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Key takeaways: A heavily marketed tax package tells dentists to place their practice in a trust, run income through trust layers, and borrow against life insurance to live on “tax-free” dollars at effective tax rates far below what any practice owner normally pays. The IRS has formally called these arrangements abusive since 1997, courts have rejected them for more than four decades, and in 2025 a dentist who bought one was sentenced to 41 months in federal prison. This article explains the pitch, the law, and what actually works.

If you practice dentistry long enough, someone will eventually pitch you this structure at a seminar, a study club, or over dinner with a colleague: put your practice in a trust, let the trust “own” the income, add a charitable entity on top, buy cash-value life insurance inside the structure, and borrow against the policy to spend untaxed dollars. The promoter, often calling himself a tax strategist, promises a dramatically reduced effective tax rate, sometimes pitched in the single digits or low teens, plus bulletproof lawsuit protection.

We researched this structure thoroughly for our clients. Here is what the tax law, the Tax Court, and the Department of Justice have to say about it.

What is the trust tax shelter being pitched to dentists?

These packages are typically sold at practice-management and asset-protection seminars for a one-time fee of roughly $25,000 to $50,000. The promoter creates a layered structure: a “business trust” that purportedly owns the practice, a “family trust” that holds the home and personal assets, and often a “charitable trust” or private family foundation at the top of the stack. Practice receipts are deposited into the trust accounts, personal living expenses are recharacterized as trust expenses or charitable contributions, and the practitioner is told the income now “belongs” to the trusts. Cash-value life insurance is frequently layered in: the trust or an affiliated benefit plan buys a policy, and the practitioner takes policy loans to spend untaxed dollars.

Variations exist, including packages built around a “non-grantor, irrevocable, complex, discretionary, spendthrift trust” said to exclude income under section 643 of the Internal Revenue Code, but the architecture and the promises are the same.

The common thread in every version: the practitioner keeps doing exactly what he or she did before. The same dentist treats the same patients in the same operatories, lives in the same house, and spends the same money. Only the paper changes.

What does the IRS say about trust tax schemes?

The IRS has warned about these structures by name for nearly three decades. Notice 97-24, 1997-1 C.B. 409, describes the layered business-trust, family-residence-trust, and charitable-trust format and states that such arrangements will be disregarded or recharacterized. The IRS maintains a standing Abusive Trust Tax Evasion Schemes enforcement program and has featured trust schemes repeatedly in its annual Dirty Dozen list of tax scams.

Most recently, IRS Chief Counsel memorandum AM 2023-006 addressed the current “section 643 spendthrift trust” pitch and concluded that its central claim, namely that capital gains and extraordinary dividends allocated to corpus escape tax, rests on quoting the statute out of context. A non-grantor trust is a separate taxpayer that reports and pays tax on that income in full.

Why doesn’t putting your dental practice in a trust reduce taxes?

The structure fails under three settled doctrines, and any one of them is independently fatal.

  1. Assignment of income. Since Lucas v. Earl, 281 U.S. 111 (1930), income from personal services has been taxed to the person who performs the services, regardless of any contract or instrument directing payment elsewhere. Dental fees are quintessential personal-service income: they exist because a licensed dentist performed the procedure. A trust cannot perform dentistry, and no assignment, however elaborately drafted, moves that income off the practitioner’s return. For a dentist who remains the practice’s primary provider, this doctrine alone disposes of the structure.
  2. The grantor trust rules. Under Internal Revenue Code sections 671 through 677, a person who transfers property to a trust but retains control or benefit (powers over distributions, continued use of the residence, or effective access to the accounts) is treated as the owner of the trust, and the trust’s income is reported on that person’s individual return. The promoted packages depend on the practitioner retaining exactly this control, which is precisely what makes the trusts transparent for tax purposes.
  3. The sham-trust doctrine. Courts disregard trust arrangements that change nothing economically real. The leading case involves a dentist. In Markosian v. Commissioner, 73 T.C. 1235 (1980), the taxpayer conveyed his dental practice, his home, and even his “lifetime services” to a family trust, then continued practicing in the same office with the same equipment while the trust paid the household bills. The Tax Court held the trust was an economic “nullity” and taxed all of the income to him, identifying four factors: the taxpayer’s relationship to the property did not change; no independent trustee stood between the family and the funds; no other beneficiary economically benefited; and the taxpayer treated the trust property as his own. Every promoted package of this type exhibits all four factors by design.

The later cases are uniform. Zmuda v. Commissioner, 731 F.2d 1417 (9th Cir. 1984), disregarded a layered chain of purported business trusts as shams. Vlach v. Commissioner, T.C. Memo. 2013-116, involved a physician who routed clinic income through a promoter-designed web of trusts capped by a “charitable” entity; the Tax Court held all three trusts were shams, restored the income to the physician’s return, and sustained accuracy-related penalties.

Doesn’t the IRS have to pierce the corporate veil?

A common question, and the actual rule is less favorable to the taxpayer than veil-piercing. Piercing a corporate veil is a remedy a creditor must affirmatively establish. In the tax cases above, the courts simply treat the trusts as if they do not exist because they lack economic substance, and the burden in a deficiency case rests largely on the taxpayer to prove otherwise. The practitioner ends up where he or she started, taxed on all of the income, plus interest and penalties, less the promoter’s fee. Federal disregard also does not depend on state-law validity: a trust can be perfectly valid under state trust law and still be ignored for federal income tax purposes.

How do state laws treat trust-owned dental practices?

Every state regulates who may own and operate a dental practice, and the trust packages are usually sold with no attention whatsoever to these rules. Under the corporate practice of dentistry doctrine, many states permit only licensed dentists, or professional entities owned by licensed dentists, to own a practice at all. Colorado’s flat prohibition played a central role in the criminal case discussed below: the dentist’s own attorneys and CPAs told him a trust could not own a dental practice there, and he proceeded anyway. Other states permit a non-dentist entity, such as a dental support organization, to hold non-clinical assets and provide management services, but reserve the practice itself, the patient relationships, and all clinical decisions to licensed dentists. A promoter selling the identical trust package in all fifty states has, by definition, accounted for none of this, and an ownership structure that violates the practice act creates licensing exposure on top of the tax problems.

Washington illustrates the more permissive end of the spectrum, and the structure still fails there. Only a licensed dentist may practice dentistry in Washington, and corporations and similar unlicensed entities are prohibited from practicing dentistry or soliciting dental patronage, which is a gross misdemeanor, with each day treated as a separate offense (RCW 18.32.675). Since 2017, Washington has permitted an unlicensed entity such as a dental support organization to own or lease practice assets and provide business-support services, but the entity may not own patient records and may not interfere with the dentist’s clinical judgment (Senate Bill 5322 (2017), amending RCW 18.32.675). Even where a trust could lawfully hold equipment and a lease, Washington law keeps the dentistry itself, the activity that generates the fees, personal to the licensed dentist, which is exactly what makes the assignment-of-income doctrine fatal to the tax pitch.

The lawsuit-protection half of the package also depends on state law, and in most states it fails outright. The majority rule, which Washington follows by statute, is that a self-settled trust, meaning a trust a person funds for his or her own benefit, is void as against that person’s existing and future creditors (RCW 19.36.020). A trust a dentist funds and controls offers essentially no shield against the dentist’s own malpractice or business creditors, which is the principal risk these packages claim to address. A minority of states do authorize domestic asset protection trusts, but those regimes require an independent trustee, genuine surrender of control, and statutory waiting periods, and they carry exceptions for fraudulent transfers and certain creditor classes. That is nothing like the keep-total-control structure sold at the seminars.

