Facebook's data center tax bill shrinks

The state of Oregon is telling Facebook it doesn't owe a big tax bill, and legislation is moving to preserve the decision .

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Here’s a quick update on the Facebook tax situation – you know, the one where Facebook is disputing property taxes on its Prineville data center in Oregon.

Well, the Associated Press (AP) reported late last week that Oregon state tax authorities will change the rule that caused the tax troubles to begin with. The state’s Department of Revenue said Thursday it will change its rules so data centers like Facebook's are assessed by local tax authorities, not by the state, according to the AP.

The trouble began last summer when Facebook was told by the state to assess any property “real and personal, tangible or intangible," in relation to its property taxes. Concern arose that Facebook might be taxed on assets such as the value of its brand. The tax bill is associated with the data center Facebook chose to build in Crook County, Ore., and as part of the deal, Facebook promised jobs for 55 full-time employees in exchange for tax breaks. A few months later, according to reports, tax authorities said Facebook faced an annual tax bill of $390,000. That amount was reduced, and authorities said the tax bill would be $26,000. But Facebook still had concerns, and began asking state lawmakers to pass legislation to exclude companies that own or lease a data center in enterprise zones from having their value assessed by the state. (You can read more here, in my blog about the issue.)

The state’s decision is good news for Facebook, but it may only be a temporary measure. In the AP article, Gov. John Kitzhaber reportedly says the state’s tax laws need to updated, but a comprehensive review and overhaul on such complexities likely won’t be addressed until 2013.

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