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ADA continues to lobby tax reform bill for dentists

November 09, 2017

By Jennifer Garvin

Washington — As Congress endeavors to pass legislation to overhaul the U.S. tax code, the Association continues to advocate on Capitol Hill for tax issues affecting dentists.

On Nov. 9, the House Ways and Means Committee passed H.R. 1, the Tax Cuts and Jobs Act, introduced by Chair Kevin Brady, R-Texas.

The amended House bill contains a number of provisions the ADA supports, including:

  • Retaining the cash method of accounting and expanding it to businesses that generate $20 million.
  • Expanding small business property expensing (179 expensing) from $500,000 to $5 million, and then eventually to $20 million.
  • Introducing a 100 percent write-off of necessary equipment as soon as equipment is purchased.
  • Introducing untaxable loan forgiveness for new dentists who enroll in the Indian Health Service after graduation.

The bill also contains some provisions that the ADA has pushed to amend, such as the exclusion of some dental practices from being treated as pass-through entities or S corporations.

"We believe our members could benefit from many of the tax reform provisions currently being discussed in the House bill, but we do have some questions and concerns, especially regarding the number of dentists subject to a lower S-corp rate. More than half of our members own or work in small business dental practices and they should be recognized for the revenue and job creators that they are.”

The original bill called for a lower 25 percent tax rate on a percentage of income for S-corps; however, professional services, including dentists, were excluded from that rate. The ADA noted this inequity in communications sent to Ways and Means and Senate Finance committees on Nov. 8.  In those letters, the ADA urged lawmakers to include applicable dental offices in that 25 percent lower tax rate.

The final version of the House Ways and Means Committee passed bill, included changes that the ADA believes might benefit some S-corp-registered dental offices.  

“The ADA is encouraged by the changes made to the S-corp provision in the amended bill and is currently reviewing how many dentists might benefit.  We will continue to advocate that all dental offices registered as S-corps benefit from a lower tax rate,” said Mike Graham, ADA senior vice president, Government and Public Affairs.

The amended House version of the bill also calls for eliminating the student loan interest deduction.  The ADA has evaluated and concluded that dentists with student loans would receive a greater benefit from the new proposal through the increased standard deduction.

“The ADA believes that any dentist with student loans, who currently benefits from the Student Loan Interest Deduction, would have the loss of that deduction offset by the proposed standard deduction,” Mr. Graham said.

In addition, the Senate Finance Committee released a tax reform proposal on Nov. 9, which the ADA is currently reviewing.

For more information on the ADA’s advocacy efforts on tax reform, visit ADA.org/taxreform.

The ADA News will continue to provide updates on tax reform as it progresses.