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Tag Archive for excise tax

Potential Tax Changes Affecting Non-Profit Organizations

The Tax Reform Act of 2014 is currently in the House of Representatives. This law is a major reform effort and is almost 1,000 pages long. Congress is expected to take action on this proposal after the November elections. While it is often risky to speculate what changes Congress will enact, this proposal has several significant changes that will affect non-profit organizations. In a previous article (Potential Tax Changes Affecting Charitable Contributions) the proposed changes in regard to charitable contributions was discussed. This article deals with other changes that would affect non-profit organizations.

Excise Taxes

The proposed legislation would levy a one per cent excise tax on net investment income of Read more

Senate Finance Committee Blank Slate Project 2013 – Senator Rockefeller’s Suggestions

Evaluation of Senator Suggestions for the Blank Slate Project

As noted in my 9/9/13 post, I’m going to summarize and analyze proposals senators offered to the Senate Finance Committee, and that the senator made public. Despite falling behind on my project, as tax reform likely heats up in 2014, I’m back at it as I’d like to look at and share what might be a broader array of proposals and issues. In no particular order, the second set of suggestions I’m commenting on are from Senator Rockefeller (D-WV) (7/26/13 letter). Senator Rockefeller is a member of the Senate Finance Committee.

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Medical Device Excise Tax

Whoa!  The medical device excise tax is a mouthful.  It’s also a complicated beast of a tax.  The medical community in this state is strong with all the medical device companies and the great Mayo clinic, so the MN Senators and some Representatives are trying to have this medical device excise tax repealed, but once something is into law and the tax starts being collected it’s unlikely they will succeed in repealing it.  Since their repeal efforts are unlikely to succeed, I suppose understanding it would be a good idea.

Basically it’s a 2.3% excise tax on all the medical devices that are produced.  An excise tax is more like a sales tax since it isn’t based on income and there are no tax credits or deductions allowed against it.  The excise tax applies to sales after 12-31-2012, which is to say it’s in effect right now.  The manufacturer or the importer of the device is subject to the tax.  It doesn’t apply at the retail level so you won’t see it on your receipt.  In fact there is a retail exemption so the everyday items you purchase shouldn’t be subject to the excise tax in the first place.  The retail exemption includes eyeglasses, contact lenses and hearing aids.

Not surprisingly, the excise tax was part of the healthcare bill.  The part that doesn’t make a lot of sense is the excise tax on medical devices is sure to increase the cost of healthcare.  As companies like Medtronic and Boston Scientific product medical devices, they will surely pass along the additional cost to the healthcare providers.  But I digress.  I don’t make the tax laws  –  I just try to understand them a little bit better each day.

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