The Medical Device Tax Quagmire
Posted Mar 17, 2014, Published February 2014
In 2010, the NADL’s analysis of the new healthcare legislation revealed that a 2.3% excise tax would be applicable to the selling price of completed dental restorations beginning in 2013.
Vague terminology in the legislation indicated that the 2.3% tax would be payable by the manufacturer, producer or importer but didn’t specifically define those terms. Given the FDA’s previous classification of dental laboratories as medical device manufacturers, the conclusion was that the tax would apply.
The news generated a growing alarm over the next several months as laboratory owners sought clarification on what the tax would mean to them. Despite the efforts of the NADL, ADA and nearly a dozen other allied dental organizations to have dental devices excluded from the tax, the IRS denied the request at a public hearing in Washington D.C. in May 2012.
However, at virtually the last minute—on December 4, 2012—the IRS released its Final Rule on the Medical Device Tax, confirming that the 2.3% excise tax would NOT apply to most domestically made dental restorations. According to the NADL, the only domestically made dental devices subject to the new tax are those currently required to be listed as a device with the FDA (including sleep apnea and some orthodontic and implant devices) as well as imported restorations fabricated by foreign laboratories.
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