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House passes bill that includes repeal of medical device tax
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The U.S. House of Representatives passed a jobs package on September 18 that would repeal the 2.3% medical device tax on U.S. sales of medical devices and issue refunds for money paid by industry since the tax went into effect last year.
House members voted 253-163 to approve the "Jobs for America Act," as their last action before heading home for recess until after the November elections.
If it becomes law, the federal Joint Committee on Taxation estimates that repealing and refunding the medical device tax will cost the U.S. $4.48 billion in revenues in fiscal 2015 and $25.74 billion over fiscal years 2015-2024. Federal officials had projected that the tax will raise about $30 billion over 10 years and a coalition of medical device lobbying groups estimating the tab at $1 billion during the first six months of last year, according to MassDevice.com.
In a report released Aug. 19 by the Treasury Inspector General for Tax Administration (TIGTA), the agency said collecting and estimating payments from device companies for the medical device excise tax is becoming increasingly problematic for the Internal Revenue Service. The report also found that the IRS mistakenly issued over 200 penalties totaling more than $700,000 against businesses filing the excise tax form 720.
Members of Congress issued statements reiterating calls to repeal the device tax after the report’s release. House member Erik Paulsen, chief cosponsor of bipartisan legislation to repeal the tax in the House of Representatives, said, “The medical device tax has been a bad idea since day one and the recent report just provides more reason why it needs to be scrapped.”