The Medical-Device Tax and the Dentist

This guest post is brought to you by our friends and colleagues at Goldin, Peiser & Peiser, LLP, a Dallas-based accounting firm. Some information in this blog has been revised from its original version, published 12.14.12.

heavy taxes

As it stands now, regardless of whether we go off the fiscal cliff or not, there will be a tax on the sale of medical devices in 2013. As mandated in the Patient Protection and Affordable Care Act, manufacturers will be assessed a 2.3% tax on the sale of certain devices. According to the IRS, taxable medical devices are defined as those that are listed under a single FDA product code. Other devices are:

  • Nitrous and oxygen delivery systems and gas
  • Computer equipment used for diagnostic purposes
  • X-ray equipment, sensors, cone-beam CT systems, caries detection devices, and cameras
  • Surgical equipment
  • Handpieces
  • Replacement parts
  • Remanufactured or refurbished equipment
  • Instruments
  • Imaging equipment
  • CAD/CAM machines
  • Prosthetic devices

All May Not Be Lost

Manufacturers as well as the dental and medical communities are pushing hard against the tax, lobbying for the delay of the start date. And not everyone on Capitol Hill supports the tax. Many lawmakers are concerned about its negative financial implications. 18 Senators and Senators-Elect sent a letter to Senate Majority Leader Harry Reid asking that the tax be included in the fiscal cliff negations. They expressed their concern that the “the medical device industry has received little guidance about how to comply with the tax–causing significant uncertainty and confusion for businesses.” They urged Senator Reid to support delaying enactment of the provision in a “fiscally responsible manner.”

The Impact on Dental Practices

At Goldin Peiser & Peiser, LLP, many of our dental clients are in a quandary. If the tax is implemented, they fully believe that the cost of will be passed onto them from the manufacturer by way of increased price. Their dilemma is whether to pass that added expenditure onto their patients by way of increased fees. Dentists will have to weigh the relative risks: whether an increased in fees, which may result in fewer patients or few procedures, would be more or less cost effective than the additional costs of purchasing the medical devices.

With the fiscal cliff looming on the landscape, dentists should consult with their tax advisors. It would be wise for them to evaluate all of the options in concert with their tax plans for 2013. If you would like to discuss this issue or any other issues facing your dental practice, email Erick Cutler, Partner at Goldin Peiser & Peiser, LLP at [email protected] or call him at 214-635-2541.

As a Partner of Goldin Peiser & Peiser, LLP, Erick Cutler focuses his tax compliance and consulting work in two main industries: Healthcare and Real Estate. Throughout the year he works with clients to improve the financial health of their practices/businesses.  He has vast experience in the area of cost segregation: he uncovers hidden costs outside of standard depreciation to help reduce property owners’ tax liabilities. Erick has had article published in a variety of publications including the Dallas Business Journal and various dental magazines.