A recent report outlined issues the IRS has encountered with compliance, processing controls and penalties in the implementation of the Affordable Care Act’s 2.3 percent medical device tax.
The report by the Treasury Inspector General for Tax Administration (TIGTA) concluded that the IRS should refine its compliance strategy to better identify non-compliant manufacturers. Under the current system, 219 penalties against businesses resulted in $706,753 in erroneous fines, according to the report.
Sen. Lamar Alexander (R-Tenn.) said companies have been burdened by the tax, which leads to increased healthcare costs and lost jobs.
“(The) report showing the IRS has no idea how to implement this job-killing tax should be the final nail in the coffin,” Alexander, the ranking member of the Senate Health, Education, Labor and Pensions Committee, said. “There is no reason the Senate shouldn’t end this onerous $30 billion tax on revenue that has cost 33,000 jobs, discouraged innovation and raised the price tag on life-saving medical devices.”
Alexander previously co-sponsored the Medical Device Access and Innovation Protection Act, which would repeal the medical device tax.
The Joint Committee on Taxation estimated that the medical device tax would generate $20 billion in revenues from fiscal years 2013 to 2019. The TIGTA report found that revenues generated from the excise tax thus far have been lower than anticipated.
The report also found medical device tax discrepancies totaling $117.8 million when comparing the amount captured by the IRS to the amount calculated by the TIGTA.