Tax Talk -- Volume 6, No. 3 -- October 2013

In This Issue:

A Primer on the Medical Device Excise Tax; FATCA Registration Begins; In re Downey Financial Corp. (U.S. Bankr. Court Dist. of Delaware 10/8/2013); In re NetBank (11th Cir. 9/10/2013); and In re BankUnited (11th Cir. 8/15/2013); CCA 201334037; Barnes Group, Inc. v. Comm’r, T.C. Memo 2013-109 (April 16, 2013); Joint Statement between US DOJ and Swiss Federal Dep’t of Finance; MoFo in the News; and Awards.

Excerpt from A Primer on the Medical Device Excise Tax -

The Medical Device Excise Tax was enacted in 2010 as part of the plan to fund the Affordable Care Act (affectionately known as “Obamacare”). It imposes an excise tax on the sale of certain medical devices by the manufacturer or importer of the device, effective January 1, 2013. The tax is 2.3% of the sale price of the “taxable medical device,” which is defined as a device that is listed as a device with the Food and Drug Administration under the Federal, Food, Drug, and Cosmetic Act, as well as in certain regulations. Examples of medical devices covered by the tax run the gamut from the mundane (tongue depressors and latex gloves) to the exotic (artificial hearts and pacemakers). Not all medical devices, however, are subject to the tax. There is an exemption for eyeglasses, contact lenses, and hearing aids, which is a relief, because, as far as we are concerned, few of us have ever referred to our glasses or contact lenses as a “medical device.” There are also other exemptions for devices that are purchased by the general public at retail for individual use (i.e., the retail exception). Whether a device falls within the retail exception turns on a fuzzy facts and circumstances test, although certain categories of devices (such as prosthetics and orthotics) may qualify for the retail exemption so that manufacturers and importers do not have to apply the facts and circumstances test. For our readers who are keen to learn even more about this excise tax, the IRS has already anticipated your questions and has provided a handy set of answers to your most “Frequently Asked Questions.” This FAQ is available online.

Please see full issue 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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