IRS Releases Information on New Tax under Healthcare Law

According to a Reuters article, the IRS released new rules today that addressed a portion of the healthcare law that has already been met with controversy. Under the bill, a tax would be placed on such medical devices like medical sutures and knee replacement implants.

The 2.3-percent tax will go into effect after December 31. The tax, which will be on gross sales of the companies that make the devices, is anticipated to generate $29 billion in revenue for the Federal government in the next 10 years.

The rules were released, though the fate of the tax remains unclear. While a repeal bill was passed in June in the House of Representatives (controlled by the Republicans), it has not yet come to a vote in the Senate, now controlled by Democrats. Large companies that produce the devices, such as Boston Scientific Corp and 3M Co are pushing for the repeal.

In regards to what is exempt from the tax, the IRS stated eyeglasses, contacts, hearing aids, and prosthetics are on the exemption list. On the other hand, medical devices that are implanted by medical professionals are the devices to which the tax will apply if the repeal bill does not pass in the Senate. Those who hope that devices being used for humanitarian purposes will be exempt are out of luck, as they fall under the category of taxable under the law.

Many in the medical device business hope that the tax will be delayed as a resolution to the “fiscal cliff” is reached.


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