Texas data center owners can lose their certified sales-tax exemption after the Comptroller's five-year audit and owe tax on every exempt purchase.

Your campus holds a Comptroller certification letter and registration numbers for the data center, the owner, the operator, and the occupant. Sellers took Form 01-929 at purchase. The state sales-tax line stayed off the invoice for qualifying gear and, where the program allows it, for electricity. The underwriting file treats that exemption as locked for the temporary term printed on the certification.

Texas runs two Comptroller sales-tax exemption programs for data centers: a qualifying data center program and a qualifying large data center project program. Both sit in the Texas Tax Code, with the detailed program rules summarized on the Comptroller's data-centers page. At the five-year anniversary of certification, the Comptroller audits capital investment and jobs. If the qualifying owner, operator, and occupant fail one or more certification requirements, the Comptroller terminates the data center's certification and revokes the related registration numbers. Each person whose registration number is revoked is liable for the state sales or use tax on all tax-free purchases made under the exemption. That liability includes penalty and interest from the date of purchase.

Certification starts the temporary exemption. The five-year audit decides whether that exemption survives for the people who used it.

Who can hold the exemption

An owner, operator, and/or occupant of a data center can apply to the Comptroller for certification of the facility and for registration as a qualifying owner, qualifying operator, or qualifying occupant. The Comptroller's data-centers page is the live program summary for both programs.

The smaller program is the qualifying data center. The facility needs at least 100,000 square feet in a single building or portion of a single building in Texas, used by a single qualifying occupant. The qualifying owner, operator, or occupant must commit to creating at least 20 qualifying jobs in the county. It must also commit to a capital investment of at least $200 million over five years from certification. A Chapter 313 limitation agreement on the data center's property disqualifies the facility.

The larger program is the qualifying large data center project. It needs at least 250,000 square feet in one or more buildings on a single parcel or contiguous commonly owned parcels. The commitment is at least 40 qualifying jobs and at least $500 million of capital investment over five years from certification. The project must have a single qualifying occupant. That occupant may not sublease any portion of the real or personal property within the project. Chapter 313 limitation agreements also disqualify.

The exemption is temporary. For a qualifying data center, it lasts 10 years from certification when capital investment in the first five years is at least $200 million but less than $250 million. It lasts 15 years when that investment reaches at least $250 million. For a qualifying large data center project, the exemption lasts 20 years from certification. The 20-year term still sits under the five-year audit. It also sits under revocation if certification requirements fail.

Local tax treatment differs by program. On a qualifying data center, the sales tax exemption applies only to the 6.25 percent state sales tax, and the retailer must collect applicable local sales and use tax. Qualifying owners, operators, and occupants remain responsible for local use taxes that may be due on purchases of qualifying items. On a qualifying large data center project, the Comptroller's page states that sales and use tax is exempt for qualifying purchases. Qualifying owners, operators, and occupants remain responsible for local use taxes that may be due on purchases of nonqualifying items. Keep those two program descriptions separate when you price a purchase.

What the five-year audit checks

The Comptroller will audit each qualifying data center and each qualifying large data center project at its five-year anniversary. The audit verifies the amount of capital investment actually made and the number of qualifying jobs created.

The qualifying owner, operator, and/or occupant must notify the Comptroller once the required jobs have been created, using Form 01-160. The job count is 20 for a qualifying data center and 40 for a qualifying large data center project. The Comptroller then reviews job information annually until it verifies that each qualifying job has been retained for at least five years.

Three certification requirements can fail and trigger revocation. The capital investment commitment must be fulfilled within five years of certification. The required full-time permanent qualifying jobs must be created within five years. Those qualifying jobs must be maintained for at least five years.

Purchasers must keep complete records of all tax-free purchases made under the exemption and of local tax paid. Those records must be retained until certification expires. If the Comptroller revokes the registration, the records must be retained until all assessments are resolved.

What revocation does to past exempt purchases

If the qualifying owner, operator, and occupant fail one or more certification requirements, jointly or independently, the Comptroller terminates the data center's certification. It also revokes all related qualifying owner, operator, and occupant registration numbers.

Each person who has a registration number revoked is liable for the state sales or use tax on all tax-free purchases made under the exemption. That liability includes penalty and interest from the date of purchase. The liability attaches to the person whose registration was revoked. No campus dollar figure is estimated here.

A certification letter alone therefore leaves an open cash question. The exemption runs while the registration holds. If the registration falls at the five-year check, past purchases that went tax-free under that registration come back into tax with penalty and interest.

The single-occupant condition on large projects

A qualifying large data center project must have a single qualifying occupant. That occupant may not sublease any portion of the real or personal property within the project. The same single-occupant and no-sublease language also appears in the qualifying data center facility requirements on the Comptroller's page.

A multi-tenant leasing plan that assumes later subleases under the large-project registration sits against that condition. Local Chapter 380 and 381 public commitments can claw back municipal deals, as municipal Chapter 380/381 public commitments and local clawbacks describes. Those local clawbacks leave the Comptroller's single-occupant rule and the state exemption's revocation language unchanged.

