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Effectively managing the medical device excise tax

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How are you managing the medical device excise tax (MDET)? Medical device excise tax Medical device makers faced a significant tax change in 2013 when the MDET – part of the 2010 Affordable Care Act – took effect.

Many medical device companies face challenging circumstances in their attempt to comply with the tax, including:
  • complicated MDET regulations and taxability rules;
  • a lack of Internal Revenue Service (IRS) guidance;
  • safe harbor pricing rules based on “industry wide” percentages instead of medical device industry subsectors;
  • exemptions that are difficult to substantiate and document; and
  • challenges in determining who is subject to the tax.

Companies are still struggling with the MDET compliance burden and are uncertain if they are paying the correct amount of tax. In particular, companies that are using the IRS “safe harbor” percentages may be overpaying. An attempt to standardize how all medical device companies are treated, the safe harbor percentages are often too high and not representative.

Companies are also faced with the increasing likelihood that the IRS will audit their compliance procedures. And although there has been considerable discussion of an MDET repeal, for now the tax remains in effect, with any repeal attempts unable to overcome political hurdles.

How Grant Thornton can help Grant Thornton can help your company navigate the complexities of the MDET and help manage the overall tax impact.

Our team provides a full range of MDET services to assist you with:

  • identifying potential overpayments and refund opportunities;
  • helping clarify the compliance requirements of the tax;
  • assisting in the development of an efficient MDET reporting and compliance process;
  • supporting your compliance function and quarterly filing process; and
  • assisting with audit defense.

Why work with Grant Thornton? Our team has helped companies comply with the MDET since its inception. Our experience helps us to deliver value to our clients through:

  • more accurate MDET calculations;
  • more efficient processes;
  • increased confidence that compliance obligations are met; and
  • the identification of refund opportunities.

Our team also actively monitors Congressional activity and can keep your company informed of any changes in compliance requirements as soon as legislative changes are enacted.

Michael Cronin
Senior Manager
State and Local Tax Services
T +1 617 848 4999
E michael.cronin@us.gt.com


Tax Professional Standards Statement:
This document supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the subject of this document we encourage you to contact us or an independent tax advisor to discuss the potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this document may be considered to contain written tax advice, any written advice contained in, forwarded with, or attached to this document is not intended by Grant Thornton to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.