In December, the IRS released its final rule on the Medical Device Excise Tax (MDT), determining that only those devices required to be listed with the FDA are subject to the tax (for example, sleep apnea...See more and snoring devices as well as all restorations fabricated outside of the U.S.). To provide labs with a clear understanding of the MDT, the NADL has prepared a Medical Device Excise Tax Guidebook which includes an overview of the tax; the definition of a taxable medical device; key factors for manufacturer and importer determination; and a computation of the tax due to the IRS. The guidebook also covers sale and sale price; tax-free sales for export and further manufacture; and the final IRS rule along with IRS Notice 2012-77 and the interim rules. Electronic manuals (on CD) are available to NADL members for $50 each and to non-members for $250; printed copies are $75 for members and $300 for non-members. To order the guidebook, visit www.nadl.org.
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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...See more 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. Visit LMTmag.com tomorrow for another LMT Memorable Moment.
At the Cal-Lab Meeting in Chicago, Safelink's Gary Morgan, CDT, offered an update on various regulatory issues, including OSHA, the FDA and the Medical Device Tax. Here's an overview: OSHA has revised...See more its Hazard Communication Standard. "This is a major change you need to be aware of and address right now," said Morgan, noting that OSHA is making enforcement a priority and laboratory inspections and penalties are on the rise. As part of the new standard: Laboratories must update their hazard communication plan which details how staff should safely work with chemicals. "You need to figure out what you have: conduct an assessment, determine safe practices, create a written program and label all chemicals with their contents," said Morgan. OSHA has also adopted a Global Harmonization System (GHS) that requires images or pictograms on dangerous, corrosive or toxic substances. Manufacturers and distributors are required to label original containers and the lab should either provide the same labeling information on secondary containers; use an alternate labeling system, such as the HMIS or NFPA labels; or post the labeling information in the area where chemicals are used. Safelink has a GHS toolkit with more information and pictogram labels; call 800-330-6003 or visit www.safelinkconsulting.com . OSHA is instituting new Safety Data Sheets (SDS) for materials; these were formerly called Materials Safety Data Sheets but OSHA has dropped "Materials" from the name. "As you receive the new SDSs, don't throw the old ones away," said Morgan. "Archive them; your lab needs them for historical reference." Laboratories must train staff on the new labeling requirement and SDSs by December 1, 2013 and manufacturers must be completely transitioned to the new SDSs by June 1, 2015. One new toxic substance that OSHA is testing for—but most labs don't know about—is hexavalent chromium, which results from melting, soldering or welding chrome cobalt. "At an OSHA inspection, one lab didn't know what this was and hadn't tested for it. Although it then tested and found no exposure, the lab still had to pay the penalty." Labs can hire an industrial hygienists to do the testing or contact the OSHA consultation service in their state who conducts the testing at no charge. Morgan also offered this information on the FDA and Medical Device Tax: In addition to paying a higher registration fee, labs required to register with the FDA must now also provide more information, including their website address. "Be careful what you put on your website," warned Morgan. "If the FDA sees you marketing something you don't have a 510k for, it will hold you accountable. Labs have already seen this happening and have been served with cease and desist letters." Will custom implant abutments be considered a Class 2 medical device? "Stock implant abutments are considered Class 2 medical devices—requiring manufacturers who make them to register with the FDA—but we're still waiting to hear how the FDA will address custom implant abutments," said Morgan. "This is a gorilla we're going to have to face; we should hear from the FDA soon, stay tuned." Medical Device Tax implications: The cost of doing business just went up. "Although most labs don't have to deal with paying the tax, the materials used will be taxed. Who are the manufacturers going to recover that tax from? You guys, unless they decide to eat it," said Morgan. "If the tax isn't showing up on your invoices you need to ask if it's included." Morgan also offered these tips for a safer workplace: Distracted driving and texting. "Be proactive, have a policy on safe driving practices." Have a contingency plan for natural disasters such as Storm Sandy. "You need to keep your business going in the event of an emergency," said Morgan. Workplace violence. "It's the thing no one wants to talk about, but you should at least have a 'no weapons' policy." for more on the Cal-Lab Meeting, click here.
