Treasury Issues Binding Guidance On Medical Device Excise Tax


The Department of the Treasury and the Internal Revenue Service (IRS) published in the December 7, 2012 Federal Register final regulations and released other interim guidance on the implementation of the new excise tax on medical devices. The IRS also posted FAQs on the new excise tax. Effective January 1, 2013, section 4191 of the Internal Revenue Code imposes on manufacturers and importers of taxable medical devices a tax equal to 2.3 percent of the “price” at which a taxable medical device is sold. Congress provided exemptions for eyeglasses, hearing aids, contact lenses and “any other medical device determined … to be of a type which is generally purchased by the general public at retail for individual use” (the “retail exemption”).

The new regulations make relatively few changes to the regulations that were proposed in February 2012 (the “proposed regulations”). The final regulations include additional guidance on the retail exemption and include 15 examples (including eight new examples) showing how the retail exemption rules apply.

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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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