State taxes are the final piece, and the trust does not help there either. Washington imposes no personal income tax, so any claimed effective-rate reduction for a Washington dentist is entirely a federal proposition, and Washington’s business and occupation tax falls on the practice’s gross receipts no matter what entity holds them. In states that do impose an income tax, trusts do not escape it: states generally tax trust income to resident trusts, grantors, or beneficiaries under their own conformity and residency rules, and a trust disregarded federally as a sham will generally be disregarded for state income tax as well. How any of these rules applies to a particular arrangement is a legal question for a licensed attorney in the relevant state.

Can you really borrow against life insurance tax-free?

Borrowing against a personally owned life insurance policy funded with after-tax dollars is legitimately tax-free while the policy remains in force. That kernel of truth is what the pitch is built on. The abuse lies in attempting to fund the policy with untaxed dollars, and the courts have rejected every variation:

  • Wegbreit v. Commissioner, T.C. Memo. 2019-82, aff’d, No. 20-1306 (7th Cir. Dec. 29, 2021): a business interest was moved into a trust that purchased an offshore private-placement life insurance policy, and the owner took over $3 million in “policy loans.” The trust was held a sham, the loans were taxable income, and the 75 percent civil fraud penalty was sustained.
  • Neonatology Associates, P.A. v. Commissioner, 115 T.C. 43 (2000), aff’d, 299 F.3d 221 (3d Cir. 2002): physicians deducted contributions to a welfare-benefit plan funneling money into cash-value life insurance for their own benefit. Deductions denied; penalties sustained.
  • Curcio v. Commissioner, 689 F.3d 217 (2d Cir. 2012): deductions denied for a section 419 plan funding cash-value policies for owners; employees may not “disguise their investments in life insurance as deductible” expenses “when those investments accumulate cash value for the employees personally.” Twenty percent negligence penalties upheld.
  • De Los Santos v. Commissioner, 156 T.C. No. 9 (2021): premiums paid by a physician’s S corporation under a split-dollar arrangement produced taxable compensation income to the physician.

The consistent result: pre-tax dollars in, “tax-free” loans out, does not survive examination. Either the deduction is denied going in, or the loan is recharacterized as income coming out, and sometimes both, with penalties.

What if the dentist is not the main provider?

Promoters sometimes adjust the pitch for owners who have stepped back from daily clinical work: if associates generate the production, the argument goes, the practice income is no longer personal-service income and can safely belong to the trust. The variation removes the structure’s weakest point but not its fatal ones.

It is true that the assignment-of-income doctrine attaches to income from the taxpayer’s own services, so revenue produced by associate dentists looks more like business income than assigned earnings. Everything else survives intact. The grantor trust rules pull the income back to any owner who retains control or benefit over the trust regardless of who treats patients, and retained control is the design of every promoted package. The sham-trust doctrine likewise turns on economic reality rather than on clinical production. Wegbreit is the clearest illustration: the asset moved into the trust there was a financial-services business interest, personal services were never the issue, and the trust was still held a sham with fraud penalties. In addition, any services the owner does continue to perform, including management and oversight, require reasonable compensation reported and taxed to the owner personally. “Not the primary provider” must be factually true and documented, not merely asserted.

Even a version executed without any abusive element fails to deliver the promised rate, because federal trust brackets are sharply compressed. A genuinely irrevocable non-grantor trust with an independent trustee is a real taxpayer, and for 2026 it reaches the top 37 percent federal rate at only $15,650 of retained taxable income, with the 3.8 percent net investment income tax applying above the same threshold, while a married couple filing jointly does not reach the 37 percent bracket until taxable income of roughly $640,000. Retaining income in the trust raises the tax bill relative to individual ownership. There is no configuration, primary provider or not, in which this structure legitimately produces the advertised rates. The low rate in the pitch comes entirely from the abusive elements.

Where a trust genuinely fits an owner who has stepped back from production is wealth transfer, not income tax reduction: gifts or sales of non-voting interests in a properly structured entity to irrevocable trusts to move future appreciation out of the taxable estate. Those are established estate-planning techniques in which someone still pays income tax at ordinary rates each year.

Can you shift income to a spouse or children instead?

Assignment to a spouse is the original losing fact pattern: Lucas v. Earl itself involved a contract assigning half of the taxpayer’s earnings to his wife, and the Supreme Court taxed all of it to the earner, holding that the fruit cannot be attributed to a different tree from that on which it grew. For most married couples the exercise is also pointless, because a joint return already combines both spouses’ income at a single marginal rate. Paying a spouse a wage for real work in the practice is legitimate, but the wage lands on the same joint return and adds payroll tax, although it can support retirement plan contributions and certain benefits.

Shifting income to children runs into two separate walls. First, service income cannot be assigned to anyone, children included. Second, investment or trust income can be shifted in principle, but only by genuinely giving away the income-producing property itself. Under Helvering v. Horst, 311 U.S. 112 (1940), a taxpayer who keeps the property and merely directs its income to a family member is still taxed on that income; the tree must go with the fruit. Even completed gifts largely fail for minors because of the kiddie tax under section 1(g): a child’s unearned income above a small indexed threshold (roughly $2,700) is taxed at the parents’ top marginal rate, whether it arrives directly or as trust distributions, and the rule reaches children under 18 and most full-time students under 24. What remains legitimate is a wage paid to a child for real, age-appropriate work at a market rate, documented properly. Where family members hold real equity, section 1366(e) and the family partnership rules allow the IRS to reallocate income back to any family member who is undercompensated for services actually rendered.

Income the trust retains is taxed at compressed trust brackets. Income the trust distributes is taxed to the beneficiaries, with the kiddie tax applying to minors. Income of a trust the owner controls is taxed to the owner. In no branch of that decision tree does the income go untaxed. The only questions are whose return it lands on and at what rate, and none of the answers comes close to the rates in the sales pitch.

What happens to dentists who use these schemes?

The consequences are no longer hypothetical or merely civil. In 2016, Dr. Ryan Ulibarri, owner of a family dental practice in Fort Collins, Colorado, paid $50,000 for precisely this package: a business trust, a family trust, a charitable trust, and a private foundation. He moved the practice into the business trust and ran several million dollars of practice income through the structure from 2017 to 2022, deducting personal expenses (mortgage, vacations, boats) as trust and charitable expenses. He pleaded guilty to six counts of tax evasion in February 2025 and in June 2025 was sentenced to 41 months in federal prison, three years of supervised release, a $150,000 fine, and approximately $1.6 million in restitution. His own attorneys and CPAs had warned him that Colorado law did not permit a trust to own a dental practice; proceeding anyway featured prominently in the government’s case.

Promoters fare no better, and their client lists become the government’s audit roadmap. In June 2026, a federal jury convicted four promoters who sold the same four-entity trust package nationwide, marketed as eliminating tax on “upwards of 98 percent” of business profits, in a scheme the Department of Justice tied to roughly $40 million in tax loss. When a promoter is investigated, the IRS routinely obtains customer files, and purchasers become examination candidates. Promoters are also subject to civil penalties under section 6700 for promoting abusive tax shelters.

For the practitioner, the exposure looks like this: on examination, the trusts are disregarded, all income returns to the individual, and the resulting deficiency carries interest plus a 20 percent accuracy-related penalty (section 6662) or, where intent is established, a 75 percent civil fraud penalty (section 6663). Fraud leaves the statute of limitations open indefinitely, so exposure never ages out, and the most serious cases are referred for criminal prosecution under section 7201. Reliance on the promoter’s marketing materials or in-house opinion letters has repeatedly failed as a penalty defense; courts expect advice from an independent professional, not from the seller of the arrangement.

One more note on the effective-rate claims used in the sales pitch: a practice owner producing typical dentist-owner income cannot reach the single-digit or low-teens effective federal rates these pitches advertise through legitimate planning; the arithmetic does not get there. A reported rate at that level is a red flag for the structure itself, not evidence that it works.

What are legitimate tax strategies for dentists?

