Years of DTA members’ efforts to educate Congress have come to fruition with a significant victory for the dental industry in the passage of the Protecting Americans from Tax Hikes (PATH) Act. This act suspends the Medical Device Excise Tax, makes permanent several lapsed business incentives and renews a handful of provisions that are pertinent to the dental industry.
“While many organizations lobbied against the medical device tax, DTA was front and center with a small group of members of Congress that, in the end, were almost solely responsible for its modification,” said DTA President and CEO Gary Price. “All of us owe a great debt to the many DTA volunteers who came to Washington multiple times to lobby on this issue. These members will tell you how important it is to be involved and be persistent in your message. If you haven’t joined us for our Washington day, you should make plans to attend in 2016. Now you can see that it actually works.”
The PATH Act received bipartisan support in both the House and the Senate. While one can argue the benefits and the costs of such sweeping legislation, it is generally accepted that this bill, on the whole, will have a positive net effect for the dental industry and for dental manufacturers.
“The DTA and its members have supported a repeal of the Medical Device Excise Tax since its inclusion in the PPACA,” said DTA Chairman Eric Shirley. “DTA and its members have worked tirelessly to explain the consequences of the tax during the Washington Conference, our legislative event on Capitol Hill, and in many discussions with members of Congress. Thank you to all of the many members of the DTA and for the DTA staff who drove these efforts.”
The PATH Act has many positives for the dental industry. Here are some of the highlights of the act, pertinent to the dental industry. We encourage you to seek additional counsel as to how these provisions will impact your company.
Medical Device Excise Tax Suspended
The Medical Device Excise Tax is suspended for sales in 2016 and 2017.
Research and Experimentation Credit Made Permanent
For taxable years beginning after 2015, the credit is modified to allow an eligible small business (as defined in section 38(c)(5)(C)) to claim the credit against both its regular tax and alternative minimum tax (AMT) liabilities. Beginning in 2016, certain small businesses also may claim the credit against the employer portion of their payroll tax liability, rather than against their income tax liability.
Increased Expensing Limits Under Section 179 Made Permanent
The increased expensing limit and phase-out threshold under section 179, $500,000 and $2 million, are now permanent. Those amounts had fallen to $25,000 and $200,000, respectively. Additionally, the extension bill permanently allows taxpayers to expense off-the-shelf computer software and qualified real property (i.e., qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property) under section 179, provisions that also lapsed at the end of 2014.
Bonus Depreciation For Qualified Property
The act extends bonus depreciation for qualified property placed in service over the next five years, subject to a phase-out schedule:
- 50 percent bonus depreciation in 2015, 2016, and 2017
- 40 percent in 2018
- 30 percent in 2019
After 2015, the bill allows bonus depreciation to be claimed on qualified improvement property regardless of whether the property is subject to a lease, and removes the requirement that an improvement be placed in service more than three years after the building was placed in service.
We hope to see you at the Washington Conference in April where we’ll continue to make inroads with Congress to support the dental community and oral health.