER
 
TITLE OF BILL:

An act to repeal paragraph 37 of subdivision (a) of section 1115 of the
tax law relating to tangible personal property purchased by internet
data centers; and to repeal subdivision (y) of section 1115 of the tax
law relating to services performed on personal property purchased by
internet data centers

 
PURPOSE OR GENERAL IDEA OF BILL:

To repeal the sales and compensating use tax exemptions currently
provided to operators of Internet data centers for equipment and related
services.

 
SUMMARY OF PROVISIONS:

This bill repeals paragraph 37 of subdivision (a) of section 1115 of the
tax law, which exempts tangible personal property purchased by internet
data centers from state and local sales and use tax. The bill also
              

repeals subdivision (y) of section 1115, which exempts services
performed on such exempt property.

 
JUSTIFICATION:

New York provides a broad sales tax exemption for purchases of servers,
power distribution equipment, cooling systems, and related infrastruc-
ture by internet data centers. These facilities are among the most ener-
gy-intensive commercial users in the state and impose significant costs
on the electric grid, local infrastructure, and ratepayers.

Unlike manufacturers, whose equipment exemptions are tied to production
and employment, data centers primarily consume electricity and real
estate while generating relatively few permanent jobs per dollar of
investment. The exemption therefore functions less as an economic devel-
opment tool and more as a direct subsidy for extremely capital-inten-
sive, energy-intensive operations.

At a time when New York is making substantial investments in grid
modernization, clean energy, and local economic development, continuing
to exempt data center equipment from sales and use taxes shifts costs
onto ordinary consumers and small businesses. Repealing this exemption
will restore neutrality in the tax code and ensure that data centers
contribute fairly to the public services and infrastructure they rely
upon.

 
PRIOR LEGISLATIVE HISTORY:

New bill.

 
FISCAL IMPLICATIONS:

To be determined.

 
EFFECTIVE DATE:
Immediately.