Under US tax law, advertisers are allowed to deduct 100% of the amount they spend on advertising on their tax returns.
However according to The Association of National Advertisers (ANA), several pieces of legislation are expected to be introduced by House Ways and Means Committee which would require advertising costs to be amortized over three years, rather than deducted in the year the funds are spent or limit the amount of tax deductions for advertising to a percentage of the amount spent in any particular year.
The ANA wrote in a note to its members:
“We have learned that there is a strong likelihood that Ways and Means Committee Chairman Dave Camp (R-MI) will include some restriction on advertising deductibility in his initial draft of a tax reform bill.
“The restriction being discussed could take two forms: (1) allowing businesses to deduct only a percentage of their advertising costs or (2) requiring them to amortize those costs – postponing the deduction of the costs over several years until long after the advertising has appeared. Either change would impose multibillions of dollars in additional costs on the business community.
“Chairman Camp is expected to release a draft of a tax reform bill soon and begin markup later this month. It would appear that the Ways and Means Committee is giving such serious consideration to this change because it would generate a substantial amount of tax revenues, not because their position is supported by economic theory.”
“Indeed, either form of a tax on advertising would cost the nation millions of jobs and hundreds of millions of dollars in lost economic activity. This is a direct impact documented by a landmark study of the economic impact of advertising on the U.S. economy. ”
Of course included in advertising are money companies spend on PPC advertising, payments to affiliates and other sources that trickle down to domain holders that monetize their domains through parking and affiliate programs and direct relationships with advertisers
You might want to follow the ANA advice here:
“It is critical that you contact your Member of Congress who serves on the Committee and express your strong opposition to such a proposal. If your Member of Congress is not on the Ways and Means Committee, ask them to contact their colleagues to call on them to oppose strongly this misguided proposal. We have prepared talking points you can use in your contacts.”…
