Twitter Uses Promoted Tweets, Training, to Duck Tax Hit

By Steve Anderson July 30, 2013

Taxes are one of those situations that most every business of most every size runs afoul of at some point. The federal government, state and even some cities get in on the act, demanding a cut of hard-earned cash. But sometimes, there's a way around taxes: deductions, accounting tricks...even a little good old fashioned negotiation. Twitter put the power of its promoted tweets program to use in one particular work-around – the kind of thing that let it save some big money on San Francisco's tax levy.

The story began a few years ago when Twitter was considering moving its offices from San Francisco to nearby Brisbane unless it got an exemption from the city on the issue of payroll taxes. The tax represents a 1.5 percent fee against all employee compensation—stock options, salaries, bonuses and the like—over $250,000, to ensure that small businesses are left comparatively alone. But that 1.5 percent would have represented a hit of better than $20 million over the course of six years –  a hit that Twitter would have rather not taken.

Thus, Twitter got a six-year reprieve from the tax, which started in April of 2011 because, chances are, San Francisco didn't want to lose all the business that Twitter would have represented for area restaurants, stores and the like, but Twitter had to agree to what was called a “Community Benefit Agreement.” Under the terms, Twitter had a dozen different activities to carry out, which San Francisco would have regarded as a sort of payment in kind. One of these activities was described as “support nonprofit capacity building in social media,” which essentially boiled down to “show charities how to use Twitter.”

So far, Twitter has taught 27 such non-profit groups how to put the social media service to work, and seven have received promoted Twitter campaigns. The cash value of all of Twitter's non-profit help turned out to be around $55,000, with different groups getting different levels of backing and support. For instance, the Great NonProfits organization got 319 Twitter followers, 27 replies, and 7,000 clicks in a campaign valued at $5,000. Compass Family Services got 17 tweets and 50 followers for $4,000, and WritersCorps landed two tweets, 30 followers, and 1,600 clicks for $2,500, though these numbers are suggested more as estimates than actual cash value.

It's easy to look at this—more than a few people have—and say that Twitter's getting the good end of this deal. After all, all the promoted tweets really cost Twitter is a bit of lost opportunity to sell same elsewhere. But, based on the reports from the organizations that got in on the Twitter rush, the Twitter training and campaigns were extremely valuable. Great NonProfits, who got some great value out of the campaign, expressed its satisfaction by calling the promoted tweets “incredibly valuable.” WritersCorps called it “pretty useful to get tips and techniques for building better tweets and Twitter strategies in general.” Even Walk SF, who got some help out of Twitter, said “the tweets did help increase awareness for Walk to Work Day and boosted Walk SF's followers significantly.”

So it looks like a win-win for pretty much every side. San Francisco keeps the Twitter population and the relevant business, which bolsters the tax base. Twitter gets to save some cash and several not-for-profit groups get some useful services. When a situation has no real losers, it's a good ending.

Edited by Blaise McNamee

Contributing TechZone360 Writer

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