Groups blast new IRS device tax rules

Share this article:

Internal Revenue Service guidance released in December spells out how a 2.3% excise tax on medical devices would be carried out. But manufacturers and other organizations likely to be harmed by the new rule want to delay or eliminate its implementation.

“Congress should act to address this $30 billion tax before it takes effect,” said AdvaMed CEO Stephen Ubl.

The medical device tax remains a controversial aspect of the 2010 healthcare reform law. The revenue service's 58-page final rule for implementing the first-ever levy has many manufacturers pressing Congress to intervene.

At press time, many critics said they were hoping a repeal could be folded into an agreement between Congress and the president to avoid the looming “fiscal cliff” of tax increases and spending cuts. 

The imminent excise tax would be levied on gross sales received by medical device manufacturers after Dec. 31, 2012. It's expected to raise $29 billion in tax revenue through 2022, up from the original projection of $20 billion. 

“The excise tax is on the medical device manufacturers and importers (who) will now have access to thirty million new customers due to the healthcare law,” countered Treasury Department spokeswoman Sabrina Siddiqui in a prepared statement.

Under the IRS “final rule,” the tax applies to most devices used or implanted by healthcare professionals. These range from tongue depressors to pacemakers. But certain devices that are sold over the counter — such as eyeglasses, contact lenses, and hearing aids — are exempt from the tax. Another exception applies to prosthetics. 

Critics noted that the IRS final rule didn't resolve all the questions. For instance, it's not clear if companies selling latex gloves and other  “dual-purpose” products to regular customers as well as medical professionals would be taxed on those products.

The House passed legislation to repeal the new tax in June 2012. But the Senate never voted on the measure, thus allowing it to stand. 


Share this article:
close

Next Article in News

More in News

Nursing home did not warn worker who was taken hostage in active ...

A nurse at a Life Care Centers of America facility in Colorado was not notified that she would be threatened and taken hostage by a gunman as part of an active shooter drill, according to a lawsuit filed Tuesday.

Revisions to False Claims Act urged by former deputy AG

A panel of witnesses debated the merits of the False Claims Act before a Judiciary subcommittee meeting Wednesday, with one former attorney general arguing current policy provokes unfair litigation and "coercive" settlements.

Medicare SNF rate finalized, reimbursements to increase by $750 million next year

Medicare SNF rate finalized, reimbursements to increase by ...

Medicare skilled nursing facility reimbursements will increase by $750 million next year under a final payment rule announced Thursday by the Centers for Medicare & Medicaid Services.