Since January 1, 2013, manufacturers, producers and importers of medical devices have been liable for a 2.3% US federal excise tax, known as the Medical Device Excise Tax (MDET), on sales made in the US.
If your company manufactures, produces or imports medical devices, now is the time to consider the MDET.
During the recent US government shutdown, the Republican Party tried to repeal the MDET. The effort failed – despite industry lobbying – so the MDET continues to apply.
The MDET applies on sales of any medical device that is intended for humans. The definition encompasses an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article.
It also includes associated parts and accessories that are:
Four categories are exempt from the MDET:
Generally, the MDET must be paid twice each month. However, IRS Form 720, ‘Quarterly Excise Tax Return’ must be filed in the month following the calendar quarter.
You should estimate the cost of the MDET to your company and its effect on your business operations.
Also, review any projections already made and the underlying assumptions, given the many uncertainties regarding exceptions and pricing.
Equally important, consider any planning steps that could mitigate the tax.