Senate reconciliation bill blunts tax change radiologists say could harm private practices
A budget proposal released by the U.S. Senate last week pares back a tax change radiologists have railed against, believing it could harm private practices.
The U.S. House previously approved its version of the bill in late May, drawing concern from a coalition of doc groups including the Society of Interventional Radiology. House leaders are proposing to increase the itemized deduction for state and local income taxes (SALT) from $10,000 to $40,000. In addition, the bill would eliminate the ability of physician practices and other businesses to use the “pass-through entity tax” structure or PTET.
However, the Senate Finance Committee version released June 16 does not include the same provision. While the House legislation provided a $40,000 cap per individual, the Senate is suggesting maintaining the current $10,000 ceiling “as a placeholder,” according to the American Institute of CPAs.
For pass-through entities, the Senate eliminates the “specified service trades or businesses” limitation. Additionally, business owners can deduct PTET SALT taxes not exceeding the greater of $40,000 ($20,000 for married filing single) or 50% of PTET SALT paid, according to the institute.
“The ADA’s position is that we were pleased to see a partial restoration of the PTET deduction, but we will continue to fight for the full deduction before the bill reaches the president’s desk,” Nicholas Cargas, a lobbyist for the American Dental Association, told Radiology Business Monday.
ADA was among over 30 doc groups penning a recent letter to Senate leaders on this issue, prior to the Finance Committee’s announcement. Others signing the message included the Society of Interventional Radiology, American College of Radiology, and American Society for Radiation Oncology (with the latter two new additions since the original May 20 message to House leaders). They asked lawmakers to protect current tax provisions and avoid potential harm to vulnerable private practices.
“Our professions already face rising costs for staffing, equipment, technology, and continuing education efforts. Any added tax burden will make it difficult for small practices to survive,” doc groups wrote Senate Majority Leader John Thune, R-S.D., and Majority Whip John Barrasso, MD, R-Wyo., on June 9. “Eliminating the PTET deduction could lead to staff reductions, service limitations, and even practice closures, directly affecting patients’ access to care. We strongly urge Congress to restore the PTET deduction as the Senate deliberates on the reconciliation bill. The undersigned healthcare organizations, representing millions of healthcare professionals, support an amendment to protect PTET deductibility and ensure that small dental and medical businesses are treated fairly under the tax code.”
In its own statement, the American Institute of CPAs said it appreciates the Senate’s effort to “improve and correct” the House’s targeting of small businesses. However, it remains concerned the Senate proposal would still result in a “tax increase for all pass-through entities.”
“As we continue to analyze the bill’s language and its impact on the business community and taxpayers, we look forward to working with Congress to recommend improvements,” American Institute of CPAs President & CEO, Mark Kozie said in a statement June 17.
Thomson Reuters has further details on the different tax implications stemming from the Senate and House bills.
Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic.