Medical Device Excise Tax – 2014 Year-End Update

    November 2014

    As 2014 comes to a close, the prospects for repeal of the medical device excise tax in 2015 have improved. In September, the House of Representatives approved the “Jobs for America Act,” which would have repealed, retroactive to its effective date, the 2.3% excise tax on a manufacturer’s sale of certain medical devices. Neither this bill nor other legislation that would repeal the tax has come to a vote in the Senate. Senate Republicans made several efforts in the 113th Congress to include repeal of the medical device excise tax as an amendment to other legislation, but the efforts were blocked by Majority Leader Harry Reid (D-NV). When the 114th Congress convenes in 2015, Senator Reid will no longer be the Majority Leader, and the Republicans will control the agenda in the Senate.

    Repeal of the medical device excise tax is not a foregone conclusion despite Republican control of both houses of the next Congress, Republican leadership identifying repeal of the tax as one of their goals and bipartisan support for the elimination of the medical device tax. If the repeal is part of legislation to obliterate the Affordable Care Act (ACA), a veto would seem likely. Repeal of the tax also could get tied up in the debate over tax reform or by budget hawks who want to see the revenue from the tax replaced.

    Since the tax is still in effect, 2014 rulings on the tax and reports from the Congressional Research Service and the Treasury Inspector General for Tax Administration (TIGTA) continue to be important to manufacturers and distributors of medical devices.