Tax Bill Approved, Retains Exclusion for Incentives 


Careful monitoring and active collaboration of incentive industry partners made it possible to retain the tax exclusion afforded incentives and corporate gifts in Section 274(j) of the IRS Code. The IMA is a member of the Incentive Federation Inc. (IFI) and we thank them for their leadership on this issue. We also want to thank IMA members and companies that contacted their elected officials, especially Michelle Smith, CPIM, and the O.C. Tanner team! 

Steve Slagel, IFI managing director, provided a helpful summary upon the completion of yesterday’s vote.

“The incentive, recognition and corporate gifting industry is a fortunate recipient of the support of several elected officials who listened to and agreed with industry leaders that the tax exclusion afforded Section 274(j) Employee Achievement Awards of the IRS Code should remain law and not be repealed as was contemplated by the House of Representatives several weeks ago. Additionally, clarifying language defining tangible property for purposes of instructing what constitutes a tax deductible award is an important bonus. The language is summarized as follows:

The Senate amendment adds a definition of ‘tangible personal property’ that may be considered a deductible employee achievement award. It provides that tangible personal property shall not include cash, cash equivalents, gift cards, gift coupons or gift certificates (other than arrangements conferring only the right to select and receive tangible personal property from a limited array of such items pre-selected or pre-approved by the employer), or vacations, meals, lodging, tickets to theater or sporting events, stocks, bonds, other securities, and other similar items. No inference is intended that this is a change from present law and guidance.

On behalf of the IFI Board of Directors the Federation also wishes to thank all individuals who responded to our call for contacting elected officials by writing letters and making calls. The success we've had keeping a valuable and important tax exclusion for our industry's companies and their business clients was clearly a joint effort. Thank you all.”  

In particular, the Federation wishes to give a special thank you and acknowledgment to O.C. Tanner, a Utah-based recognition and performance improvement company, and Michelle Smith, the company's vice president for marketing who has been an industry leader and advocate for many years. O.C. Tanner has been in a unique position to educate and persuade some key elected officials, and in particular Senator Orin Hatch (UT), who chairs the Senate Finance Committee. Senator Hatch was a strong and influential proponent of the provisions within 274(j), and he became a proponent largely due to O.C. Tanner's relationship with the Senator over many years. 

The Incentive Federation worked hard this year to monitor the tax reform actions of Congress and to keep the IFI members and other companies in the industry informed. We lobbied, encouraged members to write letters and make calls to elected officials, and contacted Senators and Representatives directly. However, the Federation cannot take all the credit for saving 274(j) from repeal, as it was largely the efforts of IFI member companies and industry leaders that achieved the success.”