The Health Care and Education Reconciliation Act of 2010 amended chapter 32 of the Internal Revenue Code by adding section 4191, which imposes an excise tax on the sale of certain medical devices by their manufacturer or importer.
Deposits of tax required
The medical device excise tax is a manufacturers’ excise tax reported on Form 720, Quarterly Federal Excise Tax.
In addition, semi-monthly deposits are required in advance of the filing of Form 720 if excise tax liability exceeds $2,500 for the quarter. Each deposit must be not less than 95% of the net tax liability for the semi-monthly period.
The first deposit of the medical device excise tax, covering the first 15 days of January 2013, is due by January 29, 2013.
Electronic funds transfer required
Federal tax deposits must be made by electronic funds transfer. Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS), although a taxpayer may choose another service.
A deposit made using the EFTPS website (www.eftps.gov) must be initiated before 8 p.m. ET the day before the due date to be received timely by the IRS.
If a taxpayer fails to initiate a deposit transaction by EFTPS by 8 p.m. ET the day before the due date, the deposit may still be made on time by same-day wire payment using the Federal Tax Application.
Deposit penalty relief
Notice 2012-77 provides that the IRS will not impose the section 6656 penalty for the first three calendar quarters of 2013 on a taxpayer that fails to make timely deposits as required if the taxpayer demonstrates a good faith attempt to comply with the requirements and that the failure was not due to willful neglect.
For more information, contact a tax professional with KPMG’s Excise Tax Practice group:
Deborah Karet Gordon