It would be downright silly to suggest anyone actually likes taxes so itâs no surprise that a coalition of 400 medical device manufacturers voiced its opposition to the 2.3% excise tax on medical...See more devices slated to go into effect January 1, 2013.
2.3% Excise Tax Goes into Effect in 2013; FDA Registration Fees Increase Since the Health Care and Education Reconciliation Act was signed into law in May 2010, laboratory owners have been wondering whether...See more the 2.3% excise tax on medical devices applies to dental restorations. Despite the efforts of the U.S. House of Representatives, 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. "Effective January 1, 2013, it's prudent for dental laboratories to be prepared for remitting a 2.3% excise tax on sales of finished devices," says Bennett Napier, CAE Executive Director, NADL. According to an analysis by Reed Smith, LLP, the NADL's Washington, D.C.-based law firm: - The tax applies to the finished device rather than components. For example, if Laboratory A outsources a partial framework to Laboratory B, there would be no tax due on the transaction. The tax only applies when Laboratory A delivers the final case to the prescribing dentist. For imported restorations, the importer—meaning the U.S. agent for the foreign laboratory, or the domestic laboratory or dental practice that sent it directly overseas—is responsible for paying the tax. Restorations fabricated in the dental office, including those fabricated via chairside milling systems, are also subject to the excise tax. In terms of administrative filing, laboratories will have to use Form 720 which is available at www.irs.gov to report and pay the tax. This form has to be filed quarterly and then a final Form 720 is submitted at the end of each year. Form 720 includes sections that help your accountant or bookkeeper determine your tax liability for each quarter. For more information, click this link, www.irs.gov/irb/2012-13_IRB/ar12.html FDA Fee Increase In August, the FDA released new requirements for the registration and listing of medical devices, including dental devices, that take effect on October 1, 2012. Among the changes: For labs that undertake a business activity that requires it to register with the FDA (see "Who Needs to Register with the FDA" below), the registration fee has increased from $2,029 to $2,575; this increase applies to both domestic and foreign laboratories. If you import, your business activity in that arena will become public record on the FDA website as foreign establishments must now identify their U.S. lab and dentist customers, even those who send work through a U.S. agent or broker. "It's apparent this is an attempt by FDA to identify all entities in the U.S. that are importing and/or using devices from foreign establishments. This change significantly increases the transparency of entities that are doing any work offshore," says Napier. The fee for filing a 510(k) form—required from labs that manufacture certain devices, like sleep apnea—has increased from $2,024 to $2,480; this is the fee for a small business with $100 million or less in sales. Filing this form also requires you to provide a website address. "FDA has been securing information from websites and apparently has been checking for 510(k)s on certain devices branded by the lab," says Napier. "If you don't have a 510(k) on the product, you shouldn't show that it treats any type of medical condition, symptom, disease or disorder such as sleep apnea. If you make a claim for treatment, then you must either file a 510(k) on the device yourself or ensure that the Manufacturer/Specification Developer has a 510(k)." A lab that registers as a Manufacturer, Contract Manufacturer or Repacker/Relabeler must now identify any proprietary or brand names of the products (i.e. TAP III). Foreign operations must also now identify any proprietary names of the devices they manufacture. For a complete summary of the requirements, click this link, www.fda.gov/MedicalDevices/ResourcesforYou/Industry/ucm314844.htm Who Needs to Register with the FDA? The rules dictating who must register with the FDA remain unchanged and include: • All domestic and foreign laboratories that repackage or relabel restorations or material, including those who work through a U.S. broker or agent; domestic labs that import devices from a foreign laboratory; or domestic labs that fabricate sleep apnea or snoring devices (or any other medical device that is not part of the core dental lab function). • All foreign dental laboratories shipping into the U.S. • All U.S. brokers or agents for foreign dental labs shipping into the U.S. To see past coverage of this topic, click on the links below: New Healthcare Law Includes Excise Tax On Restorations, June 2010 Attention Laboratory Owners: You Remain On the FDA's Radar, June 2010 To see all conversations and activity related to Excise Tax, click here.