IRS Issues Final Regulations Implementing the Affordable Care Act’s Medical Device Excise Tax


On December 5, 2012, the Internal Revenue Service (IRS) published final regulations regarding the implementation of the excise tax applicable to the sale of certain medical devices, enacted by the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the ACA), and codified under section 4191 of the Internal Revenue Code (Code). The IRS developed the final regulations in consultation with the Food and Drug Administration (FDA) and the Centers for Medicare & Medicaid Services (CMS). The final regulations provide additional guidance regarding which devices are subject to the tax, address comments submitted to the IRS in response to proposed regulations issued in February 2012 and during a May 2012 public hearing, and seek further comment on certain issues.

The ACA imposed an excise tax on the sale of certain medical devices by the manufacturer, producer or importer of the device in an amount equal to 2.3% of the sale price, effective January 1, 2013. Excluded from the tax are eyeglasses, contact lenses, hearing aids and “any other medical device determined by the Secretary [of the Treasury] to be of a type that is generally purchased by the general public at retail for individual use.”

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