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Pappas joins bipartisan letter questioning Meta's bid to claim research tax credit for data centers

The New Hampshire Democrat and other lawmakers told Treasury Secretary Scott Bessent that routine data center construction should not qualify for the federal research credit.

U.S. Rep. Chris Pappas, D-N.H., has joined a bipartisan group of lawmakers in raising concerns with the Treasury Department about reports that Meta is seeking to claim the federal research tax credit for its data center buildout, his office said Friday.

In a letter to Treasury Secretary Scott Bessent, the lawmakers said any claim Meta makes for the credit must meet the requirements for qualified research and experimentation.

"We are concerned by Meta's apparent position that expenditures associated with its massive data-center buildout qualify for the research credit," the lawmakers wrote. They argued that buying and installing commercially available servers, networking gear, electrical infrastructure, cooling equipment and other proven technologies "cannot be transformed into qualified research merely because they are installed at unprecedented scale or in new configurations."

According to Pappas' office, Congress created the credit in 1981 to encourage businesses to take on projects involving technical uncertainty and experimentation rather than simply buying and deploying proven technology. To qualify, research must pass a four-part test: it must be technological in nature, address technical uncertainty, seek to develop or improve a product or process, and involve experimentation. Research done after commercial production begins and duplication of an existing product or process are excluded, the office said.

The lawmakers warned that allowing ordinary data center construction and deployment costs to qualify would "significantly expand the research credit beyond its intended purpose" and risk turning it into "a subsidy for capital expenditures that companies would undertake in the ordinary course of business."

The release did not include a response from Meta or the Treasury Department.

Pappas, who represents New Hampshire's 1st Congressional District, also helped introduce the Reverse Big Ugly Tax Breaks for Data Centers Act, which his office said would rein in what it called "tax giveaways" for data center development included in the One Big Beautiful Bill Act. The bill would bar data centers from taking the 100% bonus depreciation deduction and from Opportunity Zone tax benefits. His office said he also voted for the Ratepayer Protection Act, which would require state public utility commissions to consider ways to make data centers pay the costs of energy and grid upgrades rather than passing them on to consumers.

This brief was drafted by AI from a public agency or political press release and published by The New England Signal. Why we use AI for stories like this one.

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