According to new regulations, the United States Internal Revenue Service (IRS) will waive late payment penalties on the medical device tax for the first nine months of 2013. However, late payment penalties will only be waived in situations where a company has reasonable cause.
With the new regulations released by the U.S. Treasury on Thursday, the IRS acknowledges that the upcoming medical device excise tax will be a significant burden for many medical device companies. Companies will be required to make semi-monthly payments of the 2.3 percent tax. The tax will be levied against total sales at a medical device company.
Industry groups have fought tooth and nail against the upcoming medical excise tax. While the amnesty on late payment penalties is good news for medical device companies, the tax remains a bitter issue for many impacted companies.
According to the regulations (listed below as a PDF), companies are required to make the first deposit for the tax on January 29th, 2013. The first payment will cover all sales from January 1st to 15th of 2013. In the fourth quarter of next year, the late payment penalty will go into full effect.
To qualify for amnesty from the late payment penalty, companies will be required to demonstrate that they made a “good faith attempt to comply with requirements ... and that the failure was not due to willful neglect."