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Medical Device Excise Tax: Achieving Compliance with Confidence


The Best Defense is a Good Offense

As the adage goes, the best defense is a good offense. Progressive companies that heed this advice and take the necessary steps to achieve compliance with confidence will have a leg up on their competition. To establish a world-class defense able to best cope with the new excise tax, progressive medical device manufacturers should have:

1. Centralized technology that effectively automates the tax compliance process for efficiency should integrate with a company’s finance and accounting applications for sales, purchasing, payment processing and resource planning. For example, acting as a central hub for consolidating transaction data, the ONESOURCE Indirect Tax global software suite is designed to identify, measure, calculate and record the tax and pass the associated tax liability back to a company’s finance applications for booking of the liability in real-time. In addition, domain experts can set tax rules and establish corporate tax policies and best practices within the software, which is automatically disseminated across the company from a single source. The result is improved accuracy and reduced workload, providing the company with higher degrees of compliance at a lower cost. But automation alone isn’t enough, especially if you automate errors.

2. Tax domain experts that provide the multi-disciplinary expertise in tax law, tax policy, research and auditing in regards to MDET and to ensure the highest level of service to their business. Smaller organizations especially may lack qualified tax professionals experienced in all the processes required to achieve and maintain the highest degree of compliance and often choose to outsource this function entirely. Whatever approach a company takes, whether in-house, outsource or a hybrid model, they must build a team of tax domain experts that can help navigate through changes or growth.

3. Best practices/processes to ensure that their company achieves streamlined compliance across the complete tax lifecycle — from tax determination to return preparation to rapid reconciliation and preparation of audit reports. As compliance requirements change, these changes are automatically rolled into core processes to ensure continued compliance with confidence.

There is no question that the new MDET is going to create cost, complexity and risk, but planning ahead of time and implementing a strategy that consists of technology, tax experts and best practices can minimize the risks, and will be critical to a rapid and successful MDET compliance function.


David Emmons, CPA, CMI, is a senior tax consultant for ONESOURCE Indirect Tax, Thomson Reuters, where he leverages his 22 years of indirect tax experience to identify customer business and tax functional requirements and deliver global indirect tax solutions that meet those requirements. Prior to Thomson Reuters, David was a senior level auditor with the State of Florida and at a Big 4 Firm’s SALT group. David can be reached 1-888-885-0206 Extension #1 or This email address is being protected from spambots. You need JavaScript enabled to view it.

Thomson Reuters
www.thomsonreuters.com

4 COMMENTS

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P. Brown

11/06/2012 09:52 PM
So a decent article; however fundamentally incorrect to state that firms are required to register and "penalty for failure to register by January 1, 2013 starts at $10,000, with a $1,000 penalty per day of noncompliance". In fact, requirements to register are only to compy with exemption from the tax if the manufacturer passes on the product to another final manufacturer or will sell the devices outside the United States.

Excerpt from the Regs:
(edited by BONEZONE webmaster due to length) --- Please see http://www.irs.gov/uac/Medical-Device-Excise-Tax:-Frequently-Asked-Questions
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