In a press release published by IRS, they are already pushing to deal with the problem via pursuing the recommendations of the recent sales tax audit which recommends an amendment on the tax forms avert potential discrepancies moving forward.
Atlanta, GA -- (SBWIRE) -- 09/19/2014 -- Based on the audits performed by the government on the medical devices from Obamacare, a number, in fact thousands, of companies fail to pay for the taxes on these medical devices, causing a decline on its revenue target. This irregularity could brave more efforts to rescind tax. Something that the Republicans and a number of Democrats would definitely counter.
The current sales tax audit procedures however is incapable of determining those companies who fail to comply. Thus the need for IRS to enhance its enforcement of the tax rules.
According to J. Russell George, Inspector General of the Treasury identifies the pain area in enforcing the tax policy on the use of these medical supplies. According to him, the agency does not have a sophisticated system to spot those manufacturers who are obliged to pay the excise tax on medical devices, along with identifying the reporting schemes and payment requirements.
As can be remembered, the Obamacare health law has added a 2.3% tax on medical devices sales and this was enacted by the Congress. These medical devices are classified based on its use. Those being used by doctors and medical institutions, including CT scan machines and pacemakers are subject to excise tax. There are exemptions though in the policy wherein some consumer items like contact lenses, hearing aids, and eyeglasses are not included in the tax law. This law was enacted in January 2013.
Based on IRS’ projection, Obamacare tax law would generate $1.2 billion. However, as of date, collections only summed up to $914 million which is 24% less than IRS’ projection. Based on the agency’s estimation, over the next few decades, collection from taxes on medical devices should reach $219 billion. What does this mean? Clearly, the numbers show that in order to sustain the goal of the said tax policy law, the 24% deficit is indeed significant.
Obacamare tax law requires companies obliged to pay the tax to file quarterly tax forms. This is something that is either unknown by these companies or are merely evading their tax obligations.
What Could Be Done
In a press release published by IRS, they are already pushing to deal with the problem via pursuing the recommendations of the recent sales tax audit which recommends an amendment on the tax forms avert potential discrepancies moving forward. Properly education companies manufacturing medical devices would be a big leap, along with streamlining proper procedures on how to identify companies who are not complying to the tax law.
The Reason Behind the Movement to Repeal Medical Device Tax Law
The Senate and the House filed separate legislation pieces clamoring for the tax law to be revoked. A non-binding resolution, however, has been voted in the Congress. According the movement, the said tax law impairs job creation, trims down assets in medical advancement efforts, and amplifies the costs of health care. Democrats from New York, California, and Minnesota are supporting this, primarily because these are the states where medical equipment makers are abundant.
The Current Status
Despite the support the medical device industry has been receiving from the majority of the Congress, there is still no final agreement on how to regain losses in revenue without augmenting budget deficit.
Interstate Tax Strategies, an Atlanta tax services company, carefully studies how this excise tax on medical devices could impact their clients as they have been providing services to some of the medical supply and manufacturer companies in Atlanta, Georgia, who are impacted with this Obamacare tax regulations.
About Interstate Tax Strategies, P.C
When it comes to Atlanta tax services, Interstate Tax Strategies, P.C. is unique in its exclusive focus on interstate sales and use tax. Ned Lenhart, CPA, is President of Interstate Tax Strategies and has been perfecting his tax consulting skills for over 27 years. He started Interstate Tax Strategies, P.C. in 2003 after serving as a Firm Director for Deloitte in its Atlanta office. Prior to joining Deloitte in 1994, Ned was a Sr. Manager with Arthur Andersen in Kansas City, Missouri. Ned also worked for the Missouri Department of Revenue where he was the Director of the Compliance Division and led the state's civil and criminal tax enforcement efforts. He also served as Deputy Director of the Division of Taxation and Bureau Manager for the Compliance Division.