Rushing to avoid a government shutdown looming after December 20, Congress reached a deal on a $1.3 trillion spending package. The legislation includes the definitive end to the unpopular medical device excise tax, which was originally passed as part of the funding for the Affordable Care Act.
The medical device excise tax had been controversial from the start. Set at 2.3% of the sales price of taxable medical devices, the tax was assessed on any sales by manufacturers or importers beginning in January of 2013. The tax was applied to revenues regardless of a company’s profitability, prompting objections from industry.
Device manufacturers had not been required to pay the tax over the past four years. A two-year moratorium passed in December 2015 was extended an additional two years for a period that was due to run through December 31, 2019.
The repeal offers significant relief to industry, which viewed the prospect of reapplication of the tax as a serious impediment to innovation.
Authored by Randy J. Prebula, John S. Stanton and Lina Kontos