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Taxation and the Ad Industry

The issue:

The IRS has long treated advertising expenditures as ordinary and necessary costs of doing business. However, as Congress continues to take up corporate tax reform—and the related issue of tax inversions—the full deductibility of advertising is coming under threat.

What this means to you:

Proposals have been introduced in the U.S. House and Senate that would lower, by 50 percent, the deductibility of advertising and then amortize and tax the remaining expenditure over a five-to-ten-year period. A reduction in deductibility could mean advertisers spend less on advertising, with complex and potentially devastating effects on the ad industry. This reduction of exemption is intended to offset any government revenue losses that result from the lowering of the corporate marginal rate (currently 35 percent). Advertising is one of the ten largest expense deductions taken by companies today and thus lends itself as a leading candidate for revenue to the Federal government.

What the 4A’s is doing to support the industry:

The preservation of the full deductibility of advertising is not a new battle, rather one that 4A’s has fought successfully over the past 30 years and continues to do so:

Taxation-Related Content

Grid List

Government Relations – November 2023 Newsletter |

By Government Relations

While politics is undoubtedly getting more and more unusual these days, dysfunction in Washington is not in short supply. Divided government has never really looked, well, more divided. To that end, we saw a multi-ballot marathon to elect Rep. Kevin McCarthy (R-CA.) as Speaker of the House earlier this year only to have him ousted […]

Maryland Comptroller Appears to Deny 2022 Digital Ad Tax Refund Claims in Mass |

By Government Relations

Digital advertisers’ frustrations over the legally dubious Maryland digital advertising tax are mounting. Last month, numerous covered companies received notices from the Maryland Comptroller’s office denying their 2022 digital advertising gross revenue tax refund claims. These notices, dated on or around October 11, 2023 and sent via certified mail a few days after, argue that […]

Maryland Supreme Court Punts State’s Digital Ad Tax Back to Lower Court

By Government Relations

On May 9, 2023,  the Maryland Supreme Court reversed a ruling by the Anne Arundel Circuit Court that Maryland’s tax on digital advertising was unconstitutional, saying the court lacked jurisdiction over the case. In an order, Chief Justice Matthew Fader punted the case back to the Anne Arundel County Circuit Court and ordered it to […]

4A’s March 2023 Tax Update |

By Government Relations

To help agencies keep a pulse on all that is happening in the complex federal, state and local, and international tax policy landscape, the 4A’s brings you a rundown on key tax areas to watch in preparation for the 2023 tax season. Areas covered in this written update include the latest legal happenings on nexus […]

Maryland Digital Ad Tax Heads to State Supreme Court; Enforcement Stayed

By Government Relations

On January 23, the Maryland Supreme Court granted direct appeal of a trial court’s ruling that struck down the state’s first-of-its-kind tax on digital advertising in a suit brought by Comcast and Verizon. Maryland Comptroller Brooke Lierman asked the high court to review an October bench ruling by Anne Arundel County Circuit Court Judge Alison […]

IRS Releases Guidance on Corporate Alternative Minimum Tax |

By Government Relations

In a December 27 announcement, the Treasury Department and the Internal Revenue Service (IRS) issued Notice 2023-7, which provides interim guidance for the application of the new corporate alternative minimum tax (CAMT) until the issuance of proposed regulations. The CAMT may impact some larger agencies with average annual financial statement income exceeding $1 billion. Foreign-parent […]