Frequently Asked Questions on Medical Device Excise Tax

Hello Taxpayers, hope you’re fit and fine. However, today we would be providing you information on Medical Device taxes, which was developed the final regulation with the consultation of technical experts at the Food and Drug Administration (FDA) and the Centers for Medicare and Medicaid Services after taking a deep insight on the public comments.

The IRS developed the final regulations in consultation with technical experts at the Food and Drug Administration (FDA) and the Centers for Medicare and Medicaid Services, and after carefully reviewing numerous public comments.

There was a huge chaos created when this tax was bought in effect after Dec. 31, 2012. However, it has been a long time since its existence, there are some frequently asked questions that we would be discussing today at our blog. This will give you space to understand and shoot your own questions if you belong here. Also, you can expect another follow up blog next week, covering up the next set of questions we would be missing them today.

So, here are the first sets of questions for your understanding:

Q. What Is Medical Devise Excise Tax?

Under the section 4191 of the Internal Revenue Code, Excise tax is imposed on the sale of certain medical devices by the manufacturer or importer of the device.

Q. When Did The Tax Go Into Effect?

This tax went into effect after Dec. 31, 2012 for the sales of taxable medical devices.

Q. How much tax should be paid?

Approximately, around 2.3 % of the sale price of the taxable medical device is applicable.

Q. Who Is Required To Report And Pay The Medical Excise Tax?

The manufacturer or importer of the taxable medical device is liable to report and file form 720, Quarterly Federal Excise Tax Return, and pay the tax to the IRS.

Q. Is Individual Consumer Required To Report Or Come Under The Recordkeeping Requirements?

Generally, there is no such need for individual consumers. As the tax is imposed upon the sale of the taxable medical device, the manufacturer or importer is responsible for reporting and paying taxes.

Q. Who Is Addressed As The Manufacturer For Purposes Of The Medical Device Excise Tax?

With regards to the medical device excise tax, the manufacturer is the person who is indulged in producing taxable medical device from scrap, salvage or junk material, or from new or raw material, by processing, manipulating or changing the form of a device or by combining or assembling two or more devices.

Q. Who Is The Importer For The Purpose Of The Medical Device Excise Tax?

An importer of a taxable medical device is the person who brings the device into the United States from a source outside States, or withdraws the device from a customs-bonded warehouse for sale or use in the United States.

Q. What Is The Tax Treatment Of Convenience Kits?

Under the interim guidance, a taxable medical device that are domestically-produced convenience kits will be subjected to tax depending on the sale carried by the manufacturer or importer, but the sale of the convenience kit by the kit producer will not be subject to tax. Special rules apply to imported kits.

Q. Which Form Should Be Used To Report Medical Device Excise Tax?

As this tax belongs to the manufacturer’s excise tax, it should be reported on form 720. More additional information on filing, deposits, and payments, refer Chapters 11 and 12 of IRS Publication 510 for additional information

Q. When is form 720 Due?

This form is filed quarterly, and you need to report the medical device excise tax on or by April 30th for the quarterly period including January, February and March 2013

Quarterly return due dates are as follows:

For the months: Due by:
Jan., Feb., Mar. April 30
Apr., May, Jun. July 31
Jul., Aug., Sep. Oct. 31
Oct., Nov., Dec Jan. 31

With the virtual world in hand and the growing technology, IRS recommends every taxpayer to e-file form 720 online in order to save time and energy. If you’re the manufacturer or importer, you’re implied to file excise taxes and pay your dues to the IRS on or before April 30th. To make a wise choice among the authorized service provider, is the ultimate. When things come so handy to you, why should you not grab the opportunity and make the best out of it! do not only serve you with user-friendly application but also with handpicked tax experts, solving your queries at every step and ensuring a successful filing form 720 online.