IRS Issues Final Rule Implementing Medical Device Excise Tax
Authors: AHRMM, Catholic Health Association of the United States (CHA), Federation of American Hospitals (FAH), Healthcare Supply Chain Association (HSCA)
The Internal Revenue Service released a final rule implementing a Patient Protection and Affordable Care Act provision that imposes on certain medical devices made after 2012 an excise tax equal to 2.3% of their sales price. In comments submitted on the proposed rule AHRMM, the American Hospital Association and others urged the IRS to explicitly prohibit device companies from passing the tax on to customers, and to clarify that hospitals and other healthcare providers who package and sterilize devices for use in surgery kits should not be treated as device manufacturers or importers under the rule. The final rule does not address AHRMM’s recommendation that manufacturers certify that the tax has not been passed on to customers, but provides that current rules apply in determining the sales price of items. Also, of importance, the final rule states that a kit produced by a hospital or medical institution for its own use would not be a taxable medical device.