1. December 6, 2010 Treasury and IRS Request Formal Public Comments on Issues
Regarding the Medical Device Excise Tax
TAX CLIENT ALERT
This Alert provides only
general information and The U.S Treasury Department (Treasury) and Internal Revenue Service (IRS) released
should not be relied upon as Notice 2010-89 on December 3, 2010, inviting formal public comments regarding the
legal advice. We would be recently enacted medical device excise tax imposed under section 4191 of the Internal
pleased to discuss our
Revenue Code on sales of medical devices after December 31, 2012.
experience and the issues
The Notice permits manufacturers, importers, distributors and retailers of products
presented in this Alert with
potentially subject to the excise tax to submit formal public comments addressing their
those contemplating
specific issues and potentially having such issues addressed in formal guidance. The
investments in these markets. Notice generally requests comments regarding issues that “should be” addressed in
For more information, contact guidance implementing the tax, presumably allowing taxpayers to submit comments on a
your Patton Boggs LLP broad array of issues. The Notice specifically requests comments on the exemption in
attorney or the authors listed section 4191(b)(2)(D) for any medical device “determined by the Secretary to be of a type
below. which is generally purchased by the general public at retail for individual use.” Comments
are also specifically requested on issues pertaining to the application of the existing
Rosemary Becchi Chapter 32 manufacturers excise tax rules to the new excise tax.
202-457-5255
rbecchi@pattonboggs.com Formal comments under the Notice must be submitted by March 3, 2011.
George Schutzer
202-457-5273
Patton Boggs LLP lawyers have identified several areas in which the application of the law
gschutzer@pattonboggs.com is uncertain or where guidance is needed. These include among others:
Darryl Nirenberg
202-457-6022
dnirenberg@pattonboggs.com • The definition of “medical device” for purposes of the tax. The statute refers to the
Federal Food, Drug, and Cosmetic Act definition, but significant ambiguities exist in
Paul Rubin how that definition applies to some classes of products, such as laboratory
202-457-5646 developed tests (LDTs), dual-use products, combination products, mobile
prubin@pattonboggs.com
electronics used for wireless health-related purposes and device components and
Martha Kendrick accessories.
202-457-6520
mkendrick@pattonboggs.com
Joanne Hodge
• The meaning of the terms “generally,” “public” and “retail” in the exemption from
202-457-6137 the tax for “products of a type which is generally purchased by the public at retail
jhodge@pattonboggs.com for individual use,” including whether a specified percentage of sales to the public
is required to satisfy “generally,” whether products sold by prescription are sold to
the “public,” and whether devices sold by doctors and dentists to patients are sold
at “retail.”
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2. • How the IRS and Treasury will develop the list of “products of a type which is
generally purchased by the public at retail for individual use,” and whether each
manufacturer, wholesaler and retailer should be providing to the IRS and Treasury
a list of products that it believes is exempt to ensure inclusion.
Manufacturers, wholesalers and retailers of medical devices may want to comment on
those issues as well as others.
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