Practitioners drawn to these packages usually have substantial unrealized savings available through conventional, defensible planning: entity structure and compensation optimization; qualified retirement plans, where a 401(k) with profit sharing paired with a cash balance defined-benefit plan can generate six-figure annual deductions the law intends; health savings accounts; employment of family members who perform real work at market wages; cost segregation where the practitioner owns the building; and properly documented charitable giving. None of these produces a single-digit effective rate on a high income, because nothing legitimate does, but they produce substantial, durable savings that survive examination.

The bottom line

The trust-plus-life-insurance package is an abusive arrangement with a documented losing record spanning more than four decades, a standing IRS enforcement program aimed at it, and recent felony convictions of both a purchasing dentist and the promoters of a materially identical product. If someone presents this structure to you, have the materials reviewed by an independent CPA and a tax attorney before signing anything or paying any fee. Ten minutes of review is considerably cheaper than 41 months.

Questions about a structure you have been pitched, or about what defensible tax planning looks like for your practice? Contact Dental Accounting Group. We work exclusively with dental professionals, and we would be glad to run projections for your situation.

This article is provided for general informational purposes only and is based on federal tax authorities, public court records, and government publications available as of the date above, which are subject to change. It is not, and should not be relied upon as, tax, legal, or accounting advice for any specific taxpayer, and it is not an opinion on the laws of any state, including professional licensing, practice-ownership, trust, or asset-protection law; those questions should be directed to a licensed attorney. No specific promoter, company, or product is evaluated or referenced in this article. This content was prepared in accordance with the AICPA Statements on Standards for Tax Services. It was not written to be used, and cannot be used, for the purpose of avoiding penalties that may be imposed on any taxpayer. Application of the authorities discussed to any specific situation requires a separate engagement and analysis of that taxpayer’s facts. Positions taken on any tax return remain subject to examination by taxing authorities.

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INSURANCE 1099 MISREPORTING: IRS NOTICES HITTING DENTAL PRACTICES

*If your practice has received an IRS notice, such as an IRS CP2000 notice or similar income mismatch letter, you are not alone. A growing number of dental practices across the country are receiving these notices as a direct result of errors on 1099s filed by dental insurance companies — not errors made by the practice.

Insurance companies report payments made to dental practices each year on Form 1099-MISC or 1099-NEC. The Internal Revenue Service cross-references those third-party reports against the income reported on your tax return for that tax year. When the numbers don’t match, the IRS sends a 1099 income mismatch IRS notice — even when the practice reported its income correctly.

We are seeing this issue with increasing frequency among our clients, and the burden of resolving it falls entirely on the practice owner. For many business owners, this creates unnecessary stress during tax season and tax time. Understanding why these discrepancies occur and how to protect yourself is essential.

Why These Mismatches Happen

Insurance companies handle payment data for thousands of providers. Clerical errors are a well-documented problem, and dental practices are particularly susceptible to a handful of specific scenarios:

ScenarioWhat HappensWhy It Matters
EIN / SSN MismatchAn insurance company’s records incorrectly associate a PLLC’s Employer Identification Number (EIN) with another provider’s Social Security Number. Payments made to one provider end up reported under a different taxpayer’s identification number.The IRS may flag your return as underreporting income that was actually paid to — and reported by — someone else entirely.
Claim Payment MisreportingInsurance payments related to claims adjustments, retroactive fee schedule changes, or year-end true-ups are sometimes reported in the wrong tax year or duplicated across multiple 1099s.Your reported income may be lower than what the insurer filed, triggering an IRS mismatch notice even though no income was missed.
Practice Sale or AcquisitionWhen a practice changes hands mid-year, insurance companies often struggle to split 1099 reporting cleanly between the old and new taxpayer. Payments may be reported entirely under one EIN when they should be split, or reported under the wrong entity after a transition.Both the selling dentist and the acquiring dentist can receive IRS notices for income that belongs to the other party. Transition years are the highest-risk period.
Name / Entity ChangesA change in practice name, entity type, or banking information can cause an insurer’s records to fall out of sync. Payments made post-transition may be reported under the old entity’s information.The result can be a 1099 issued to an entity that no longer exists, or duplicate reporting under both the old and new entity.

The Real Cost to Your Practice

Receiving an IRS notice does not mean you did anything wrong. But it does mean you have a problem to solve — and that takes time and money.

Practice owners who receive income mismatch notices typically face:

  • CPA or advisor time: Researching the discrepancy, gathering copies of all tax documents, and preparing a written response to the IRS requires professional time and often a consultation with a tax advisor or CPA.
  • Owner time: Gathering records, reconciling invoices, reviewing pay stubs where applicable, and coordinating with the insurance company to obtain corrected 1099s.
  • Stress and uncertainty: Even when the error is clearly the insurer’s fault, IRS notices create anxiety and distraction.
  • Potential penalties and interest: If an IRS notice is not handled properly, the agency may assess taxes, penalties, and interest, and in some cases apply backup withholding rules if taxpayer information is incorrect.

The error originated with a third-party issuer. The cost of resolving it falls on you. This is exactly the kind of issue that proper recordkeeping and proactive review are designed to minimize.

What You Can Do to Protect Your Practice

1. Keep All 1099s from Insurance Companies on File

Every 1099 you receive from a dental insurance company should be saved — permanently digitized and organized by tax year. Do not discard these documents after filing your income tax return. If the IRS questions your income years later, these records are essential for clarification.

DAG Recommendation: Retain all 1099s for a minimum of 7 years. This supports audit readiness and aligns with IRS lookback periods under current tax law.

DAG Recommendation: Retain all 1099 forms received from insurance companies and other healthcare payers for a minimum of 7 years. This covers the IRS’s extended 6-year lookback period for substantial understatement of income (IRC §6501(e)) plus a one-year buffer. Digitize and store them in a consistent folder structure organized by tax year.

2. Reconcile Your 1099s Against Your Practice Management Software

Before your tax return is filed, compare all 1099 totals against your internal records. Any mismatch should be addressed immediately with the insurer, and a corrected form should be requested if needed.

If a 1099 appears to overstate your income, contact the insurance company’s provider relations department immediately and request a corrected Form 1099. Document all communications in writing.

3. Flag Transition Years for Extra Attention

If your practice was sold, acquired, or restructured in the last two years, notify your DAG advisor so we can review your 1099 reporting carefully during the tax preparation process. Transition years are the most common source of multi-party mismatches, and the window to correct errors is narrow.

This is also true if you changed entities — for example, converting from a sole proprietorship to a PLLC — or if you updated your EIN or banking information with any insurance company during the year.

4. Respond to IRS Notices Promptly and with Documentation

If you receive an IRS CP2000 or similar income mismatch notice, do not ignore it. The IRS is not necessarily asserting that you owe money — it is asking you to explain a discrepancy. A well-documented response that shows your reported income, your 1099s, and your practice management records can resolve the issue without any tax liability.

Forward any IRS notice to your DAG advisor as soon as you receive it. Response deadlines are typically 60 days from the notice date and cannot be extended without IRS approval.

5. Verify Your Taxpayer Information on File with Each Insurer

Once per year — or any time your practice changes its name, EIN, banking information, or entity structure — contact your major insurance payers to confirm that the taxpayer name and EIN on file match your current legal entity. A mismatch in the insurer’s records is the root cause of most EIN/SSN confusion errors.

Request written confirmation and keep it on file alongside your 1099s for that year.

The Bottom Line

Insurance company 1099 errors are a third-party issue, but the responsibility for resolving them falls on the practice owner. The dental practices that avoid prolonged IRS issues are those with organized records, consistent reconciliation processes, and proactive CPA support.

If you have received an IRS notice, need clarification, or want to strengthen your reporting process, contact your DAG advisor. We can help you review documentation, respond to the IRS, and reduce the risk of future discrepancies.

