The American Institute of Certified Public Accountants (AICPA) has written Senator Olympia Snowe (R-ME) commending her introduction of S. 723, the SIMPLE Cafeteria Plan Act of 2005. The SIMPLE Cafeteria Plan Act, introduced in April, amends the Internal Revenue Code of 1986 to allow small businesses to set up simple cafeteria plans to provide nontaxable employee benefits such as flexible spending accounts to their employees.
“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,” Tom Purcell, Chair of the AICPA’s Tax Executive Committee and an Associate Professor of Accounting and Professor of Law at Creighton University in Omaha, wrote in a letter to Senator Snowe.
The AICPA is a longstanding supporter of simplifying and expanding the law governing the establishment of cafeteria plans so small business employees can also benefit. The AICPA also endorsed other provision of S. 723 allowing cafeteria plans of all sizes to offer long-term care insurance as an optional benefit; permit the carryover of unused flexible spending account funds; simplify and increase dependent care accounts, and curtail the “use it or lose it” rule, which causes employees to forfeit their own dollars to the employers when the dollars are not spent on health 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,” Purcell stated.