MASSDEVICE ON CALL — Medical device industry lobbyists have new ammunition in the fight against the 2.3% Affordable Care Act tax thanks to a U.S. Treasury report citing several issues with the IRS’s management of the levy.
Tax regulators are apparently having trouble determining who does and does not owe the tax and the confusion has also spurred hundreds of false penalties issued to companies wrongly asked to pay, according to the report.
The total tax revenue is also about a quarter shy of expectations. Some called the shortfall a “revolt” on the part of device makers, but others suggest that the findings led credence to industry claims that the tax is too burdensome.
The tax is imposed on all U.S. sales of prescribed medical devices and contains a "retail exemption" on devices sold to the general public, such as contact lenses or diabetes devices and supplies. Estimates on the amount the tax is expected to range vary, from $30 billion over 10 years to the Joint Committee on Taxation’s forecast for $20 billion for fiscal years 2013 through 2019.
The IRS told MassDevice.com last month that it collected $1.4 billion last year in excise tax payments from medical device companies.
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