Medical device tax brings in less than expected
American Academy of Sleep Medicine
Wednesday, August 20, 2014
The Hill reported that the Affordable Care Act's medical device tax generated $913.4 million in revenue in the first half of 2013, which is short of the $1.2 billion the Internal Revenue Service estimated it would receive, according to a report by the Treasury Inspector General for Tax Administration (TIGTA). In order to help fund the ACA, a 2.3 percent tax was established for the sale of medical devices that are primarily used by physicians and hospitals.
One of the reasons shortfall identified by TIGTA was that IRS agents were still having a hard time determining exactly which medical device manufacturers were subject to the tax. The report also noted several mistakes IRS had made in collecting funds owed under the tax. For example, although electronic tax returns automatically check to make sure taxes paid match the amount of a company's reported medical device sales, IRS does not have a similar system in place to check paper returns.