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2018 Update on the ACA Medical Device Excise Tax



In 2013, as part of the Affordable Care Act, the medical device excise tax imposed a 2.3% tax on the sale, use, or lease of certain medical devices in the United States. This medical device excise tax was one of the several taxes and fees included in the Affordable Care Act to help pay for expanded health insurance.

A two-year delay on the application of the medical device excise tax was imposed in December 2015. Therefore, the excise tax did not apply to sales of taxable medical devices between January 1, 2016 to December 31, 2017. Manufacturers and importers of medical devices sold during this time did not have to make semi-monthly deposits of the excise tax. When the moratorium expired at the end of 2017, it was expected that the tax would become effective for sales beginning January 1, 2018.

However, on January 22, 2018, the moratorium on the medical device excise tax was retroactively extended another two years and will now go into effect on January 1, 2020.

So, what does this mean for you?

Quite simply put, it means a 2.3% savings on your investment in new laser technology.  Now that the 2.3% medical excise is no longer required to be collected by the IRS, these savings can be passed directly to the medical device purchaser resulting in substantial savings! On most medical device purchases, this moratorium will result in thousands of dollars in cost savings for those purchasing a new tattoo removal or hair removal laser. We can’t think of a better use of your savings than making an investment to market your new or expanding business.  Regardless of what you decide to do with this savings on your investment, one thing is for sure, it won’t be collected and sent to Uncle Sam.

The actual verbiage from the IRS is inserted below for your convenience.

H.R. 195 (Pub. L. 115-120), signed into law on Jan. 22, 2018, extends for an additional two years the moratorium on the medical device excise tax imposed by Internal Revenue Code section 4191. Because of the moratorium, the medical device excise tax does not apply to the sale of taxable medical devices by the manufacturer, producer or importer of the device during the period beginning on Jan. 1, 2016, and ending on Dec. 31, 2019. Further, because the extension of the moratorium is retroactive to Jan. 1, 2018, manufacturers, producers and importers of taxable medical devices should not make deposits of tax or report any medical device excise tax liability on Form 720, Quarterly Federal Excise Tax Return, for sales of taxable medical devices between Jan. 1, 2018, and Jan. 22, 2018.

If you have questions about the current status of the Medical Excise Tax and how you can apply these new savings to your purchase of a tattoo removal laser, hair removal laser or other aesthetic devices, call us today.


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