11/21/2012

Medical excise tax set to take effect Jan. 1


Despite strong lobbying from the ADA and other dental organizations, a 2.3 percent medical device excise tax is set to take effect on Jan. 1. Dentists should be aware, however, that the impact of the tax on dental practices is not entirely clear.

The Internal Revenue Service has not yet published final regulations or provided guidance as to how it applies to dentistry. The tax may impact dental practices in the form of increased costs for purchasing supplies and equipment.

Many questions remain about the implementation of this tax. For example, it is not yet determined whether a dentist would be considered a "manufacturer" under the manufacturers and retailers excise taxes regulations and be required to pay the excise tax on such things as mouthguards and indirect restorations milled in the practice.

The medical device excise tax will apply to dental devices regulated by the U.S. Food and Drug Administration.

The ADA is seeking clarification from the IRS and specifics on how the tax affects dental practices, but it is unclear when the IRS will issue formal interpretation on this provision.

For more information, read the article ADA has posted. You also can read more about it on the CDA Compass Blog. More details will be included in future issues of the CDA Update as they become available.





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Now that Election Day has passed, it appears the 2.3 percent medical device excise tax will go into effect as scheduled on January 1, 2013. The IRS has yet to publish final regulations, but its proposed regulations and responses to comments (available here) may provide insight to how the agency might enforce it.The tax may impact dental practices in the form of increased costs for purchasing supplies and equipment. The excise tax also applies to equipment leases. Many questions remain about the implementation of this tax, and it is not yet determined whether a dentist would be considered a "manufacturer" under the manufacturers and retailers excise taxes regulations (26 CFR Parts 40 and 48) and be required to pay the excise tax on such things as mouthguards and indirect restorations milled in the practice.
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