Broadcasters Fight Possible Ad Deduction Change
Congress cruises for cash
November 14, 2013
— The National Alliance of State Broadcasters Associations is asking
Congress to keep the current rules regarding the deductibility of
advertising in place.
The issue has come up as lawmakers look to reform tax laws. In a letter to the House Ways and Means Committee, the NASBA calls
advertising “the life blood for local radio and television stations.”
“Any change to deductibility would deal an enormous financial blow to
this country’s local broadcasters,” state the executives in the letter
signed by the heads of 50 state broadcast associations. They urge
lawmakers to reject any measure that would alter or eliminate the
current law that permits a business to deduct the full cost of
advertising in the year that is incurred.
For 100 years, advertising has been treated as an “ordinary and
necessary” expense of the cost of doing business, says the NASBA.
Advertising is the primary source of revenue for most broadcasters,
“and for some, their only source of revenue, according to the NASBA.
“Local radio stations currently receive 96% of their revenues from
advertising and televisions receive 94%.”
Lawmakers are considering disallowing all or part of the cost of
advertising as an ordinary and necessary business expense in their
efforts to restructure the tax code.
NAB has said limiting the advertising deduction would be the same as
imposing a tax on advertising, making it more expensive and, in turn,
lowering the amount of ads business can buy. NAB has joined with
advertisers and agencies on the issue.