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Braces on Dental Prosthesis

An exception in Food and Drug Administration regulations makes most dentists and dental laboratories exempt from the new medical device excise tax.

Navigating health reform

Dental Industry Update: FDA Exemption Clarifies Medical Device Excise Tax

  • 11/21/2012

FDA Exemption Clarifies Medical Device Excise Tax for Dental Industry

In an October 22, 2012, article titled Dental Industry: Prepare for New Medical Device Excise Tax in 2013, we speculated that dentists and dental labs making crowns, retainers, and bridges would be subject to the new medical device excise tax beginning in 2013. We have since learned of an exception in Food and Drug Administration (FDA) regulations that makes most dentists and dental laboratories exempt from the new excise tax.

Uncertainty in the Patient Protection and Affordable Care Act

Considerable uncertainty still exists regarding the new 2.3 percent medical device excise tax that was enacted as part of the Patient Protection and Affordable Care Act of 2010 (PPACA). Proposed regulations were issued by the IRS in February 2012; however, these regulations have not been finalized, but in their current form they have left the definition of a medical device to the FDA.

The key: registration with FDA

Generally, under Section 510 of the federal Food, Drug, and Cosmetic Act (FDCA), all manufacturers, producers, and importers of medical devices must register with the FDA and submit a list of the medical devices that they manufacture, produce, or import. These “listed” medical devices are identified by the proposed tax regulations as “taxable medical devices” and are subject to the new 2.3 percent excise tax.

However, subsection 510(g) of the FDCA states that the registration rules (except for importers) do not apply to licensed practitioners who prescribe or administer devices, and who manufacture these devices solely for use in the course of their professional practice. The FDA regulations explicitly state that dentists who manufacture or alter medical devices solely for use in their practice fall within this exemption. Dental laboratories are also generally exempt from registering according to FDA rules.

“If dentists and dental laboratories are not registered with the FDA, then nothing they manufacture will be considered a taxable medical device since the devices will not be listed with the FDA,” says Terry O’Reilly, a health care partner with CliftonLarsonAllen.

However, if dentists or dental laboratories are registered with the FDA because they import medical devices or perform some other non-exempt activity, then only those devices that they are required to list with the FDA will be subject to the 2.3 percent excise tax.

“Consequently,” says O’Reilly, “identifying taxable medical devices should be a relatively straightforward process of asking whether the taxpayer is registered with the FDA as a manufacturer, producer, or importer of a medical device, and if so, which devices it lists with the FDA.”

How we can help

For dentists or dental labs that are registered with the FDA and submit an annual list of devices that are manufactured, produced, or imported, we can prepare and submit Form 720 Quarterly Federal Excise Tax Return and Form 637 Application for Registration (For Certain Excise Tax Activities). In addition, we will continue to monitor the progress of IRS guidance on the medical device excise tax and alert you to further developments.


Terry O’Reilly, Health Care Partner
terrance.oreilly@cliftonlarsonallen.com or 612-376-4546