Departments - March/April 2013

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Right to Recognize
Grassroots Initiative Pushes for Industry Awareness, Recognition

By Deborah L. Vence

With Section 274(j) of the Internal Revenue Code at risk of being eliminated, members of the Incentive Federation Inc. are helping to build awareness of the incentive industry and stress the importance of employees' contributions.

In January, the Incentive Federation carried out a soft launch of a new grassroots initiative, "Right to Recognize," at the PPAI Expo in Las Vegas. Right to Recognize encourages Corporate America and professionals from the incentive marketplace to become advocates by educating and raising awareness within the community and with their local legislators.

"The initiative has been created for the purpose of hosting informational events to educate legislators and the corporate community about how incentive programs are effective business tools," said Jessica Tadlock, managing director of the Incentive Federation, who, along with the Incentive Federation's attorney, George Delta, met with PPAI Expo participants to discuss the importance of taking an active role by hosting webinars, publishing memorandums, writing their local legislators, joining the Incentive Federation and following social media for updates on Right to Recognize.

"These programs stimulate and support our economy. This is a grassroots legislative awareness effort sponsored by the Incentive Federation, and its members shall become involved to raise awareness at its points of business," she said. "Federation members believe we must protect the right of businesses to recognize employees and key distribution partners. Our program shall build upon our existing initiatives."

The new initiative speaks to Section 274(j) of the Internal Revenue Code, which has been a hot-button issue in the industry for the past few years.

Section 274(j) allows employers to recognize and reward their employees under specific conditions without those employees having to pay taxes on the value of their awards. Also, it allows employers to deduct the value of the awards given out, up to a certain percentage.

The dilemma is that tax entitlements, including 274(j), could be eliminated. The Incentive Federation for at least the past three or four years has been lobbying members of Congress to understand the benefits of service awards and to stop the removal of 274(j).

"The Incentive Federation has been meeting with members of Congress and their staffs during the last five years to educate them on the incentive, rewards and recognition marketplace and the benefits of incentives, awards and programs that implement them. Part of our message has been that safety and length of service awards under Section 274(j) have been a powerful and inexpensive tool in ensuring a safer, healthier, more engaged and more motivated workforce," Delta said.

"Because of our legislative outreach and education effort, we have made a compelling case for retaining section 274(j) if and when Congress enacts comprehensive tax reform. We have been successful to date in enlisting the support of some key members of the tax writing committees for retaining section 274(j)," he said.

"Therefore, while there can be no assurances that we will be successful, we are cautiously optimistic that Congress now understands the usefulness and importance of section 274(j) and would retain the provision when it enacts tax reform," Delta added.