Incentive Federation Trying to Preserve Tax Break

The Incentive Marketing Association's executive director, Karen Renk, says the deduction that has been in place for more than 20 years may be threatened.

Section 274(j) of the Internal Revenue Code, which was enacted by the Tax Reform Act of 1986 and allows employers to deduct the cost of employee achievement awards given to the same employee up to $400 per year, is in jeopardy, and the Incentive Federation is aggressively lobbying to protect it, incentive industry officials say.

The federation, which represents the major incentive trade associations, has been lobbying Congress to add a similar tax incentive, a new 274(p), for employers that offer "effective and comprehensive" wellness programs. Executive Director George Delta had headed groups on several trips to Capitol Hill and push for it, but preserving 274(j) is now a concern, said Karen Renk, executive director of the Incentive Marketing Association, a federation member.

"I believe your readers would like to know that these benefits may be threatened," Renk wrote July 15.

Reached July 15 by phone, Delta said some in Congress are intent on ending various tax breaks and deductions, including the home mortgage deduction and ethanol subsidies. "Because 274(j) service and safety awards will fall in that category, even though ours are much smaller, they are now in play," he said.

Delta said when 274(j) was originally enacted, members of Congress generally appreciated that safety incentives were an inexpensive (to the Treasury) way to encourage safe behavior at companies. He said he and allies from the incentive industry have been meeting monthly with staffers on Capitol Hill and will make another trip July 20. Other visits might take place in September and October, he said. "We're trying to convince them by any means possible and by empirical evidence that these programs work."

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