AAF Government Report

May 14, 2014

Clark Rector Jr., Executive Vice President – Government Affairs

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Committee Approves Extensions

The Republican controlled U.S. House Ways and Means Committee has approved long-term extensions for six tax breaks – such as the one for research and development – that have in recent years have been repeatedly extended on a short-term basis. Most Democrats opposed the action claiming that with no offsetting revenue increases the extensions come at too great a price. The package under consideration in the Democratic controlled Senate Finance Committee would extend a much broader array of tax breaks for a much shorter two-year period. Negotiations between the two committees are ongoing, with no final resolution anticipated before next autumn.

None of the tax breaks directly affect advertising. However, many committee members in both chambers believe that under any extension, short- or long-term, new revenue must be found to offset that lost through the tax breaks. These lawmakers may look at the recently introduced tax reform proposals for ideas. Both the Senate and House versions of tax reform include provisions only allowing 50% of advertising expenses to be deducted from federal tax returns in the first year, with the remaining amortized over a period of 5 or 10 years.

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