California based Twitter makes plans to sidestep the IRS

Even though California based Twitter hasn't made any money this year, it is doing some major tax planning. Just as Apple and Facebook have made moves to sidestep the IRS, Twitter is taking steps to move out of the country to save on taxes. These plans are being made seemingly alongside plans for an initial public offering (IPO) that could make the company and its shareholders rich.

As many California businesses already know, the state has the highest taxation in the nation. After the IRS takes its 35 percent, the state takes its share as well. According to the Tax Foundation's 2014 edition of the State Business Tax Climate Index, California is the worst state for businesses when it comes to taxes. This would certainly cut into any profits that are bound to be made from Twitter's IPO.

So, in order to combat this, the company is moving a portion of its business, and a good amount of its money, to Ireland. The corporate tax rate there is only 12.5 percent and currently, that money can only be taxed by the United States if it is brought back into the country, which may never happen. The way the Irish system is currently set up, it's possible for companies to either defer or pay lower taxes.

There are rumblings that Ireland will change its current structure, but until then, companies such as Twitter, Apple and Facebook are taking advantage of the lenient laws. Unlike some companies, Twitter is mainly comprised of intellectual property, so moving its business out of the country isn't as difficult as it would be for other companies. Having a good, and legal, tax plan can such as this can save a company a substantial amount of money, and there seems to be nothing the IRS can do about it -- at least for now.

Source: Forbes, How Twitter Hopes To Reduce Its Tax Bill (In 140 Characters Or Less), Kelly Phillips Erb, Oct. 19, 2013

No Comments

Leave a comment
Comment Information

Contact the Law Office of Williams & Associates

For more information about our tax law services, or to discuss your tax matter, call our Sacramento office at (916) 488-8501 or toll free at (800) 684-7147. You may also send us an inquiry via email.

Contact the Firm

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Office Location:

3600 American River Drive, Suite 135
Sacramento, CA 95864

Toll Free: 800-684-7147
Phone: 916-488-8501
Fax: 916-488-8196
Sacramento Law Office Map