Legislation aims to lift tax on Veterinary Medicine Loan Repayment Program

AVMA urges veterinarians contact lawmakers in support of VMLRP Enhancement Act

March 8, 2017 (published)
By Jennifer Fiala

Lawmakers reintroduced a bill last week to make grants by the Veterinary Medicine Loan Repayment Program, or VMLRP, exempt from federal income taxes.

The proposed VMLRP Enhancement Act — HR 1268 and S 487 — would eliminate the 39 percent tax paid by the VMLRP on the grants it awards. The work-incentive program provides up to $25,000 a year for three years in student-loan payments to practitioners who pledge to work in federally recognized shortage areas.

The tax payments, equal to 39 cents per dollar granted, are covered by the program, administered by the U.S. Department of Agriculture's National Institute of Food and Agriculture. NIFA makes tax payments directly to the Internal Revenue Service on participants' behalf. Award recipients who receive the full $75,000 benefit actually cost the VMLRP $104,250, which includes $29,250 in taxes.

That money could be used to attract more veterinarians to shortage areas, and it's unfair, asserts the American Veterinary Medical Association, which supports efforts to lift the tax on VMLRP grants. Similar incentive programs for professionals in human health are exempt from federal tax.

"Since the program's implementation in 2010, 388 awards have gone to veterinarians practicing in 45 states, Puerto Rico and U.S. federal lands," AVMA officials wrote Tuesday in a blog post. "… Without this tax, about 100 additional shortage areas could have benefited from veterinarians participating in the program to date."

The VMLRP is designed to offset veterinarians' student-loan debt, thereby making it easier to live and work in areas where opening a practice might be cost-prohibitive. In November, USDA issued more than $4.3 million in VMLRP awards to 48 veterinarians to help repay a portion of their student loan debt in exchange for serving in shortage areas.

AVMA leaders are urging members to contact their elected officials in support of the VMLRP Enhancement Act. The concept isn't new, the association said in the blog post. Initially introduced in 2011, the initiative has failed to pass during previous congressional sessions despite broad bipartisan support.

"This legislation would provide a tremendous benefit to both veterinarians and rural communities, and the AVMA strongly supports this bill," officials said. "Your voice can make a difference, too."

AVMA members who are interested in contacting their representatives and senators about the VMLRP Enhancement Act can do so on the AVMA's Congressional Advocacy Network. A complete list of federal lawmakers can be found on the Library of Congress website.

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