S. 5689
RECLAIM Act
Sponsor: Bernie Moreno · 0 cosponsors
In plain English: what this bill does
Summary
- This bill would stop large AI data centers from getting federal grants, loans, or tax breaks.
- It would also add a federal tax equal to 100 percent of any state or local incentive a large AI data center receives, which would effectively cancel that incentive.
- The bill would take effect only after the Treasury Secretary issues final rules.
Who this affects
- Operators of covered data centers: They could not receive federal financial help or tax incentives for building or running the facility, and they would owe a tax equal to any state or local incentive they receive.
- The Treasury Secretary: Must write rules within one year to define "AI accelerator chip" and to explain how to value and time state and local incentives for these data centers.
- The Commerce Secretary: Must work with the Treasury Secretary on defining AI accelerator chips and on possible rule adjustments.
- State and local governments: The bill does not directly require them to act, but it states that they should repeal or reform data-center-specific tax incentives.
Words to know
- Covered data center: A facility or campus with a planned peak power demand of at least 100 megawatts, where at least half of its computing chips are used for artificial intelligence work.
- Accelerator chip: A specialized computer chip, such as a graphics processing unit, designed mainly for artificial intelligence tasks.
- Incentive: Money, a loan, or a tax break given to encourage a business to invest or operate in a place.
For example
Made-up numbers:
- A data center is designed for 200 megawatts, and 60 percent of its chips are AI chips, so it is a covered data center.
- A state gives it a $10 million tax break.
- Tax owed under the bill: 100% × $10 million = $10 million.
- Net effect: the $10 million state break is canceled by the federal tax.
Written by AI from the bill's text below; it can be wrong. How it's written
Official summary
No official summary yet.
Text of the bill
In plain English
- This section bars very large data centers, those with at least 100 megawatts of planned power demand and mostly AI chips, from receiving any federal grant, loan, tax break, or other federal financial help.
- It also adds a new federal tax of 100 percent on any state or local tax break or subsidy that such a data center receives, and it directs the Treasury Secretary to define the AI chips and issue related rules within a year.
- The section also expresses Congress's wish that states repeal data-center-specific tax breaks, and these rules take effect once the Treasury issues final regulations.
Written by AI from the text below; it can be wrong. How it's written
(a) No Federal incentives. A covered data center (as defined in section 5000E(b) of the Internal Revenue Code of 1986, as added by subsection (b)) shall not be eligible for any Federal grant, loan, loan guarantee, cooperative agreement, tax credit or deduction, exclusion, exemption, abatement, or other form of Federal financial assistance or tax incentive for the development or commercial operations of such covered data center.
(b) Excise tax on prohibited state and local incentives
(1) In general. Subtitle D of the Internal Revenue Code of 1986 is amended by adding at the end the following new chapter:
50B Prohibited state and local incentives for data centers
5000E. Prohibited state and local incentives for data centers
(a) In general. In the case of any covered data center, there is imposed a tax in an amount equal to 100 percent of the amount of any prohibited State or local incentive received by the data center operator during the taxable year with respect to such data center.
(b) Definitions. In this section—
(1) Artificial intelligence. The term artificial intelligence has the meaning given such term in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401).
(2) Covered data center
(A) In general. Subject to subparagraph (B), the term covered data center means any facility or integrated campus of facilities—
(i) that has or is designed to have a contracted peak power demand of not less than 100 megawatts, and
(ii) within which not less than 50 percent of the installed compute accelerators are AI accelerator chips attributed to artificial intelligence training, fine-tuning, or inference.
(B) Regulations
(i) In general. Not later than 1 year after the date of enactment of this section, the Secretary (in conjunction with the Secretary of Commerce) shall promulgate regulations that define the term AI accelerator chip for purposes of subparagraph (A)(ii).
(ii) Required considerations. In promulgating the regulations required under clause (i), the Secretary (in conjunction with the Secretary of Commerce) shall consider whether the definition of the term AI accelerator chip should include graphics processing units, tensor processing units, application-specific integrated circuits, and other semiconductor devices designed primarily for artificial intelligence training or inference.
(iii) Adjustments. The Secretary (in conjunction with the Secretary of Commerce) may promulgate regulations—
(I) adjusting the thresholds described in clauses (i) and (ii) of subparagraph (A) for high-density facilities optimized for artificial intelligence, and
(II) excluding de minimis computing sites sitting on the edge of those thresholds.
(3) Data center operator. The term data center operator means the person that enjoys the economic benefits from, and bears a majority of the economic burdens related to, ownership of the covered data center.
(4) Prohibited State or local incentive. The term prohibited State or local incentive means any State or local grant, loan, loan guarantee, cooperative agreement, tax credit or deduction, exclusion, exemption, abatement, or other form of State or local financial assistance or tax incentive for the development or commercial operations of a covered data center.
(c) Regulations and guidance. Not later than the date that is 12 months after the date of enactment of this section, the Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section, including any regulations or guidance for purposes of—
(1) determining the value of any prohibited State or local incentive,
(2) coordinating the tax imposed under subsection (a) with any other relevant Federal tax liability associated with a covered data center, including rules to prevent double taxation or double counting with respect to any prohibited State or local incentive, and
(3) the timing of recognition of a prohibited State or local incentive as received, including rules addressing incentives received in installments or contingent on future performance.
(2) Clerical amendment. The table of chapters for subtitle D of the Internal Revenue Code of 1986 is amended by inserting after the item relating to chapter 50A the following new item:
Chapter 50B—Prohibited state and local incentives for data centers
(c) Sense of Congress. It is the sense of Congress that States and political subdivisions thereof should promptly repeal or reform any tax incentive programs that are specific to data centers in order to restore tax neutrality, protect public revenues, and eliminate distortions in business location decisions that disadvantage domestic manufacturing and other job-creating investments.
(d) Effective dates. The provisions of this section, and any amendment to the Internal Revenue Code of 1986 made by this section, shall take effect on the day after the date on which final regulations are issued by the Secretary pursuant to section 5000E(c) of the Internal Revenue Code of 1986 (as added by subsection (b)).