May 14, 2014

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.
 

Tax Revenue Down in States

For the first time since the end of the recession, tax revenue declined in several states for the first quarter of 2014. Many analysts suspect that tax changes enacted during the “fiscal cliff” were at least partially to blame. They believe that the changes caused many corporations, money managers and high income earners to report income or sell stock that resulted in tax windfalls in 2013, but declines in 2014. 
 
It is uncertain at this point whether revenues will rebound or stabilize. Long-term shortfalls in tax collections often cause many lawmakers to look for new sources of revenue, including extending the sales tax to advertising and other services.

White House Releases Big Data Report

The White House recently released its much anticipated report on Big Data. The good news for the advertising industry is that the report acknowledges that the advantages that come from the data far outweigh the perceived harms. The report highlights the need for consumers to have meaningful control over privacy, a need that is largely being met through the AAF supported self-regulatory program of the Digital Advertising Alliance. The report also called for an update of the Electronic Communications Privacy Act and passage of national data breach legislation. Done correctly, those are goals that are supported by much of the advertising and other related industries. 

Senate Committee to Look at Online Advertising

The Senate Committee on Homeland Security and Governmental Affairs has announced a May 15 hearing on Online Advertising and Hidden Hazards to Consumer Security and Data Privacy. Digital Advertising Alliance Executive Director Lou Mastria has been asked to testify about the industry’s self-regulatory program for online behavioral advertising.

Net Neutrality Scheduled for Vote

The Federal Communications Commission has scheduled a May 15 first vote on Chairman Tom Wheeler’s controversial net neutrality plan. The Chairman’s plan would allow Internet providers to charge websites for access to so-called fast lanes for faster service, provided that those fast lanes do not slow other Internet traffic. If the Commission votes yes, it would then begin the process of accepting public comment on the notice of proposed rulemaking. Chairman Wheeler has reportedly been making changes to the plan to court support from other Commissioners. Two of the other four Commissioners have already asked that the vote be delayed. 
 
Many Democratic lawmakers on both sides of the Hill have expressed concern over the plan and have asked Chairman Wheeler to drop the approach. Congressional approval is not needed and at this writing the Chairman still intends to move forward. 

FCC Requires Broadcasters to Post Political Ad Info

Beginning in July, the Federal Communications Commission will require all broadcasters to post information about the political television advertisements they sell online at a FCC-hosted database. Major broadcasters, including ABC, CBS, Fox and NBC have been required to provide the information since 2012. Smaller broadcasters had been required to make the information available, but had been permitted to keep the files at their own facilities.