The medical device excise tax moratorium extended two more years
On Jan. 22, 2018, President Trump signed H.R. 195, a continuing resolution that will fund the government through Feb. 8, 2018, ending a three-day government shut down. The new law also contains several provisions relating to the Patient Protection and Affordable Care Act.
Section 4001 of H.R. 195 amends Internal Revenue Code section 4191 relating to the excise tax on medical devices. Section 4191 imposes a 2.3 percent excise tax on manufacturer’s sale of medical devices. Prior to this amendment, there was a moratorium on the excise tax for sales that occurred after Dec. 31, 2015 and before Jan. 1, 2018. The new law serves to extend the moratorium, retroactively from Jan. 1, 2018, through Dec. 31, 2019.
Taxpayers who manufacture medical devices can disregard earlier guidance (see our tax alert IRS provides temporary relief for medical device tax deposits on Notice 2018-10) allowing for transitional relief for the required deposits of the medical device excise tax. Although there has been speculation that another such moratorium on the excise tax would likely result in its repeal, taxpayers should consult their tax advisors to determine when and how the medical device excise tax will apply to them.