Disclaimer: This article is prepared by Dental Accounting Group (DAG) for general informational purposes only and does not constitute legal, tax, accounting, or investment advice. Information is based on sources believed to be reliable as of the publication date but may become outdated or superseded. Tax laws and regulations are subject to change. Individuals and businesses should consult with a qualified professional advisor regarding their specific circumstances before making any financial, tax, or legal decisions.
© 2026 DG Accounting Professionals LLC. All Rights Reserved.

Dental Accounting Group  •  Bellevue, WA  •  cpa4dds.com  •  425.216.1612

© 2026 DG Accounting Professionals LLC. All Rights Reserved.

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Save More. Do More. Stay Independent. — How Clients Use BEST for Dentistry to Reduce Operating Expenses

Published by Dental Accounting Group | The Successful Dentist™ | March 2026 | Partner Spotlight

As your trusted accounting partner, we are always looking for the best ways to help your dental practice reduce overhead costs, improve cash flow, and operate more efficiently. That’s why we’re excited to highlight a partnership that’s already delivering real, measurable savings for independent dental practices — helping practice owners strengthen their bottom line while maintaining high-quality patient care and a strong patient experience.

What Is BEST for Dentistry?

BEST for Dentistry (Building Everyone’s Success Together) is a group purchasing and practice management solutions network built specifically for independent dental practices and dental offices. Its mission is simple: level the playing field against corporate dentistry by giving independent offices access to the same buying power, lower prices, resources, and expertise that large DSO groups enjoy.

Premium membership provides access to:

  • Dental Supplies & Equipment
  • PPO Solutions
  • Compliance Training
  • Dental Labs
  • Group Health Insurance
  • Retirement Benefits
  • Human Resources Support
  • Tax & Financial Experts
  • Patient Financing
  • Payment Processing
  • Practice Technology
  • Front Office Solutions

These tools support better inventory management software, improved efficiency at the front desk, and a more connected digital space for managing your dental services and daily operations.

What Are Practices Actually Saving?

Below is an anonymized breakdown of average savings per participating client, organized by solution category. Only practices actively using each solution are included in that category’s average.

Solution CategoryVendor PartnerClients UsingAvg. Savings / ClientYear 1 Net*
Dental SuppliesBurkhart10 of 16$27,213$27,213
Aligner SolutionsSpark2 of 16$5,281$5,281
Compliance Trng.Etactics4 of 16$4,219$4,219
Implant SystemsStraumann5 of 16$2,794$2,794
* Year 1 Net: DAG clients receive their first 12 months of membership free (promo code: DAG), so Year 1 savings equal gross savings with no membership fee deducted. Standard annual membership is $2,189/yr ($199/mo). Year 2+ net savings = Avg. Savings − $2,189.

Overall Average — Per Active Client

Across all solution categories combined, here is what the average participating practice saved — before and after the annual membership fee. These savings can significantly impact profit margins, reduce variable costs, and improve overall practice profitability.

Avg. Gross Savings / ClientAnnual Membership FeeAvg. NET Savings / Client
$26,200Active clients (12 of 16)−$2,189After Year 1 free trial$24,014Year 2+ (after membership fee)

Note: Averages reflect 12 of 16 participating practices actively utilizing at least one BEST solution (CY2024–Q3 2025). Results will vary based on practice size, services used, and purchasing volume.

How to Become a Member

Join our network of independent dental practices to boost practice success, streamline operations, and maintain autonomy — while unlocking new revenue opportunities and gaining access to tools that improve efficiency across your team members and practice manager workflows.

Participation can also support better scheduling, reduced chair time gaps, and more effective handling of upcoming appointments, insurance companies, and treatment plan coordination.

  1. Visit BESTforDentistry.com
  2. Click “JOIN NOW”
  3. Complete quick registration
  4. Select monthly payment option and enter code “DAG” to receive first 12 months free
  5. Our team will contact you to complete your onboarding

Questions? Contact us: 877-669-6320  |  bestfordentistry.com  |  in**@**************ry.com

DAG has not received financial benefits for endorsing BEST for Dentistry. They are our preferred group purchasing partner because of the measurable value delivered to independent dental practices. Results will vary based on practice size, services used, and purchasing volume. This article is for informational purposes only.
© 2026 DG Accounting Professionals LLC. All Rights Reserved.

Dental Accounting Group  •  Bellevue, WA  •  cpa4dds.com  •  425.216.1612

© 2026 DG Accounting Professionals LLC. All Rights Reserved.

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Cyber Security News: Fake PDF Reader Scam — Make Your Office Admin Aware!

Published by Dental Accounting Group | The Successful Dentist™ | March 2026

Article Body

CRC Technologies collaborates with DAG to help keep our clients informed on the latest cyber threats and cybersecurity risks impacting dental practices. CRC provides managed IT services, backed by over two decades of industry experience, to over 375 dental practices across the Pacific Northwest, helping protect sensitive data, personal information, and critical systems from cybercriminals and attackers.

Fake PDF Reader Scam: Make Your Office Admin Aware!

CRC is seeing an uptick in two common attack methods targeting small businesses: “free” PDF readers and malicious Excel files. In the first case, someone searches online for a PDF reader, converter, or “editor” and ends up downloading software that looks legitimate but is actually bundled with malware, spyware, or other malicious code. These fake PDF converters and fake sites often mimic official websites or trusted brand elements, making them difficult to identify. These installers can add hidden background tools that track activity, steal passwords, capture login credentials, and create a foothold for a larger compromise or data theft involving sensitive information and bank accounts.

With Excel files, we’re seeing more suspicious documents designed to trick users into enabling risky features. These often arrive by email and look like routine spreadsheets labeled as invoices, statements, payroll, or reports, but then prompt you to “Enable Content” or “Enable Macros” to view the file properly. That prompt is one of the biggest red flags: macros can run malicious code on your computer and are a common malware delivery method used by hackers, threat actors, and cybercriminals. If an Excel file is asking to enable macros or is throwing a malware alert, stop and do not proceed.

CRC’s security protections are designed to detect and block these threats by scanning downloads, suspicious PDFs, and malicious PDF files, and quarantining anything that matches known malicious patterns or behavior. This includes monitoring for ransomware, trojans, and spyware that may attempt to connect to remote servers or compromise personal data. If you see a malware alert, that means the protection worked. Do not click “allow,” “override,” or try to install a different “free” version to get around the warning.

Practical Guidance

A practical tip: in many cases you don’t need a “free PDF editor” at all. Modern browsers like Firefox can open a PDF and allow basic text entry and simple edits (and you can always use approved tools your IT team provides). Please avoid installing any free software from the internet unless it’s explicitly approved, and do not open Excel files that trigger a warning or request macros. If something appears urgent but gets blocked, contact your IT support or CRC so we can validate it safely and provide an approved, secure option. 

Please avoid installing any free software, online file converters, or free online converters from the internet unless it’s explicitly approved. These tools are often used by attackers as a gateway for malware, identity theft, and credential theft. As a best way to protect your systems, rely on approved antivirus software, secure environments, or even sandbox tools like Browserling to safely review suspicious PDFs when needed.

Do not open suspicious documents or malicious PDFs that trigger a warning or request macros. If something appears urgent but gets blocked, contact your IT support or CRC so we can validate it safely and provide an approved, secure option. Taking extra caution can prevent a privacy nightmare and protect your practice from serious cybersecurity incidents.

Contact CRC Technologies

“At CRC, we’re monitoring this issue closely. If you want a list of recommended protections and more info on spotting these scams, please contact us at he**@******hs.com”Your security is our priority.— James Cosgrove, CEOCRC (Computer Resource Corporation)P (206) 441-5042  |  F (206) 374-2264  |  Direct (206) 254-02221125 N 140th St Seattle WA 98133
DAG has not received financial benefits for endorsing CRC. They are our preferred vendor for dental practice IT services in Washington because they are the best at what they do — serving the unique needs of dental practices!
© 2026 DG Accounting Professionals LLC. All Rights Reserved.

