Medical Device Industry to Pay IRS $97 Million as Device Tax Goes into Effect

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Medical device manufacturers estimate that $97 million will be paid to the IRS as part of the first semimonthly payment for the medical device tax, which goes into effect this year.

Under the new 2.3% tax, device manufacturers expect to pay an average of $194 million per month, with approximately $94 million in semimonthly payments. A coalition for the medical device industry — which includes the Medical Imaging & Technology Alliance (MITA), the Advanced Medical Technology Association (AdvaMed), and the Medical Device Manufacturer’s Association — is urging Congress to repeal the tax because they say this money would be better spent if it was reinvested in research and development (R &D) and in protecting American workers' jobs.

The medical device industry, according to the coalition, employs more than 400,000 workers across the US, generates approximately $25 billion in payroll, and invests nearly $10 billion in R &D annually.

“Every dollar spent on this tax is a dollar taken away from medical innovation and job creation. This tax is already resulting in layoffs, reduced investments in R &D and delays in significant capital improvements. We urge Congress to act swiftly and repeal this job-killing, innovation destroying, anti-competitive tax,” said Stephen J. Ubl, President and CEO of AdvaMed, in a press release.