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February 2013 – MA Alert
A 2.3 percent tax on the sale of certain medical devices in the United States went into effect January 1 despite efforts from opponents to repeal or delay its implementation. The tax—part of the 2010 health care reform law and codified under Section 4191 of the Internal Revenue Code (IRC)—applies to the sale of taxable medical devices by their manufacturer, producer, or importer.
On December 5, 2012, the US Department of the Treasury published final regulations and additional interim guidance that define a “taxable medical device” as any device listed with the US Food and Drug Administration under Section 510(j) of the Federal Food, Drug, and Cosmetic Act and 21 CFR Part 807. The statute provides exemptions to the tax for:
Products exported from the United States Devices sold for further manufacture products intended for nonhuman use eyeglasses, contact lenses, hearing aids, and “any device of a type that is generally purchased by the general public at retail for individual use.” The final regulations retain the facts and circumstances approach set forth in the proposed regulations published in February 2012, and they include examples that illustrate the process for determining whether a device meets the retail exemption. This determination is made based on the overall balance of factors (including a list of safe harbor factors) relevant to the particular type of device. If a company expects to have exempt sales from exports or sales that are subject to further manufacture, it must register with the IRS by filing Form 637. Read More
Moss Adams LLP has an experienced team of tax and industry professionals that can help you determine the impact the medical device excise tax may have on your organization as well as implement procedures to comply with the new rules. For additional guidance, please contact:
RICHARD CROGHAN, PARTNER
(415) 677-8282 | richard.croghan@mossadams.com
JOE SULLIVAN, SENIOR MANAGER
(503) 478-2256 | joseph.sullivan@mossadams.com