In a earlier this week, the company informed early users of the Azure platform that they'll need to move their applications off the data center located in Quincy, Washington. Microsoft said it will soon offer users an automated tool that will help them migrate to its Southwest data center, most likely a reference to one in San Antonio, Texas.

"This change is in preparation for our migration out of the northwest region," the blog post reads. "Due to a change in local tax laws, we've decided to migrate Windows Azure applications out of our northwest data center prior to our commercial launch this November."

However, the company will continue to use the data center for other online services, a Microsoft spokesman said. He did not respond to a question about why Microsoft would pull the Azure services from the facility but still host others there.

The relevant tax issue began to unfold in late 2007 when Washington's attorney general wrote an opinion stating that data centers do not qualify as manufacturers, which in some areas of the state are exempt from paying taxes on new projects, including buildings and the equipment in them. Manufacturers in rural areas also get new employee business and occupation tax credits. Before that opinion was issued, some data center operators believed that they could be considered manufacturers and thus get those tax breaks.

After the attorney general's opinion made it clear that the data center operators would have to pay those taxes, Washington Governor Christine Gregoire drafted a bill that would have handed data center operators a discount on their taxes for equipment in the facilities, but the bill did not pass.