Section 2. BACKGROUND

Section 4191, enacted by section 1405 of the Health Care and Education Reconciliation Act of 2010, Public Law 111–152 (124 Stat. 1029 (2010)), in conjunction with the Patient Protection and Affordable Care Act, Public Law 111–148 (124 Stat. 119 (2010)), imposes an excise tax on the sale of certain medical devices. The excise tax imposed by § 4191 is 2.3% of the price for which the taxable medical device is sold. The medical device excise tax is codified in chapter 32, subtitle D of the Code (“chapter 32”), which pertains to excise taxes imposed on the sale or use of taxable articles by manufacturers, producers, and importers (commonly referred to as “manufacturers excise taxes”). See § 48.0–2(a)(4)(i) of the Manufacturers and Retailers Excise Tax Regulations (the “regulations”) (which defines the term “manufacturer” to include a “producer” and an “importer”). As a result, the existing chapter 32 rules, including the regulations issued thereunder, apply to the medical device excise tax.

On December 7, 2012, the Internal Revenue Service (IRS) and the Treasury Department issued T.D. 9604, 2012–52 I.R.B. 730 (77 FR 72924), containing final regulations under § 4191. The final regulations do not address certain issues that the IRS and the Treasury Department continue to study. These issues include the determination of price under § 4216(b); the tax treatment of medical software licenses; the taxability of donated medical devices; and the taxability of medical convenience kits.

The IRS and the Treasury Department may issue additional published guidance on these issues in the future. The IRS and the Treasury Department recognize, however, that manufacturers need rules on these issues that will apply on an interim basis. Sections 3 through 5 of this notice prescribe those interim rules.

In addition, several comments on the proposed regulations requested transition relief from the deposit penalty under § 6656. In response to those comments, this notice waives penalties under § 6656 for the first three calendar quarters of 2013. Section 6 of this notice delineates the scope of this deposit penalty relief.

Unless otherwise stated, existing definitions provided in chapter 32, and the regulations issued thereunder, apply to this notice.