Microsoft's data center in Quincy, Wash.

Microsoft today told early users of its Windows Azure cloud computing platform that it will shift applications and storage away from its Pacific Northwest data center in Quincy, Wash., prior to Azure's commercial launch. Microsoft cited "a change in local tax laws," referring  to a controversial decision that excluded data centers from a rural manufacturing sales tax exemption under Washington state law.

"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," the company says on the Windows Azure blog. "This means that all applications and storage accounts in the “USA - Northwest” region will need to move to another region in the next few months, or they will be deleted."

That doesn't bode well for Grant County, Wash., the home of data centers for Microsoft, Yahoo and others. Despite Intuit's recent opening of a data center in Quincy, the big data center operators have been reevaluating their plans in the region since Washington state Attorney General Rob McKenna determined in 2007 that they didn't qualify for a major sales tax deferral program.

The Data Center Knowledge blog says the Azure services in Quincy will shift to San Antonio, Texas, where Microsoft has another large data center. The Oak Leaf Systems blog has more details and background, as cited by ZDNet's Mary Jo Foley in a post on the topic.

The potential impact on the rest of Microsoft's operations in Quincy isn't clear. We've asked Microsoft for more information about its plans for the data center, and we'll update this post depending on the response.

Follow-up: Microsoft not deserting Quincy entirely, but tax debate rages on