Plans for medical device tax finalized by the IRS
Tax will cover everything from pacemakers, sutures, surgical implants
After weeks of planning and negotiations, the U.S. Internal Revenue Service has released the final rules governing new taxes on medical devices. The tax will cover all items, such as surgical sutures to knee replacement implants. The tax will become effective in 2013 under the umbrella of President Barack Obama's 2010 healthcare law.
Companies affected by the new tax rule include Boston Scientific Corp, 3M Co and Kimberly-Clark Corp has been lobbying the U.S. Congress for a repeal of the tax.
A repeal bill passed the Republican-controlled U.S. House of Representatives in June. It has not been voted on by the Democratic-controlled Senate.
Currently, many medical devices are sold over-the-counter without a doctor's prescription. The IRS says that such items as eyeglasses, contact lenses and hearing aids are exempt from the tax, as are prosthetics.
The new tax applies mostly to devices that are used and implanted by medical professionals, including such complex items or as rudimentary as tongue depressors.
Experimental cancer treatment devices are not exempt from the tax.
Some medical device companies are hoping to delay the tax's start date as part of a resolution of the "fiscal cliff" deadline at the end of the year involving several taxes and spending measures.
"We would like to be part of the punt," chairman of Cook Group Inc., Steve Ferguson said, referring to an extension of current tax policy into 2013.
Director at PricewaterhouseCoopers LLP as well as a former IRS official, Lew Fernandez points out to one potentially problematic aspect of the tax. Upon implementation, companies selling dual-use products to medical and non-medical customers must pay the tax on those products, potentially putting them at a competitive disadvantage.
For example, it remains "an open question" when latex gloves come under the tax, he said.
© 2012, Catholic Online. Distributed by NEWS CONSORTIUM
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General Intention: The Faith of Christians. That in this Year of Faith Christians may deepen their knowledge of the mystery of Christ and witness joyfully to the gift of faith in him.
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Keywords: Medical device tax, medical devices, fiscal cliff, eyeglasses, contact lenses and hearing aids
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