The Internal Revenue Service (IRS) and the Treasury Department recently released initial rules providing details of how the IRS plans to implement the medical device excise tax. Created as part of the Affordable Care Act in 2010 during the reconciliation process, the medical device excise tax is a 2.3% tax to be imposed on device manufacturers. In initial negotiations, the excise tax was only to be applied on class II and III medical devices, but in last minute wrangling, the tax was extended to include class I devices as well, which includes O&P.
The law did include an exemption for items “generally sold at retail”, such as eye glasses. The O&P industry has been fighting to ensure patient care facilities, such as orthotics and prosthetics clinics, are included in the exemption and considered retail clinics. AOPA stressed the importance of communicating with congressional representatives on this issue by including it in the list of items discussed at the AOPA Policy Forum in 2011. Officials from AOPA then followed up with staff at the IRS and Treasury Department to make the case for our industry.
The rules released earlier this month seem to show the work done by the O&P industry has paid off as “prosthetic and orthotic devices” and “theraputic shoes” are both specifically listed as being covered by the retail exemption. MORE
The IRS is seeking public comment on these proposed rules and will accept comment through May 7th.