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Will Job Cuts cause LivingSocial to lose its Tax Incentive Package?

livingsocial, tax incentives, dailydealmedia.comThis past June, Daily Deal Media reported that LivingSocial had received approval for a substantial tax incentive package from the District of Columbia Council. In exchange for these tax breaks which would take effect in 2016, the daily deal provider would need to meet certain requirements beginning in 2013.

These requirements included mentoring of D.C. based students and support for businesses affected by street construction. It was also stipulated that 50 percent of LivingSocial employees would be required to live within the district.

But now questions arise as to whether Livingsocial will be able to hold up its end of the bargain. As The Washington Post writer Steven Overly points out, the company’s recent elimination of 400 jobs across the U.S., including 160 of those within the D.C. area, could be a game changer for LivingSocial’s strong future in the D.C. community.  

The largest stipulations in the $32.5 million tax incentive package, called the Social E-Commerce Job Creation Tax Incentive Act of 2012, require eligible companies to employ at least 1,000 people in the District and establish a 200,000-square-foot headquarters within city limits.

The agreement between LivingSocial and the District of Columbia include:

Distribution of deals for at least 20 local companies disrupted by construction in the area. These may also be in the form of “social media subscriptions or engagement services” or other “special marketing efforts.”

Designing and administering a minimum of 18 hours of social media marketing and technology training per year for local small business owners.

Provide a minimum of 32 hours of engineering-related training per year for 20 software developers to help D.C. in its efforts to hire and retain technical talent for local companies.

Hire interns each year as part of the District’s Summer Youth Employment Program. The total intern hire is to equal 1 percent of the LivingSocial workforce. The salaries for these interns will be paid by the District.

If during any year LivingSocial cannot meet the terms of the agreement, it will be required to make up for it the following year.

In June when the city council voted unanimously to push the Social E-Commerce Act to passage things were not yet looking quite as dismal for the daily deal industry as they do now almost six months later.

Spokesperson for LivingSocial, Brendan Lewis spoke with Business Journal about the pending passage of the bill, saying:

[The decision]…gets us one step closer to ensuring LivingSocial can continue to grow and prosper with the District, and help other District-based businesses do the same. Final passage of this bill will help ensure LivingSocial creates roughly a thousand new jobs in Washington, DC and signal to technology entrepreneurs that the District is a great place to grow a business. As we have said all along, Washington, D.C., is LivingSocial’s home and is in our DNA.

But will LivingSocial be able to create a thousand new jobs when it has just eliminated 400?

Read More: LivingSocial Reviews

The Washington Journal, Business Journal

Krissa Ashton

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