WASHINGTON Dec 5 The U.S. Internal Revenue
Service on Wednesday released final rules for a new tax on
medical devices, products ranging from surgical sutures to knee
replacement implants, that starts next year as part of President
Barack Obama's 2010 healthcare law.
The 2.3-percent tax must be paid, effective after Dec. 31,
by device-makers on their gross sales. The tax is expected to
raise $29 billion in government revenues through 2022.
Companies including Boston Scientific Corp, 3M Co
and Kimberly-Clark Corp have been lobbying the
U.S. Congress for a repeal of the tax.
A repeal bill passed the Republican-controlled U.S. House of
Representatives in June, but it has not been voted on by the
"The excise tax is on the medical device manufacturers and
importers (who) will now have access to 30 million new customers
due to the health care law," Treasury Department spokeswoman
Sabrina Siddiqui said in a statement.
Many medical devices that are sold over-the-counter - such
eyeglasses, contact lenses and hearing aids - are exempt from
the tax, as are prosthetics, the IRS said.
The tax applies mostly to devices used and implanted by
medical professionals, including items as complex as pacemakers
or as simple as tongue depressors.
Products sold for humanitarian reasons, such as experimental
cancer treatment devices, are not exempt from the tax.
Some medical device companies are hoping to delay the tax's
start date as part of a resolution of the "fiscal cliff"
deadline at the end of the year involving many tax and spending
measures, said Steve Ferguson, chairman of Cook Group Inc.
"We would like to be part of the punt," Ferguson said,
referring to an extension of current tax policy into 2013.
In one potentially problematic aspect of the tax, companies
selling dual-use products to medical and non-medical customers
must pay the tax on those products, potentially putting them at
a competitive disadvantage, said Lew Fernandez, a director at
PricewaterhouseCoopers LLP and a former IRS official.
For example, it remains "an open question" when latex gloves
come under the tax, he said.