LivingSocial is about to get a break in the nation’s capital – a tax break to be specific. A bill, known as the Social E-Commerce Job Creation Tax Incentive Act of 2012, was passed by the District of Columbia Council on July 10, according to an article in Bloomberg BNA’s Weekly State Tax Report.
Beginning in 2015, once the Mayor signs the bill and it goes through Congress (as is required for any bill to become law in the District), LivingSocial will be entitled to certain corporate income tax and property tax abatements.
The bill requires that LivingSocial build or secure a minimum of 200,000 square feet of consolidated space with a minimum lease of 10 years, hire at least 50 employees a year over the lifetime of the abatements, mentor D.C. students interested in careers in science and technology by providing tech education programs/internships, and offer support to businesses affected by ongoing street construction projects, according to the article.
Supporters of the bill feel the tax incentives will keep LivingSocial headquartered in the District and that these incentives are necessary in order to prevent a nearby state from luring the company away with other tax breaks, according to an article in The Examiner.
However, others believe that LivingSocial should be required to hire more District residents in order to receive the tax incentives. In addition, as currently structured, the company is entitled to $9 million in incentives even if 50 percent of its new employees are not District residents, according to a Greater Greater Washingtonarticle.
The debate surrounding the LivingSocial tax breaks is yet another example of jurisdictions offering tax incentives in order to keep certain industries within their bounds in an effort to help raise revenue. Only time will tell if the incentives being offered by the District are enough to keep LivingSocial in the nation’s capital long term.
In other developments . . .
The New Jersey Division of Taxation adopted final rules amending the urban transit hub tax credit program, clarifying that developers allowed credits for capital investment in a residential project that is part of a mixed use project, will also be allowed credits for capital investment in a qualified business facility that is part of the same project, according to a recent Bloomberg BNA Weekly State Tax Reportarticle.
By: Kathleen Caggiano
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