written by Patti Stoner

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Effective January 1, 2013, manufacturers and importers are required to pay 2.3% on the sale price of any medical device, according to the Affordable Care Act.

A medical device is defined as any device listed by the Food and Drug Administration (FDA) that is intended for humans. The term device has a broader definition than you might imagine. Click here to read the definitions from the FDA website.

Generally, if these medical devices are purchased by the general public at retail for their individual use, there is the retail exemption to this tax. Included in the kinds of items under this retail exemption would be: sales of eyeglasses, contact lenses, hearing aids, and other devices such as over-the counter lab tests, durable medical equipment, prosthetics, orthotics or supplies. A “facts and circumstances test” will be applied for other items.

Sales of taxable medical devices for further manufacture or export may be made tax free if certain registration and other requirements are met. The medical device excise tax is reported and payment is due with the return and the first quarterly return is for 1/1-3/31/2013 and due 4/30/2013. Semi-monthly electronic federal tax payments may be due but the IRS has delayed starting any penalty assessments through the 3rd quarter of 2013.

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