WASHINGTON — 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.