On February 6, 2022, the Washington Department of Revenue’s Administrative Review and Hearings Division issued a determination concluding that a company providing a license to use data center space owes business and occupation (B&O) tax on the profits from the service. The taxpayer provides colocation services, which includes renting space in data center facilities for providing customer with the power, cooling and physical security for their server, storage, and networking equipment. The sale and rental of real estate is exempt from B&O tax. However, the Hearings Division previously concluded that a colocation provider was not renting real estate because it restricted its licensees’ access to the property and did not grant the licensee “absolute right of control” over the space. Accordingly, the Hearings Division determined that the taxpayer in this case also provides the nonexclusive right for licensees to have access to the premises, which is limited to installing and operating equipment for purposes of interconnecting to the taxpayer’s network. Therefore, a mere license to use the taxpayer’s real estate for a narrow purpose without exclusive dominion and control over the real property was subject to B&O tax.