Posted on Wednesday, January 19th, 2011 by Marilea Campomizzi, CPA
The Medical Device Tax was enacted as part of the Patient Protection and Affordable Care Act as a way to help offset the cost of the overall bill. Originally, medical device manufacturers and importers with sales over $5 million would have paid a non-deductible annual fee. After several amendments, medical device manufacturers will now pay a 2.3% excise tax, which will be deductible, on sales of taxable medical devices starting in 2013.
What qualifies as a taxable medical device?
Currently, a taxable medical device is defined, by Section 201(h) of the Federal Food, Drug and Cosmetic Act, as any device intended for humans except for the following:
- Contact lenses,
- Hearing aids, and
- Any other medical device determined by the Secretary of the Treasury to be of a type which is generally purchased by the general public at retail for individual use
Since medical devices range from elastic bandages to joint implants, there is still a great deal of ambiguity and it is yet to be seen what exactly will be considered a taxable medical device. What we do know for sure, though, is that this tax is coming. For more information on how your company can plan ahead for this change, contact our Life Sciences and Innovation Group at 440-449-6800.