In a June 12 letter to the House Committee on Ways & Means, the ADA detailed dentists’ priorities for tax-related issues affecting dentists and dentistry. Noting that most dental practices are small businesses, but that dental practices may also be organized as pass-through entities (S corporations) or C corporations, ADA advocated for both business and individual tax code reforms.
ADA President George R. Shepley, D.D.S., and Executive Director Raymond A. Cohlmia, D.D.S., focused on five tax policies in their letter to Rep. Jason Smith, R-Missouri, and Rep. Richard Neal, D-Mass., the chair and ranking member, respectively, of the House Committee on Ways & Means.
• Pass-through-entities: The ADA supports the Main Street Tax Certainty Act, which would make the Section 199A 20% deduction created by the Tax Cuts and Jobs Act permanent. The deduction is scheduled to sunset at the end of 2025. “Without this deduction, S corporations would be subject to a tax rate far out of parity with C corporations, leading to an uncertain future for many small business dental practices,” the letter said.
• Use of pre-tax dollars for health care: The ADA supports expansion of and increased flexibility for health savings accounts and flexible spending accounts and preserving current tax exclusions for employer-provided medical and dental plans. The letter noted that the Association supports returning FSA limits to the pre-ACA level of $5,000 and continuation of the index to inflation provision. Currently, FSA reimbursement is limited to $3,050 for 2023. “The ADA believes the reduced amount is a step back for consumers when the cost of health care continues to increase and adversely impacts the patient’s choices for dental care,” the letter said.
The ADA also supports legislation that would treat oral health care products as paid-for medical care for purposes of eligibility for health savings account and flexible spending account reimbursement. “Oral health care products are not only essential for good oral health, but for health in general,” Drs. Shepley and Cohlmia wrote. “Americans should not be taxed on products like toothbrushes, toothpaste and dental floss that are necessary for maintaining their health.”
• Expensing: The ADA supports maintaining full expensing of investments in equipment and property, particularly for small businesses. “Allowing businesses to immediately expense their investments increases dentists’ ability to grow their practices and provide better care for their patients by utilizing the most up-to-date advances in dentistry,” the letter said.
The ADA also supports the Small Business Growth Act, legislation that would lift the deduction cap to $2 million with a phase out at $3.5 million.
• Cash accounting: The ADA supports continued use of the cash method of accounting for small businesses, including pass-through entities and professional service corporations. “The cash method of accounting is a simpler, fairer system for dentists who often must wait a significant period of time before being reimbursed by insurance companies for the services they provide,” Drs. Shepley and Cohlmia said. “In addition, dentists, particularly orthodontists, frequently provide patients with extended payment plans for services, which delays payment for work performed.
• Higher education incentives: The ADA also encourages lawmakers to support measures that would help relieve dentists’ significant debt load. “New dentists today are saddled with an average of over $300,000 in student loan debt,” the letter said. “This debt impacts their practice decisions, including whether to work in research, dental education or in underserved areas. It also affects dentists’ ability to provide charitable care or pursue post-doctoral education.”
Follow all of the ADA's advocacy efforts at ADA.org/Advocacy.