The Medical Imaging & Technology Alliance (MITA) recently submitted comments to the Internal Revenue Service (IRS) regarding the implementation of the new excise tax on medical devices as enacted by the Health Care and Education Reconciliation Act of 2010.
The imaging and radiation therapy industries have unique characteristics that will require careful consideration in many aspects of the regulatory process. For example, medical imaging and radiation therapy equipment is often considered capital equipment, as it is reusable and can last for many years.
According to MITA, the device tax creates two issues for capital equipment: First, end-customers may choose to purchase service contracts including replacement parts to maintain functionality. The replacement of component parts of a machine that has already been taxed should not be taxed a second time. In parallel, leases of this equipment should not be put at a disadvantage by applying the entire tax at the beginning of the lease. The device tax should be imposed on the final sale of the equipment to the end-user customer to match the tax expense with the sales revenue, indicated MITA.