Medical Device Excise Tax
What is the Medical Device Excise Tax?
An excise tax of 2.3% on the sale, lease, rental or use of certain medical devices was mandated by the 2010 health care reform legislation and went into effect in 2013.
Who is affected by the tax?
The excise tax applies to manufacturers, producers, importers and in some cases, health care organizations, of taxable medical devices. Companies need to begin evaluating and planning whether they will be liable and ultimately how to calculate this tax. For purposes of the excise tax, a “manufacturer” produces a taxable medical device from new, used or raw material, and an “importer” brings a taxable medical device into the US from outside the country.
Excise tax payments will be due semi-monthly, and returns will be filed quarterly in the month following the end of a calendar quarter. The first one will be due on or before April 30, 2014.
IDENTIFICATION OF TAXABLE MEDICAL DEVICES
- Verification of taxable medical device status
- Identification of possible exemptions, such as retail sales exemption
- Determination of Contract Manufacturer Status
- Convenience Kit Analysis
- Form 637 Preparation and accompanying information, review and submission
- Form 720 Quarterly Payments
- Compliance assurance for required bi-monthly payments
- Identification of taxable sales
- Identification of relevant distribution channels for constructive pricing
- Development of internal compliance procedures including best practices
TAX CALCULATION SUPPORT
- Identification of available exclusions from taxable “price”
- Constructive Price Calculation Support (Price Segregation and Contract Modification)
OVERPAYMENT IDENTIFICATION & REFUND CLAIMS
TAX CONTROVERSY SUPPORT IN EVENT THE IRS EXAMINES THE CLIENT