Why a compliance read belongs on the calendar before December 10

Three separate clocks sit next to the Comptroller rule in November and December 2026. None of them creates a new statutory sales-tax filing deadline for the exemption. Together they are why an owner who already holds certification should run a recapture and compliance read now.

First, ERCOT's State and Community Impact workstream collects information on public financial assistance and tax benefits as part of the Governor-directed Community Impact RFI. Market Notice M-B091426-01 said ERCOT expected to publish that report no later than December 10, 2026. ERCOT's November 5, 2026 Community Impact RFI Preliminary Summary says detailed analysis is underway and targets a published final report on December 10, 2026. The October 12 Community Impact RFI response clock is the earlier disclosure deadline for that same workstream. The December 10 target is the report date after those responses.

Second, ERCOT's separate Batch Zero verification workstream is also on a December 10 clock. The November 5, 2026 Verification RFI Update says ERCOT must complete its review that month to file a report with the Public Utility Commission of Texas on December 10, 2026. That filing is about interconnection eligibility verification. It is a separate instrument from the Comptroller's five-year sales-tax audit.

Third, the Texas Legislative Council Dates of Interest calendar lists Monday, November 9, 2026 as the first day legislators and legislators-elect may file bills for the 90th Legislature. The regular session convenes January 12, 2027. Bill filing open is a legislative calendar fact. It does not change the two Comptroller data-center exemption programs in the Tax Code.

The November 3, 2026 election named a Comptroller-elect who takes office in January; that office certifies and audits these exemptions. The Comptroller's data-centers page still shows the sitting Comptroller, and the election map uses unofficial counts. The November 4 election map of campus permit offices records that Governor-elect Gina Hinojosa campaigned for data centers to pay sales tax on the electricity they consume, and that she said that position would need legislative action. That electricity sales-tax position remains a campaign position. It is not enacted law and is not treated here as a filed bill.

December 10 is therefore owner diligence timing against a live Comptroller audit-and-recapture rule, while ERCOT's assistance and verification reports land and while the next legislature's bill window opens. It is not a tax deadline created by ERCOT or by the legislative calendar.

A water-survey interconnection requirement sits on a different instrument. The Texas water survey and ERCOT interconnection requirement leaves the Comptroller revocation math untouched.

What a sponsor still has to weigh

Running the compliance read costs counsel time and internal document pull. Skipping it leaves the five-year anniversary and any intervening job-retention review as the first hard test of whether past exempt purchases stay exempt.

Certification still starts the temporary exemption term the Comptroller prints. The audit tests whether the capital, jobs, and occupancy commitments that earned the term were met. A campus that already meets those commitments still benefits from documenting that fact before an outside report season puts assistance and interconnection files in public view.

Unknowns stay labeled. Sitebraid has not inventoried every certified Texas data center's anniversary date. The Comptroller page does not publish a campus-by-campus audit calendar here. Whether any particular campus's five-year anniversary falls before or after December 10 is a file-specific fact for that owner to confirm from its own certification date. No MW figure, no tax bill estimate, and no client result is stated.

Before the next commitment

These are the sponsor's calls, made with counsel. The steps below gather the facts for them. None of this is legal advice.

Check with your own counsel before you rely on this.

1. Pull the Comptroller certification date and every registration number issued for the data center, owner, operator, and occupant, because the five-year anniversary and any revocation run from that certification and those registrations.
2. Separate which program you hold, qualifying data center or qualifying large data center project, because the square-footage, investment, job, exemption-term, and local-tax descriptions differ on the Comptroller page.
3. Rebuild the capital investment ledger against the five-year commitment that began on certification, because the anniversary audit verifies capital actually made.
4. Rebuild the qualifying-jobs file against the 20-job or 40-job commitment, including Form 01-160 notice status and the annual retention evidence the Comptroller reviews for five years.
5. Confirm single-occupant status and whether any sublease of real or personal property inside the certified facility or project exists or is planned, because the Comptroller page bars that sublease for the qualifying occupant.
6. Inventory every purchase claimed under Form 01-929 with the matching registration numbers, and retain those records through certification expiry or through any assessment after revocation.
7. Test Chapter 313 status, because a limitation agreement on the data center's property disqualifies the exemption programs on the Comptroller page.
8. Calendar the five-year anniversary from the certification date. Treat December 10, 2026 as diligence timing for the recapture and compliance read, because that date is the ERCOT Community Impact and Batch Zero report target rather than a new Comptroller sales-tax filing deadline.
9. Keep campaign electricity sales-tax talk and any future filed bill on a separate row from the existing audit-and-revocation rule, and decide with counsel before the next LOI, purchase package, or refinance that assumes the exemption is settled.

If your campus is counting on a Comptroller certification, Sitebraid's Entitlements and community work maps the Texas approvals and tax positions it carries and the dates each one turns on, the five-year audit included. Contact is help@sitebraid.dev.