Tax on medical devices to resume after hiatus

BOSTON » While much of corporate America will enjoy a tax cut in the new year, one industry is getting a tax increase it has fought hard but so far unsuccessfully to avoid.

A 2.3 percent excise tax on medical device manufacturers went back into effect Monday after a twoyear hiatus.

It was originally imposed in 2013 as one of several taxes and fees in the Affordable Care Act that pay for expanded health insurance under the law.

The tax was strongly opposed by the $150 billion a year industry that produces everything from catheters to heart stents to artificial joints. In Congress, it was unpopular not only with Republicans but many Democrats from states like Massachusetts and Minnesota with large numbers of medical device companies.

Congress voted to suspend the tax for 2016 and 2017 with the widespread expectation it would be permanently abolished before 2018. But various GOP efforts to repeal the Affordable Care Act and the taxes associated with it failed, and the sweeping federal tax overhaul recently signed by President Donald Trump didn’t eliminate the medical device tax either.

Industry groups Including the Advanced Medical Technology Association (AdvaMed) and the Medical Imaging & Technology Alliance warn the tax will take a $20 billion bite out of the industry over the next decade.

Some Democrats, including Sen. Elizabeth Warren of Massachusetts, have said they won’t support repeal of the tax unless an equivalent source of revenue is found for the ACA.

In a Dec. 20 letter to Trump, AdvaMed urged the president to support repeal of the tax and, in the interim, direct the IRS to grant companies “administrative relief” from the tax.

That could include such steps as waiving the bimonthly deposit requirement or any penalties resulting from late payments.