Dental Accounting Group  •  Bellevue, WA  •  cpa4dds.com  •  425.216.1612

© 2026 DG Accounting Professionals LLC. All Rights Reserved.

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New! DAG Survey Dashboards Now Live

Published by Dental Accounting Group | The Successful Dentist™ | April 2026

Dental Accounting Group is proud to announce the launch of two powerful new interactive dashboards built from our annual survey data, designed to support dental practice benchmarking, KPI tracking, and stronger visibility into your practice’s financial health and overall performance.

Financial Survey Dashboard

Our comprehensive Financial Survey Dashboard puts decades of Washington State dental practice benchmarking data at your fingertips. Compare your practice overhead, production, total revenue, and profitability against peers across general practice and specialty categories. These performance metrics provide valuable insight into your overhead ratio, operating expenses, and profit margins while helping you evaluate your practice’s performance against industry averages.

Access the dashboard:

Financial Survey Dashboard

Payroll Analytics Dashboard

Our Payroll Analytics Dashboard provides detailed compensation benchmarking for dental hygienists (RDH), dental assistants (DA), front office administrators, and office managers across the Greater Puget Sound and Washington State. This data supports better decisions around staff productivity, employee turnover, and resource allocation while helping dental practice owners stay competitive in today’s dental industry.

Access the dashboard:

Payroll Analytics Dashboard

Whether you are evaluating your overhead structure, preparing for a practice sale or acquisition, or making compensation decisions in a competitive hiring market, these dashboards give you the Washington State–specific data you need to benchmark accurately and plan strategically. With clearer insight into key metrics such as total production, collection rate, and cash flow, dental practices can improve operational efficiency, strengthen patient retention, and support sustainable growth.

Disclaimer: This newsletter is prepared by Dental Accounting Group (DAG) for general informational purposes only and does not constitute legal, tax, accounting, or investment advice. Information is based on sources believed to be reliable as of the publication date but may become outdated or superseded. Tax laws and regulations are subject to change. Individuals and businesses should consult with a qualified professional advisor regarding their specific circumstances before making any financial, tax, or legal decisions.
© 2026 DG Accounting Professionals LLC. All Rights Reserved.

Dental Accounting Group  •  Bellevue, WA  •  cpa4dds.com  •  425.216.1612

© 2026 DG Accounting Professionals LLC. All Rights Reserved.

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⚠️  SCAM ALERT: If you
received a letter titled “2026 Annual Registration — Final Reminder” or similar, do not pay until you have verified it with the Washington Secretary of State directly.

 

The actual cost of a Washington State annual report is $70 for most for-profit businesses. Third-party mailers routinely charge $100–$200 or more for filings that may not be necessary at all.

 

Scam Alert: Washington Annual Registration Mailers Are Back in 2026

If your dental practice, PLLC, or other Washington LLC recently received a letter titled “2026 Annual Registration — Final Reminder” or “2026 Annual Registration Instruction Form,” pause before you pay. A new wave of these misleading mailers has been circulating in Washington State in 2026, and they are designed to look far more official than they are.

We are flagging this for our clients because the dental industry — where practices are commonly structured as PLLCs or S-Corps — is a frequent target. These letters are not from the Washington Secretary of State. They are from private, third-party companies that charge excessive fees for services that are either unnecessary or available directly from the state at a fraction of the cost.

 

What the Mailer Looks Like

The notice below is an example of one currently circulating in 2026. Notice that it includes legal-sounding language, RCW statute references, urgent “respond by” dates, and even an ALERT box warning recipients about other imposter letters — while itself being a third-party solicitation from a company called “Fast Filing Services.”

 

Example of a third-party mailer
circulating in 2026. Client address has been redacted. This letter is not from
the Washington Secretary of State.

Note the fine print at the top right: “Beware of imposter letters that have been circulating around Washington. We are not associated with Next Step Filings.” This is a telling detail. The letter is essentially a third-party service trying to differentiate itself from other scammers — while engaging in the same practice of charging excessive fees for state filings you can do yourself for $70.

 

This Is Not New — Washington Businesses Have Been Targeted for Years

The Washington Attorney General’s Office has issued repeated warnings about fraudulent Secretary of State notices targeting small businesses across the state. According to the Attorney General, these scam letters are designed to mimic official government communications and demand payment well beyond the cost of legitimate state business filings.

These letters are addressed directly to businesses, often include the company’s Unified Business Identifier (UBI) number, and may include the Washington state seal — all of which make them appear official. However, business names and UBIs are publicly available records, not confidential information. Anyone can look them up and use them to make a solicitation appear legitimate.

Multiple consumer protection lawsuits have been filed and won by the Attorney General’s Office against companies engaging in this conduct, with courts imposing civil penalties and ordering restitution. The schemes keep resurfacing under new company names.

 

How to Tell the Difference: Scam vs. Legitimate SOS Notice

Use this table to evaluate any annual registration notice you receive:

 

Check This

Scam / Third
Party

Legitimate WA
Secretary of State

Sender/Return Address

Private company (e.g., Fast Filing Services, Next Step Filings,
E-File Business). PO box or out-of-state address.

sos.wa.gov or official SOS letterhead. Mailed from Olympia, WA.

Fees Requested

Often $100–$200+ for a filing that may not be needed at all.

Annual report fee is $70 for for-profit businesses. No other fees
required for a standard filing.

Urgency vs. Actual Due Date

Creates a “respond by” date that is weeks or months earlier than
the actual state filing deadline.

Sends notice ~60 days before your expiration month. Your actual
due date is the end of your anniversary month.

QR Codes / Website URLs

QR codes link to .org, .com, or other non-government sites.

All official links end in .gov (sos.wa.gov). The SOS does not
currently send text messages.

Legal-Sounding Language

Quotes RCW statutes and threatens administrative dissolution to
create urgency. May reference other scam companies.

Communicates plainly. Does not reference competitors or unrelated
companies. Does not threaten jail.

How to Verify

Google the company name. Check the WA Secretary of State CCFS
system directly at sos.wa.gov to see your actual filing status.

Call (360) 725-0377 or email co***@****wa.gov to confirm the
communication is genuine.

 

Red Flags in the Specific 2026 Mailer

The letter shown above has several specific characteristics that identify it as a third-party solicitation rather than an official government notice:

 

•      Two different dates: The letter shows a “Please Respond By” date of 3/27/2026 but a “Due Date” of 6/30/2026. The real filing deadline is 6/30 — the earlier date is designed to create artificial urgency and pressure you to pay quickly.

•      Sent by “Fast Filing Services,” not the Secretary of State: The bottom of the letter references this private company. The Washington Secretary of State does not contract private third parties to collect annual report fees.

•      Warning about other scammers: The ALERT box disclaiming association with “Next Step Filings” is itself a red flag. The real Secretary of State has no reason to disclaim being associated with other private companies.

•      RCW citations used as legitimacy props: Quoting Washington state statutes sounds official, but any private company can quote state law. The citation does not mean the mailer is from a state agency.

•      No official Secretary of State branding: Legitimate correspondence from the Secretary of State’s office clearly identifies the agency, uses .gov email addresses, and links to sos.wa.gov. Third-party letters often omit or obscure this.

 

What the Real Filing Actually Costs

The Washington Secretary of State annual report fee is $70 for most for-profit businesses (including PLLCs and S-Corps). There are no additional required fees for a standard annual report filing.

 

You can file directly at: sos.wa.gov → Corporations and Charities Filing System (CCFS)

 

The Secretary of State sends its own reminder notices — by email approximately 60 days before expiration and by mail 45–60 days before expiration if you have not selected electronic notification. These notices come from the SOS directly, not from third-party services.

