Medical device tax: AdvaMed warns IRS on double tax risk for drug device combination products

July 13, 2011 by MassDevice staff

The Medical device industry council files more comments with IRS in an effort to exclude drug-device combination products, medical kits and leased equipment from being taxed twice under the medical device tax.

Health care reform

The medi-tech industry is trying to stay ahead of medical device fees to assure some products are not taxed twice under the new excise tax on industry contained in the health care bill.

As expected, the Advanced Medical Technology Assn. submitted another round of public comments to the IRS in an effort to mitigate the chance of some medical device companies being taxed twice under the new 2.3 percent excise tax, which is slated to go into effect in 2013.

Back in May, AdvaMed president & CEO Stephen Ubl told MassDevice that industry officials had met with representatives of the IRS and the U.S. Treasury Dept. about concerns over double taxation. Ubl said he's confident that the industry's concerns were understood by the brass at the Internal Revenue Service and Treasury and that the council was planning on issuing another round of recommendations.

In its supplemental comments, AdvaMed asked the IRS to make special considerations for drug-device combination products, so that they weren't hit with the excise tax and a prescription drug fee. The industry council said only one fee should be assessed in those cases, stating that "congress did not intend medical devices in combination products to be subject to a double taxation."

In addition, AdvaMed asked for a clarification that companies that build certain medical kits be considered exempt from the tax, as pre-packaged surgical, maintenance and other kits should not be considered a manufacturing activity in itself.