The National Association of Dental Laboratories (NADL) was able to fund a legal analysis of the proposed rule for the Medical Devise Tax that went into effect on January 1, 2013. The final rule, released in December, outlined that the vast majority of devices made by domestic dental laboratories do not meet the IRS’s proposed definition of “Taxable Medical Device” as proposed in S48.419-2.
With the exception of sleep apnea devices and snore guards, the finished devices that are domestically made by dental laboratories are NOT subject to the Medical Device Tax under currently proposed IRS rule.
It is important to note that the IRS definitions of “importer” and “manufacturer” that apply to excise taxes are different from the FDA’s definitions. Under the IRS definition of “importer”, a person who brings an article into the United States is only a nominal importer if they are not also the beneficial owner of the article. For example, if you engage a customs broker they are a nominal importer and the IRS deems the beneficial owner, hence, the domestic dental laboratory that engaged the customs broker to be the importer for excise tax purposes. In this scenario, imported finished devices are subject to the tax.
All dental materials that are registered with the FDA will be subject to the Medical Device Tax. These include products that are used in the manufacture of dental devices. Most manufacturers of these products have issued increases in pricing starting January 1st, 2013. These products include; dental alloys, dental porcelains, denture teeth and acrylics, and dental implants.