 

What to Do If You Received One of These Letters

1.    Do not pay. Set the letter aside and verify your actual filing status first.

2.    Go to sos.wa.gov and log in to the Corporations and Charities Filing System (CCFS) to check the status of your annual report. You can see whether your filing is current, when it is due, and what you owe — at no cost.

3.    If you are unsure whether a notice is legitimate, contact the Secretary of State’s office directly: call (360) 725-0377 or email co***@****wa.gov.

4.    If you determine the letter is fraudulent, report it to the Washington Attorney General’s Office at atg.wa.gov. The more complaints received, the better the AG’s ability to take action against these companies.

5.    Forward the letter to your DAG advisor.

 

What to Do If You Already Paid

 

If you have already sent payment to a third-party company for a Washington annual registration filing, consider taking these steps:

 

•  Contact your bank or credit card company immediately to stop or dispute the payment.

•  File a complaint with the WA Attorney General at atg.wa.gov.

•  Check sos.wa.gov to verify the status of your actual annual report. If the third party filed it on your behalf, your information (and payment) may now be in someone else’s name.

•  Contact the SOS at (360) 725-0377 if you find an unauthorized filing under your business name.

 

Official Resources

•      Washington Secretary of State CCFS: sos.wa.gov —
verify your filing status and file your annual report directly

•      SOS Phone: (360) 725-0377

•      SOS Email: co***@****wa.gov

•      Misleading Notices FAQ (SOS): sos.wa.gov →
search “Misleading Notices & Solicitations”

•      Report a Scam (WA AG): atg.wa.gov → File a
Consumer Protection Complaint

 

Disclaimer: This article is prepared by Dental Accounting Group (DAG) for general informational purposes only and does not constitute legal, tax, accounting, or investment advice. Information is based on sources believed to be reliable as of the publication date. Individuals and businesses should verify their specific circumstances directly with the Washington Secretary of State. To report a scam, contact the WA Attorney General’s Office at atg.wa.gov.

 

© 2026 DG Accounting Professionals LLC. All Rights Reserved.

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RS Tax Payments & USPS Updates

How to Pay Estimated Taxes Online

Effective immediately, the IRS is no longer accepting paper checks for estimated income tax payments. All estimated tax payments must be submitted electronically. This applies to small business owners, sole proprietors, and any business owner responsible for making quarterly payments on their tax liability.

Here is what you need to know:

Using IRS Direct Pay

IRS Direct Pay is the fastest, most secure way to make federal tax deposits or estimated payments directly from your bank account at no cost. It connects directly to your tax account and allows you to apply payments toward your tax balance due for the current year. Access it at

https://www.irs.gov/payments/direct-pay-with-bank-account

Follow these steps:

  • Step 1 Go to pay.irs.gov and select ‘Make a Payment.’
  • Step 2 Choose your reason for payment (e.g., Estimated Tax), which applies to income tax return obligations and quarterly payments based on your taxable income.
  • Step 3 Verify your identity using information from a prior year federal tax return.
  • Step 4 Enter your bank account routing and account number (or use a debit card option where available), along with your payment amount.
  • Step 5 Review all details and submit. You will receive a confirmation number immediately upon completion.

These payments help reduce your tax liability and avoid an estimated tax penalty or underpayment issues later in the year.

IMPORTANT: IRS Direct Pay payments must be scheduled at least one business day in advance of the due date. Do not wait until midnight on the deadline day.

Other Electronic Payment Options

In addition to IRS Direct Pay, estimated tax payments can also be made through EFTPS (Electronic Federal Tax Payment System) at eftps.gov, which is popular for S-corp and business tax deposits. You may also pay via debit card or credit card through an IRS-approved payment processor, though service fees apply. These options are commonly used by small business owners, including sole proprietors filing a Schedule C, to stay current on federal tax deposits and avoid accumulating a tax balance.

USPS & Certified Mail Requirements

If you must mail anything to the IRS — such as a tax return, amended return, or written correspondence — always use USPS Certified Mail with Return Receipt Requested. This provides legal proof of timely filing. Keep your tracking number and postal receipt as part of your permanent records. Standard first-class mail does not provide this protection. FedEx and UPS may also be used, but only to IRS-designated addresses. This is especially important when submitting documentation related to your income tax return, amended filings, or resolving a tax balance due.

Depending on your situation, estimated payments may also be influenced by gross income, dividends, capital gains, available deductions, and existing withholding from a paycheck or other income sources.

If you want clarity around your estimated payments and overall tax strategy, connect with our team for guidance tailored specifically to dental practice owners.

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The OBBB (Oh-Triple-Bee as we are starting to call it) Act officially passed and signed into law on July 4th, 2025 by the President. We have been diligently reviewing source material to craft our tax planning approach for 2025 and future years. Please note that we are still waiting for additional IRS guidance, but in the interim, here is a short summary of the key tax provisions:

Key Takeaways for Dentists:

  • Tax rates from the 2017 Tax Cuts & Jobs Act made permanent
    • 10%, 12%, 22%, 24%, 32%, 35%, and 37%
    • Enhanced inflation adjustment for 10%/12%/22% brackets.
  • Qualified Business Income Deduction made permanent at 20%
  • State and Local Tax (SALT) limit raised to $40k ($20K MFS) with a phase-down over $500k of Modified Adjusted Gross Income. Reverts back to $10k in 2030.
  • SALT cap increases 1% per year starting in 2025 through 2029

The Pass-Through Entity (PTE) tax work around was on the chopping block, but in the final Senate version this tax saving strategy for business owners was saved, which will benefit high-earning practice owners in income tax states like California and Montana.

  • Child tax credit increased to $2,200 per child, adjusted for inflation thereafter. Phase out begins at $400k Modified Adjusted Gross Income (if filing jointly).
  • Trump Retirement & Savings Account (Trump Account) is introduced – Invest up to $5,000 per child per year until the child turns 18. Funds must be invested in US stock market index funds. The US Government will give $1,000 per baby born between 2025 – 2028.
    • Employers can make up to $2,500 in nontaxable contributions per employee. We need more guidance from the IRS regarding compliance.
    • Trump accounts grow tax-deferred until the beneficiary withdraws the money.
  • Expanding the use of section 529 tax-advantaged savings accounts for qualified higher education expenses, including “qualified postsecondary credentialing expenses” related to professional licensure. We believe CE programs like AGD, Spears and KOIS fall under this new definition. 
  • Charitable deductions: Under OBBBA, the deduction has been expanded to include a permanent “above-the-line” deduction for taxpayers who do not itemize their deductions. Beginning in 2026, taxpayers who do not itemize can claim a deduction of up to $1,000 ($2,000 for those taxpayers who are married filing jointly) for certain charitable contributions. Taxpayers who itemize are subject to a 0.5% floor of their modified adjusted gross income. For example, a household with $300k in MAGI would not be able to deduct the first $1,500 in charitable contributions. New carryover rules would also apply. OBBBA also makes the 60% contribution limit for cash gifts to qualified charities permanent.
  • Green energy tax credits are repealed including electric vehicle credits, installation of home EV charging equipment, and some residential energy credits such as insulation, windows, or energy efficient heating and cooling systems (including solar). Most Inflation Reduction Act (IRA) credits will terminate 2025-2027. 
  • Exemption for overtime pay up to $12,500 per year (2025 to 2028) via a tax deduction (above the line). Must be reported on Form W-2 (waiting on additional guidance).
  • Above the line deduction for auto loan interest up to $10,000 per year (2025 – 2028). The car must be new (not used) and be assembled in the United States.  EV cars are eligible. Debt must have been incurred after 12/31/24. Deduction is completely phased out when income is over $150k ($250k married filing jointly)
  • Senior Citizens aged 65 and older will get an additional $6,000 added to their standard deduction (in an effort to offer relief to those collecting Social Security (2025 – 2028).
  • Health Savings Account (HSA) changes – expanded coverage & eligibility.
  • Employer education plans paying student loan payments – extended permanently.
  • Increasing the filing threshold for Forms 1099-NEC and Forms 1099-MISC from $600 to $2,000, adjusted for inflation.
  • The 100% depreciation deduction is now permanent. This replaces the phase-down of 40% for property after January 19, 2025.
    • A temporary 100% expensing for qualifying structures that start construction in 2025-2028 will be granted.
  • The OBBB Act overhauls federal student loan repayment by eliminating all existing Income-Driven Repayment (IDR) plans and replacing them with the standard repayment plan and the Repayment Assistance Plan (RAP). While RAP caps monthly payments at 10% of discretionary income, it extends the repayment period to 30 years (360 payments) before any remaining balance is forgiven, compared to current plans that offer forgiveness after 10-25 years.
  • The temporary increase to the estate and gift tax exemption has been made permanent and increased further to $15 million.
  • Higher exemptions and phase-out thresholds for the Alternative Minimum Tax have been made permanent, meaning very few taxpayers will be subject to it.
  • Total itemized deductions are subject to a new phase-out for higher incomes. The otherwise allowable deduction is reduced by 2/37 of the lesser of (1) the amount of the itemized deductions or (2) the amount of the taxpayer’s taxable income that exceeds the start of the 37% tax rate bracket.

