The new NSA datacenter gets a surprise tax bill

The new NSA datacenter gets a surprise tax bill

Summary: It seems ironic, but the National Security Agency is caught by surprise by a new tax that impacts its new datacenter.


A story in the Salt Lake Tribune, put together through diligent research using Utah’s open records law, has indicated that a Utah law passed this year has added a 6% tax to the cost of power purchased from Rocky Mountain Power. In what seems like a very circular process, the money from the law that specifies this tax is directed towards Utah’s Military Installation Development Authority, which is a program that allows for long-term leases of government-owned land and facilities to private organizations. Apparently, the $1.5 billion datacenter project at Camp Williams, Utah falls under its discretion.

Weeks after the new measure was signed into law, Utah Governor Gary Herbert’s staff received an email expressing the NSA concerns about the new tax, pointing out that it came as a surprise and that stable power prices were one of the major factors that led to the selection of the Utah site. The surprise part was itself surprising, as an attorney for Utah stated that the agency had been informed of the proposed tax before the measure had been signed by the Governor.

With an estimated yearly power bill of $40 million, the tax would add an additional $2.4 million to the operating costs of the datacenter. All of the major state level players who were involved in attracting the datacenter project are claiming that they were unaware of the potential tax, nor were any of them consulted about the impact it could have on the datacenter facility. At this point in time, the newspaper is reporting that there are negotiations ongoing about the facility, and its tax liability is scheduled to be resolved by September.

UPDATE: Nate Carlisle, of the Salt Lake Tribune, sent me the following information: The Military Installation Development Authority still has discretion on when, or if, to apply the tax and at what rate up to 6 percent

So at this point the decision if the tax is to be applied, or in what amount, has not been announced.

Topics: Data Centers, Government US

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  • Seems fair to tax PRIVATE use of government facilities!

  • Well...

    How much of their own power will they have to generate to recoup the tax? And what will that cost to install?

    It could be worse; at one time, an energy tax in Germany was levied even on enterprises and farms that produced their own.
  • Don't worry, then know how to deal with it ...

    They will just classify it as a "terrorist act" and black vans will haul the state tax collector off to Guantanamo.
    terry flores
  • What a Shame

    NSA gets caught up in a system whereby taxpayers are subsidizing NSA's expenses. Every taxpayer. In the State should file a similar objection that it is unfair that the State should tax them after they moved into the State based on cost of living. As the Feds would say, as well as most states, it is not that much considering the total budget.

    NSA's objection should get the same response as an objection from any taxpayer; the tax was passwd after you moved in so you are subject to it.
  • Interesting on both sides

    I suppose that if the federal government CHOOSES to pay for use of private property, rather than purchasing the property outright and "federalizing" it, it would also be CHOOSING to put itself (indirectly) under the taxing power of the state and locality. For example, the USPS leasing rather than buying Post Office locations, so that they can be closed or moved without bothering with a property sale. But if it is federally owned land, it is not subject to local property tax. The snark about calling the state tax collector a terrorist is uncalled for in a civil and reasonable discussion.
    • Calling state tax collectors terrorists...

      When he said the state tax collector might be labeled a "terrorist," he was only half joking. Some members of Congress were literally publicly calling downloading music illegally "a terrorist act" at one point. The entire reason they passed the (un)"Patriot Act" was so that they could break every protection of the Constitution simply by labeling something a suspected "terrorist act" or a "national security threat." Using those labels gives the government intelligence agencies unlimited powers to harass, kill, bypass due process, and/or avoid proving guilt before throwing somebody in prison with no defined sentence - all with no "balance of powers" oversight whatsoever. Considering the NSA is one of the biggest abusers of these powers, it isn't that far-fetched for them to declare this tax bill as "threatening national security" by making it more expensive for them to operate. The question isn't whether they've already abused this label in ridiculous ways like that. They have - many times. The question is whether they would use those idiotic tactics against one of their own - i.e. another part of the government.
      • When you pirate music,

        you're supporting COMMUNISM.

        And I really wouldn't be surprised to see the NSA use "terrorism" as part of name-calling tactics against any taxes.

        If anything, this should encourage the NSA to build a nice solar and wind farm on the grounds of this installation, to help recoup the cost of the energy tax.