Tax season is hardly anyone’s favorite time of year, but corporations are being cautioned that it could soon be an even bigger source of frustration. This month, the Global Business Travel Association (GBTA) issued a letter warning that generally accepted business deductions, such as travel & entertainment spending, are possibly at risk as Congress works to balance the demand for job creation versus the need for additional revenue. 2013 is expected to see an upswing in business travel and the spending associated with it, but any congressional move against deductions would likely halt that forward progress.
Threatened deductions typically cover transportation, meals, lodging and entertainment for corporate travelers, expenses that are vital for corporations working to create and maintain new and existing business relationships. Their loss would have a substantial impact on business travel and the industries involved, as well as the organizations that would have to dial back such activities during a time when travel spending is boosting both business and the economy. Even in this age of e-mail, Skype and conference calls, face-to-face interaction is generally still the preferred and proven method of sealing business deals. Without T&E deductions in place, many companies would have to minimize such activities. Fortunately, for this year at least, T&E deductions remain in place, but the GBTA’s cautionary letter will have businesses on alert for any action coming from Washington.
“Reasonable business deductions, including the travel and entertainment deduction, remain vital to facilitating business travel growth, and we will fight to preserve this provision,” wrote GBTA executive director Michael McCormick.
The concern certainly highlights the need for topnotch expense management, whether the deductions stay or go. Businesses that use expense management software are able to carefully track each and every expense down to the minute details, which supports maximizing deductions and minimizing budget impact through careful oversight. If T&E deductions were to be removed, businesses would need to be especially careful about tracking spend and keeping it under control, something that’s tough to do without expense report software.
While the GBTA has not stated why they felt the need to address the issue ahead of any overt congressional action, the letter ironically comes on the heels of passage of the No-Hassle Flying Act, which was put into place to ease business travel to the United States.