17 January 2018 IRS guidance on medical device excise tax deposit penalty relief On January 17, 2018, the IRS released guidance that provides temporary relief for device manufactures, producers, and importers who fail to make timely deposits of the medical device excise tax for the first three calendar quarters of 2018. The notice is effective on and after January 1, 2018 and will be published in the Internal Revenue Bulletin (IRB) on February 12, 2018. A two-year moratorium of the medical device tax ended on December 31, 2017, and taxpayers are now required to resume making semi-monthly deposits of the tax. The first deposit, covering the first 15 days of January, is due by January 29, 2019. The IRS guidance notes that in consideration of the short timeframe between the end of the moratorium period and the due date of the first deposit, they will waive the penalty for late deposits provided the taxpayer demonstrates "a good faith attempt to comply with requirements" and if "the failure was not due to willful neglect." The normal rules and regulations for the tax will apply with respect to deposits due during the fourth calendar quarter of 2018 and thereafter, absent further legislative action. Beginning in the third calendar quarter of 2018, medical device manufacturers may use the safe harbor rules for semimonthly deposits due during that quarter. On January 16, 2018, the House introduced a continuing resolution (CR) that — along with funding the government through February 16, 2018 — would extend the moratorium on the 2.3% excise tax imposed on the sale of medical devices through 2019, retroactive from December 31, 2017. The fate of that legislation is still being debated as bipartisan discussions continue and many Democrats are reluctant to support legislation that does not address the immigration status of "DREAMers" under the Deferred Action for Childhood Arrivals (DACA) program and provide for a longer extension of the Children's Health Insurance Program (CHIP). The CR requires 60 votes to pass in the Senate.
Document ID: 2018-0117 | |||||
