Section 5. CONVENIENCE KITS

(a) Overview . Under § 4191, a “taxable medical device” is a device defined in § 201(h) of the Federal Food, Drug, and Cosmetic Act (FFDCA) that is intended for humans. Under § 48.4191–2(a) of the regulations, a device defined in section 201(h) of the FFDCA that is intended for humans means a device that is listed as a device with the Food and Drug Administration (FDA) under section 510(j) of the FFDCA and 21 CFR Part 807, pursuant to FDA requirements. Finished taxable

medical devices are sometimes packaged together into kits for the convenience of a healthcare provider in the performance of a medical procedure. Convenience kits that are listed with the FDA under section 510(j) of the FFDCA and 21 CFR Part 807 are “taxable medical devices” under the regulations unless they fall within an exemption under § 4191(b) or § 48.4191–2(b) of the regulations.

The IRS and the Treasury Department have received numerous written and informal comments suggesting that the sale of convenience kits by the kit producer should not be subject to tax under § 4191. The IRS and the Treasury Department are studying the taxability of convenience kits and intend to issue additional guidance in the future.

(b) Definition of a “Convenience Kit.” For purposes of this notice, a “convenience kit” is a set of two or more devices within the meaning of section 201(h) of the FFDCA that is enclosed in a single package, such as a bag, tray, or box, for the convenience of a health care professional or the end user. A convenience kit may contain a combination of devices within the meaning of section 201(h) of the FFDCA and other articles.

(c) Interim Rule for Domestically-Pro- duced Convenience Kits . Until the IRS and the Treasury Department issue further guidance, no tax will be imposed upon the sale of a domestically-produced convenience kit that is a “taxable medical device” under § 4191 of the Code and § 48.4191–2(b) of the regulations. During this interim period, the sale of a taxable medical device that goes into a domestically-produced convenience kit will be subject to tax upon its sale by the manufacturer or importer, pursuant to the normal rules of § 4191 and the regulations thereunder; however, the sale of the convenience kit by the kit producer will not be subject to tax.

(d) Interim Rule for Imported Conve- nience Kits . Until the IRS and the Treasury Department issue further guidance, tax is imposed under § 4191 on the sale by an importer of a convenience kit that is a taxable medical device under § 4191 of the Code and § 48.4191–2(b), but only on that portion of the importer’s sale price of the convenience kit that is properly allocable to the individual taxable medical devices included in the convenience kit.

2012–52 I.R.B. 784 December 27, 2012

determine an appropriate percentage allowance for the industry as a whole or, alternatively, for particular segments of the industry. The IRS and the Treasury Department will announce any such adjustments in published guidance. Further, the IRS and the Treasury Department request comments regarding alternative methods for determining price for the distribution chain described in paragraph (b)(5) of section 3 of this notice (sales to related resellers that lease, but do not sell, taxable medical devices).

The deadline for submission of comments is March 29, 2013. All materials submitted will be available for public inspection and copying. Written comments should be submitted to: Internal Revenue Service, CC:PA:LPD:PR (Notice 2012–77), Room 5203, Internal Revenue Service, PO Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (Notice 2012–77), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC. Comments may be transmitted electronically via the following e-mail address: Notice.Comments@irscounsel.treas.gov . Please include “Notice 2012–77” in the subject line of any electronic communications.