TAX CLIENT ALERT: The Medical Device Excise Tax: What You Don’t Know Could Cost You

    View Authors 24 August 2010

    The recently-enacted Health Reform Law (the Patient Protection and Affordable Care Act [Pub. L. No. 111-148] as amended by the Health Care and Reconciliation Act of 2010 [Pub. L. No. 111-152], collectively known as the “Affordable Care Act” or “ACA”) added a provision to the Internal Revenue Code imposing an excise tax of 2.3 percent on the sale of medical devices after 2012. Due to uncertainty associated with whether certain products will be characterized as medical devices, and which devices will ultimately be eligible for an exemption from the excise tax, it is imperative for manufacturers, importers, distributors and retailers of products potentially subject to the excise tax to become involved in the policy debate. 

    Even though formal comments have not yet been requested, Treasury and IRS have both expressed an interest in receiving informal comments at this time.  Companies should consider submitting company-specific comments, and working with trade associations, such as AdvaMed, to address procedural and substantive issues associated with implementation of the tax. It is almost always preferable to become involved early in the process, working with and educating regulators on complex and novel issues, rather than being solely reactive.