Impact for Dental Practice Owners:

Most of our clients will continue to benefit from key tax provisions passed in the original Tax Cuts and Jobs Act (TCJA) from 2017. We continue to review text from the One Big Beautiful Bill Act and participate in CPA industry group discussions. We will keep you updated as information becomes available from the IRS.

Any Questions? Feel free to reach out to our office.

-Your Dental Accounting Group

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2025 brings some notable changes to local taxes in Washington State. 

Capital Gains Tax 

The Washington capital gains tax has been in place for a few years now.  Washington taxpayers are subject to a 7% tax on long-term capital gains that exceed an annual threshold (currently $270,000).  An additional 2.9% tax is now being added for taxable gains above $1 million.  This retroactively applies to any gains realized as of January 1, 2025. 

With the annual exemption, this essentially means you must have long-term capital gains of $1,270,000 before the additional tax applies.  The first $270,000 is still exempt, and gains from $270,000 – $1,270,000 are still taxed at 7%.  Only the gains exceeding this amount are taxed at 9.9%. 

There are no changes to the existing exemptions and deductions, such as gains on real estate, retirement accounts, and qualified family-owned small businesses. 

Estate Tax 

Many are aware of the increased federal estate tax exemption.  When someone dies, they can leave assets to their heirs without paying any estate tax as long as the estate is under $13.99 million (or $27.98 for a married couple).  This effectively means that very few people need to worry about the federal estate tax.  (Note that this is currently scheduled to sharply decrease next year, although legislation is currently in the works that could extend it). 

However, many states also have a state estate tax, including Washington.  The state exemption is currently much lower, at $2.193 million and has been unchanged for several years.  It will increase to $3 million on July 1, 2025, and it will be indexed to inflation each subsequent year.  Note that unlike the federal exemption, this is not “portable” between spouses, meaning you cannot double the exemption to get $6 million per couple.  When the first spouse dies, everything can pass to the surviving spouse tax free.  But when the second spouse dies, they will only be entitled to a $3 million exemption, the same as someone who was never married. 

While the increased exemption will allow more people in the state to avoid the state estate tax, once you are above that exemption, the rate at which you pay the estate tax is increasing.  Similar to the federal income tax, the state uses progressive brackets where larger estates pay a larger percentage in taxes.  The rates currently range from 10%-20%, but the top bracket will now increase to 35%. 

Taxable Estate (amount above exemption) 

Current Rates 

Rate as of 7/1/25 

<$1m 

10% 

10% 

$1m – $2m 

14% 

15% 

$2m – $3m 

15% 

17% 

$3m – $4m 

16% 

19% 

$4m – $6m 

18% 

23% 

$6m – $7m 

19% 

26% 

$7m – $9m 

19.5% 

30% 

>$9m 

20% 

35% 

Business owners can also take advantage of another exclusion, if the value of the business owned makes up over 50% of the taxable estate and has been actively operated by the decedent or a family member for at least five of the previous eight years.  Currently, you can exclude $2.5 million of the business from your total estate value.  That amount is increasing to $3 million. 

However, if the business is later sold, or the business no longer qualifies within three years of death, the State can go back and assess tax on the business as if it had been included in the taxable estate. 

Should you have any questions on these tax changes, or how you can best plan to limit your exposure, please do not hesitate to reach out to us. 

 

 

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The PDF version of our formal letter can be found Here

January 29, 2025

RE:        Testimony in support of HB 1535 / SB 5351

Our firm specializes in working with dental practices, which we have been doing since 1989.  We understand the economics of the dental profession, how the current financial model dictated by large insurance carriers is threatening its financial health, and how this directly leads to less access to care and more expense for patients.

Here’s some background on the economics of a dental practice.  Dental graduates typically leave school saddled with $300,000 or more in student debt.  In addition to servicing that debt, they will require nearly $1 million in financing if they want to buy or open a basic clinic.  Once a clinic is up and operating, it faces economic challenges over which it has little control.  Post-pandemic, we have seen a decline in experienced dental office employees, a trend identified by the American Dental Association as a critical challenge for the dental profession nationwide.  Due to this acute shortage of experienced dental workers (especially hygienists), average dental employee wage rates have increased by at least 30% in the last five years alone across Washington (and up 40% in Seattle/Bellevue Metro).  Other expenses have also increased, if not as significantly.

Despite these rising costs and despite an overall increase in the general Consumer Price Index of more than 45% since 2010, dental benefit reimbursement rates have remained relatively flat.  Delta Dental of Washington (DDWA), by far the largest carrier in the state, unilaterally reduced its reimbursement rates by approximately 15 percent in 2011 and froze those rates for 10 years. More recently, DDWA has increased reimbursements by approximately 3% in 2024 and 4% for 2025 for select Current Dental Terminology (CDT) reimbursement codes.

These increases are insufficient to keep up with rising costs, much less make a dent in the gap created by more than a decade of frozen reimbursements.  They create a clear imbalance between the huge costs associated with obtaining a dental education and operating a dental clinic and the potential rewards for pursuing a career in dentistry.  In short, the current financial model is killing the future of the profession. It is a formula for a shrinking number of providers and a decline in the supply of dental care resources – reducing access, availability and quality of care. In the end, patients are the ones that will suffer.

We have seen this trend in the medical profession over the last 20 years, where changing economics have led to provider consolidation, private equity acquisition of health systems, and diminished access to care for patients. 

HB 1535 and SB 5351 can help prevent this from happening in the dental arena.  It will:

  • Support dentists in covering rising expenses like wages, equipment, and rent
  • Ensure parity of reimbursement between in-network and out-of-network providers, giving patients true freedom to choose their dentist and unrestricted access to the benefits they are paying for. 
  • Reduce anti-competitive practices by dominant insurers (For example, several insurers already provide relative parity for in-network and out-of-network reimbursements, but DDWA as the dominant player does not.).
  • Provide sufficient economic incentives for students to pursue dentistry, critical for maintaining an adequate dental workforce and appropriate access to care
  • Prevent rural and underserved communities from losing access to dental care
  • Mandate insurance plans spend 85% of premium revenue on care, not profits or administrative costs.

