Departments - September/October 2011

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Legislative Update: Safety, Service Award Tax Provision in Peril
Get Involved to Protect the Business Value of These Crucial Rewards

For two years, the Incentive Federation has been involved in a lobbying campaign at the U.S. Congress, largely meant to help protect the industry by raising awareness of the role recognition and reward solutions play in improving business productivity.

While the Congress was engaged in debate about the best approaches to solve the country's current health care challenges, incentive industry leaders worked to inform representatives and senators and their staffs and aides about the benefits incentives and rewards can provide when used as part of wellness programs. This involvement has built a foundation for a new effort by this lobbying arm of the incentive industry: defending the tax provision, 274(j), that supports safety and length of service programs by providing tax deductions to employers and tax exclusions to employees.

In the current budget-cutting climate in Washington, all tax exclusions and deductions are "on the table," according to various incentive industry leaders. Because of this, it is crucial to step up lobbying efforts to ensure our leaders in Congress are aware of the crucial value of such programs to businesses across America.


The Incentive Federation and its partners advocate maintaining Section 274(j) of the Internal Revenue Code for service and safety awards, which was first enacted in 1986. This provision has been credited with saving as much as $10 for every dollar invested in safety and service awards.

The 25-year-old provision provides that the cost of a length-of-service award and a safety achievement award given to an employee is deductible to the employer and tax-free to the employee as long as the award is tangible personal property and does not exceed $400 in any year.

"While the last few years have brought a lot of legislative focus on health care and economic stimulus, Congress is now turning its attention to tax return," said George Delta, executive director of the Incentive Federation. "We have a great deal of evidence to show that section 274(j) has a positive effect on worker productivity, employee engagement and workplace safety. It's our job to show members of Congress that this provision has been beneficial to American business."

Delta explained that the Incentive Legislation Campaign (ILC) has been meeting with members of Congress and their advisers over the past 21 months to provide information, case studies and data that will help them better understand the $46 billion incentive industry.