June 21, 2005
The Honorable Olympia J. Snowe
RE: Comments on S. 723, The SIMPLE Cafeteria Plan Act of 2005
Dear Senator Snowe:
On behalf of the approximately 350,000 members of the American Institute of Certified Public Accountants (AICPA), I would like to commend you for introducing S. 723, The SIMPLE Cafeteria Plan Act of 2005. The AICPA has long held the position that the law should be simplified and expanded so that small businesses are allowed to offer the same health insurance and savings options currently available to employees of large companies and government agencies. We believe that your bill, if enacted as introduced, would accomplish that objective.
We applaud the fact that this bipartisan legislation would amend the tax code so that owners of small businesses, including sole proprietors, partners and all S-corporation stockholders, could participate in a cafeteria plan if they work in the business. This bill would enable them and their non-owner employees to be able to purchase employer-provided health insurance and other benefits with pre-tax dollars.
In addition, we support the bill's provisions that would: (1) allow cafeteria plans of all sizes to offer long-term care insurance as an optional benefit; (2) permit the carryover of unused flexible spending accounts funds; (3) simplify and increase dependent care accounts; and (4) curtail the "use it or lose it" rule, which causes employees to forfeit their own dollars to their employers because they did not need to spend those dollars on health care or dependent care.
We believe that now is the time to allow small businesses to offer the same health insurance and savings options currently available to employees of large companies and government agencies. We recognize there is a significant revenue cost associated with this simplification reform. However, the longer Congress postpones fixing this problem, the greater will be the ultimate revenue and economic burden.
We appreciate your leadership on this important topic and welcome the opportunity to share our comments on S. 723. Please feel free to contact me at 402-280-2062 or Lisa Winton, AICPA staff, at 202-434-9234 if we can be of further assistance.
Thomas J. Purcell, III
Chair, Tax Executive Committee
cc: Senator Christopher S. Bond
Senator Jeff Bingaman