In an Advisory Opinion, the New York State Department of Taxation and Finance held that a taxpayer developing a data center for Internet services is eligible for the State’s sales and use tax exemption pertaining to Internet data centers. In order to qualify for the exemption, the tangible personal property must be located or installed in a facility or structure which is an Internet data center and required for and directly related to the provision of Internet website services for sale by the operator of the center. In this case, the taxpayer planned to provide three primary types of services to its customers: (1) “powered shell” space, which will be partially furnished by the taxpayer for data center operations and partially furnished by customers with equipment designed to meet the customer’s individual data center needs; (2) “turn-key” data center operations, which will be fully furnished by the taxpayer; and (3) carrier and network space, which will house network provider equipment and support uninterrupted Internet access. The Department determined that upon completion of the facility, the taxpayer will be an operator of an Internet data center because the taxpayer will operate the center in a high security environment and will provide uninterrupted Internet access relative to the services to be offered to the taxpayer’s customers. Therefore, the Department held that the taxpayer is entitled to claim the sales and use tax exemption for purchases of machinery, equipment and other tangible personal property that will be used in the center. TSB-A-12(30)S, New York Dept. of Tax & Fin. (Dec. 3, 2012).