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For purposes of the medical device excise tax the irs

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price of the particular device. For purposes of the medical device excise tax, the IRS final rule committee has adopted a listing system in which taxable devices that are intended for humans are those that are listed with the Food and Drug Administration (FDA) under section 510(j) of the FFDCA. If a device is not listed with the FDA, but the FDA later determines that it should have been listed as a device, the device will be deemed listed as a device as of the date the FDA notifies the manufacturer in writing that such device should have been listed and taxed (www.irs.gov). The provision calls for the tax without regard to whether the company will have a profit during the year. There are however several exemptions that exist that will result in no medical device tax for certain products. These products include eyeglasses, contact lenses, and hearing aids. In addition to the exemption on these products there is also an exemption for other devices that are “regularly available for purchase and use by individual consumers who are not medical professionals, and if the design of the device demonstrates that it is not primarily intended for use in a medical institution or office or by a medical professional” (www.policymed.com) In order to correctly determine what products will fall into the category of this “retail exemption,” the IRS has adopted a “facts and circumstances approach.” This approach will evaluate whether a medical device is of a type that is generally purchased by the public at retail for individual use (www.policymed.com). This particular tax is in the news as this paper is being written due to the fact that lawmakers are trying to get this provision of the Affordable Care Act repealed. Lawmakers are
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trying to spare the medical device companies from this tax which will only hit that company if their products fail to qualify for that “regularly available” status. A device that is manufactured by a company will qualify for the retail exemption and not be subject to the medical device tax if it meets certain qualifications. The fact that a device is of a type that requires a prescription is not a factor in the determination of whether or not the device falls under the retail exemption. The IRS website lists the factors for “regularly available” which include: 1. Whether consumers who are not medical professionals can purchase the device in person, over the telephone, or over the internet, through retail businesses such as drug stores, supermarkets, or medical supply stores and retailers that primarily sell devices (for example, specialty medical stores, durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) suppliers and similar vendors); 2. Whether consumers who are not medical professionals can use the device safely and effectively for its intended medical purpose with minimal or no training from a medical professional; and 3. Whether the device is classified by the FDA under Subpart D of 21 CFR part 890 (Physical Medicine Devices).
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