Weekly Round-Up: The Tax Mess Confronting Facebook’s New Data Center in Oregon

Oregon’s Department of Revenue stirred up a political maelstrom by telling social networking giant Facebook that the department can assess global intangibles at its new data center in central Oregon's economically depressed high-desert country, Paul Shukovsky, a staff correspondent with BNA, reports in this week’s issue of the Weekly State Tax Report.

The assessment, which the state has since backed away from, creates uncertainty for the state's growing industry in server farms and data centers because of the possibility of higher taxes, Shukovsky writes. The industry that has flourished, Shukovsky goes on to explain, as economically challenged communities have lured companies like Facebook with promises of reduced taxes in exchange for more jobs.

The roughly 22,000 people of rural Crook County, who have been languishing under an unemployment rate that has sometimes pushed 19 percent, attracted the data center with generous tax incentives and cold desert nights that reduce air conditioning costs, Roger Lee, executive director of Economic Development for Central Oregon, explains in Shukovsky’s article.

Facebook threw a grand-opening party April 15 attended by CEO Mark Zuckerberg to celebrate its first data center that cost at least $200 million, according to Shukovsky’s article. An enterprise zone established by Crook County allows Facebook a 15-year property tax abatement on its facility improvements and installations, Shukovsky writes.

“When the assessor comes out and looks, it's like an empty site,” said Lee. And the company also gets a credit on state income tax of up to 62.5 percent of gross payroll, he says in the article.

But what Facebook never expected was a “director's order on Aug. 1 from the Department of Revenue that basically said two things: That Facebook could be centrally assessed [by the state instead of Crook County] and that it could be taxed on intangibles inside and outside the state,” a source working with Facebook explains in Shukovsky’s story.

Read Shukovsky’s complete coverage of this developing controversy in its entirety here.

In other developments,

Simon Property sues to force Indiana to tax e-commerce sales, Andrew Harris at Bloomberg BusinessWeek reports.

Jack Cummings of Alston & Bird takes a look at voluntary and “forced” corporate combinations in North Carolina.

Amazon offers to serve as tax collector — for a price, Marc Lifsher, of the Los Angeles Times reports.

By Priya D. Nair
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