MITA Weighs in on Excise Tax Issues

The Medical Imaging & Technology Association (MITA), the trade group representing US medical imaging equipment manufacturers, has submitted comments to the Internal Revenue Service warning that improper implementation of the medical device excise tax provision of the Health Care and Education Reconciliation Act of 2010. In a statement, MITA executive director David Fisher emphasized the “unique nature” of the medical imaging and radiation business and cautioned that ill-planned implementation of the tax would stifle innovation—an argument made regularly by the Advanced Medical Technology Association (AdvaMed) and the Medical Device Manufacturers Association. MITA’s two key concerns involve the nature of medical imaging and radiation therapy equipment, considered capital equipment because of its durability and reusability. First, the trade group contends that end-users opting to purchase service contracts that include replacement parts could face double taxation. “The replacement of component parts of a machine which has already been taxed should not be taxed a second time,” MITA stated. Second, leases of imaging and radiological therapy devices should not be subject to the entire excise tax at the beginning of those leases, argues MITA. Rather, the tax should be levied on the final sale of the equipment to an end-user in order to match tax expense with revenues. MITA officials also worry that the tax will put FDA-registered manufacturers at a competitive disadvantage against device resellers that will not be taxed on their revenues. Although warnings of innovation stifling in the face of new regulations have become commonplace to the point of cliché by now, MITA’s specific arguments (as well as those of AdvaMed) regarding careful implementation of the excise tax merit serious consideration by the IRS. Hopefully the agency will prove receptive to these recommendations.

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