Bradley Merrill Thompson, a Member of the Firm in the Health Care and Life Sciences practice, in the Washington, DC, office, was quoted in an article titled "Combo Products May See Double ACA Tax Under IRS Rule, But Kits Exempt."
Following is an excerpt:
The IRS' decision to subject combination products that have both device and drug components to possible double taxation under the health reform law yet waive the device tax for custom procedure kits assembled by hospitals has left some in the combination product industry perplexed. ...
Industry attorneys agreed that many products will not likely be double taxed initially, but said the situation could arise in the future. These concerns should be addressed in additional guidance from IRS, said Bradley Merrill Thompson, an attorney at Epstein, Becker and Green and general counsel to the Combination Products Coalition. "As to combination products, our concerns remain," he said.
Further, Thompson said IRS' treatment of combination products doesn't square with the agency's treatment of kits, with IRS acknowledging that kits are a special case and may include articles that should not be subject to the tax. ...
But Thompson questioned why some combination products can be considered as kits that are not subject to the device tax while other combination products are treated differently. ...
Thompson said, however, that the agency "punted" on some major issues. He said the regulation provides a high level outline of the tax, but there are still many questions that companies have about implementing the tax. He said he hoped the questions will be addressed by forthcoming guidance but companies will likely have to start paying the tax before guidance is released.
"Companies really need guidance before they can implement this in a reliable way," Thompson said. "Right now we are just guessing ... Until we have that guidance it is really tough to put the systems in place."
Thompson added that some companies had also delayed preparing for the tax in hopes it would be repealed. While the medical device industry continues to push for delay or repeal of the tax, Thompson said companies "can't afford not to prepare at this point."