Everyone in Washington will benefit from a more competitive and better functioning market for dental benefits.  It will allow dentists to tailor their practices to compete for and meet the needs of their patients without insurance companies dictating how and how much they are reimbursed for the care they provide.  It will allow patients to pick the dentist they are most comfortable with and not be forced to accept a lower level of benefits because of that choice.  It will allow insurance companies to adjust their reimbursement rates to become more competitive.  Premera’s recently announced plan to increase its reimbursement rates 24% clearly shows how this can benefit consumers.  Most importantly, it will require that 85% of patients’ premium dollars are directed to their care, helping ensure that they – and the dental profession that cares for them – remain healthy in the years ahead.

We urge you to support this vitally important legislation.

ADDITIONAL BACKGROUND INFORMATION

  • Dental care is financed in large part by employer provided dental insurance.

  • Delta Dental of Washington (DDWA) covers the majority of insureds in Washington State. In some markets, it exceeds 80% of the patient population. Premera and Regence also have large insured populations. We refer to these as The Big 3.

  • Effective July 2011, DDWA reduced their reimbursement rates to providers by roughly 15% with some more frequently used CDT codes, such as those for preventive care, being cut even greater than 15%. DDWA froze those lower rates for 10 years

  • In 2024, DDWA increased a handful (around 20 of the over 800 CDT codes) of the CDT reimbursement rates by approximately 3%. For 2025, DDWA has increased some CDT reimbursement rates by approximately 4%, with an emphasis on selective hygiene CDT codes.  

  • Premera followed DDWA’s lead in 2018 with a significant cut to their CDT reimbursement rates. Premera and Regence have followed DDWA’s frozen reimbursement rate model in lockstep. Premera is one carrier that pays the same in-network reimbursement rate to out of network providers which allows insureds unrestricted provider choice and full access to their benefits.

  • Following Premera’s rate cut in 2018, based on experience with our clients, a substantial number of clinics dropped out of Premera’s PPO network. The out of network reimbursement rates for many carriers, with the exception of DDWA, are on par or nearly on par with in-network reimbursement rates without transferring an onerous financial burden to patients who choose to continue their relationship with their dental provider regardless of their PPO status. Delta, on the other hand, slashes reimbursement rates as low as 20% of in network rates, even for preventive care, and transfers the financial burden of dental care back to those patients who choose/desire to continue with their established dental provider. DDWA’s punitive financial terms for out of network providers (and patients that desire to continue working with their long-term provider that has dropped their DDWA PPO status) are so onerous that it forces most patients to transfer to an in-network provider. Dictating consumers (patients) to seek services solely from in-network providers due to DDWA’s control and influence in the market is anti-competitive and monopolistic, especially when you factor in the punitive outcome to both providers and patients that are out of network. It is a barrier to a patient’s choice and access to care.   

  • Market conditions (presumably Premera insureds complaining about difficulties to access care with in-network providers) must have come into play to trigger Premera to raise their reimbursement rates by 12% effective October 1, 2024 and another 12% effective March 1, 2025. Given the frozen reimbursement rate environment since 2011, Premera’s 24% rate increase within 5 months is a “drastic” reaction to presumably free market forces.

THE CURRENT PPO BASED FINANCIAL MODEL IS NOT SUSTAINABLE

  • The Big 3 carriers have monopolistic influence in the marketplace. They dictate what providers can charge for their services. They have influence over approving or disapproving insureds claims diagnosed by their providers. Because they “control” the majority of “customers,” they make it nearly impossible to compete for doctors who choose to drop out of the carrier’s PPO networks.

  • Between 2010 and 2024, the consumer price index (CPI) has increased by 45.65%. The CPI is a measure of increasing costs. Meaning how much the cost of delivering dental services has increased over the 10 plus years that reimbursement rates have been frozen. Post the 2020 pandemic, we have seen a decline in experienced dental office employees which has been identified by the ADA as a nationwide critical challenge for the industry. Combine the short supply of experienced dental workers with wage inflation in recent years, dental employee wage rates have increased by 30% just in the last five years alone across Washington on average (and up 40% in Seattle/Bellevue Metro).

  • The medium-term trajectory for this model threatens the economic viability of independent private practice and leads to a declining interest in the profession due to the miss-match with the financial reward relative to the huge investment (educational costs and student loans). The University of Washington’s current projected cost for an in-State student to complete dental school is approximately $432,000. We regularly see new dental grads saddled with student debt in excess of $300K at current interest rates in the 7% to 9% range. Currently it typically cost a dentist at least $1.0M in practice financing to buy or open a basic clinic. The long-term implications we are potentially faced with is a shrinking number of providers relative to a growing population which will stress insureds access to in-network dental care. The current financial model is killing the future of the profession. It is a formula for a decline in the supply of dental care resources – reducing access, availability and quality of care. In the end, patients are the ones that will suffer. Simply look at what has been going on with medical care over the last 20 years as a predictor of future dental care without needed structural changes with the financial model. Medicine has pivoted to a concierge model which is simply a pay for access model which has created financial barriers to accessing highly experienced and sought after providers. The concierge model, created out of the financial failings of the PPO model, allows providers to deliver quality care that is focussed on the patient’s needs and not dictated by a carrier’s claim approval or subsistence reimbursement rates. One could argue that the concierge model has created a two-tier health care system. One able to deliver unbridled high-quality care to those with financial resources and a second constrained by the financial model dictated by the carriers for everyone else. This can be avoided in dentistry with some needed structural changes in the financial arrangement between the carriers, the providers and patients.  

———————————————————————————–

COMPANY BIO

DG Accounting Professionals LLC dba Dental Accounting Group 

  • Washington Chapter of the Academy of Dental CPAs
  • We are a dental specific CPA firm that works with hundreds of dental practices.
  • We are a member of an exclusive organization of dental CPA firms (the Academy of Dental CPAs) nationally that serve over 11,000 practice units.
  • We understand the economics of the dental industry and the in-network or PPO financial model dictated by the large dental insurance carriers.

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LEADERSHIP BIOS

Brian F. Bray, CPA
Co-Managing Partner | Senior Client Advisor
Working with dentists since 1989

Brian has been a Certified Public Accountant and business advisor for over 40 years and is Co-Managing Partner of the Dental Accounting Group. Brian offers clients a business-minded perspective, sharpened by decades of practical experience, to help clients grow and improve their business. He is passionate about helping the next generation of dentists learn how to be financially successful in today’s challenging economic environment.

Affiliations:
Washington Society of Certified Public Accountants
American Institute of Certified Public Accountants
Academy of Dental Certified Public Accountants

Education:
University of Washington

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Margaret M. Boyle, CPA
Co-Managing Partner | Senior Client Advisor
Working with dentists since 1990

Maggie is the Co-Managing Partner of the Dental Accounting Group. She is a University of Washington graduate, a Certified Public Accountant (CPA) and a former Certified Valuation Analyst (CVA). Maggie has been providing tax, consulting and planning services to dental professionals since 1990. She served on the board of the ADCPA for 6 years and is the Washington representative for the Academy of Dental CPAs, a select group of 26 CPA firms throughout the US that provide progressive consulting, accounting and tax services to dental professionals. Maggie has guest lectured at the University of Washington Dental School, SKCDS and many local study clubs.

Affiliations:
Washington Society of Certified Public Accountants
Academy of Dental Certified Public Accountants

Education:
University of Washington

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Kevin J. Bray
Partner | Client Advisor
Working with dentists since 2014

Kevin has been working with Dentists since 2014, building a dental focused bookkeeping practice from scratch, that later merged with the Dental Group to form the Dental Accounting Group in 2022. DAG was recently honored as one of the Puget Sound Business Journal’s Best Places to Work in 2024 and was featured in the INC. 5000’s Fastest Growing Companies in America list. Kevin is passionate about building businesses, financial planning and education.

Affiliations:
Academy of Dental Certified Public Accountants

Education:
University of Washington
Washington Governors University