Lawmakers seek tax exemption for veterinary program

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A bipartisan group of House and Senate lawmakers is seeking to make Veterinary Medicine Loan Repayment Program awards tax-exempt so more veterinarians can practice in parts of the country where their services are in short supply.  

The Veterinary Medicine Loan Repayment Program offers participants up to $25,000 annually to pay down their student debt in exchange for three years of work in areas designated by the Department of Agriculture as lacking sufficient veterinary services—mostly rural communities with livestock populations. 

Congress authorized the VMLRP a decade ago, and the program is funded at approximately $4.8 million annually. Of the 260 program applicants in 2012, 62 were selected to participate. 

The VMLRP is modeled after the National Health Services Corps, a federal initiative encouraging human medicine providers to work in shortage areas. NHSC awards have been exempt from federal taxation since 2004, while those made by its veterinary counterpart are taxed at an annual rate of 39 percent. So for each $25,000 award, the USDA pays $9,750 to the Internal Revenue Service out of the total VMLRP appropriation. Over a three-year period, the tax bill is $29,250.  

The AVMA and more than 150 supporters of the VMLRP point out that eliminating the tax would free up enough money for as many as 20 additional veterinarians to serve in underserved areas with no additional funding from Congress.

And with that goal in mind, Sen. Tim Johnson and Rep. Kurt Schrader on March 14 introduced the Veterinary Medicine Loan Repayment Program Enhancement Act in their respective chambers of Congress (S. 553/H.R. 1125). Previous attempts to pass the legislation have been unsuccessful.

“The Veterinary Medicine Loan Repayment Program is a critical tool to expanding access to veterinary care,” Johnson said. “Our legislation has the potential to increase the number of veterinarians placed in underserved and shortage areas by more than 30 percent.”