The IRS needs to improve its strategy of ensuring accurate reporting and payment of the Medical Device Excise Tax, the Treasury Inspector General for Tax Administration has said.
It explained that the Affordable Care Act includes an excise tax equal to 2.3 percent of the sales price for medical devices sold and that the Joint Committee on Taxation estimated revenues from the medical device excise tax of $20 billion for fiscal 2013 – 2019.
However, TIGTA found that both the number of filings for the medical device excise tax and the amount of revenue reported were lower than estimated.
The IRS is working to advise medical device manufacturers of the new excise tax, but so far it cannot identify the population of medical device manufacturers registered with the FDA that are required to file a Form 720 and pay the excise tax, according to TIGTA.
It said it identified device tax discrepancies totaling about $117.8 million when comparing captured amounts to estimates of what should have come in.
The IRS agreed with recommendations aimed at refining the agency’s compliance strategy and plans to consider alternative strategies for identifying noncompliant manufacturers, identify programming changes needed to improve the math verification for paper-filed Forms 720, and implement procedures for corresponding with taxpayers if the changes can be accomplished within budgetary constraints, according to TIGTA.
