Regulations on Medical Device Excise Tax Proposed; Opportunities for Comment


On Friday, February 3, 2012 the Internal Revenue Service and Department of the Treasury (Treasury) released a Notice of Proposed Rulemaking (NPRM) on the excise tax imposed on the sale of certain medical devices under section 4191 of the Internal Revenue Code (Code). Code section 4191 imposes a 2.3 percent excise tax on the sale of taxable medical devices by a manufacturer or importer after December 31, 2012. Section 4191(b)(1) provides that a “taxable medical device” is any device, as defined in section 201(h) of the Federal Food, Drug, and Cosmetic Act (FFDCA), intended for humans. Section 4191(b)(2) provides that the term “taxable medical device” does not include 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.

The NPRM includes proposed regulations addressing many, but not all, of the key issues raised by the medical device industry and other stakeholders. The preamble reviews the proposed regulations and describes how existing rules for manufacturers excise taxes apply to the sale of medical devices by manufacturers and importers.

The NPRM announces a public hearing to be held at 10 a.m. on May 16, 2012, and the NPRM seeks written or electronic comments on the NPRM, and presentation outlines to be discussed at the public hearing, by May 7, 2012 (90 days after publication of the NPRM in the Federal Register.)

The NPRM incorporates both Food and Drug Administration (FDA) and IRS concepts, and includes cross references to the FFDCA, FDA regulations, and manufacturers excise tax regulations.

Please see full alert below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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