SECTION 3. GUIDANCE TO BE

ISSUED

.01 Scope of taxable sales . The Treasury Department and the IRS intend that, under the forthcoming proposed regulations, the § 5000D tax would be imposed on taxpayer sales of designated drugs dispensed, furnished, or administered to individuals under the terms of Medicare. The

Treasury Department and the IRS intend that the forthcoming proposed regulations will also propose a method for taxpayers to calculate their § 5000D liability.

.02 Separately charged tax not part of price; presumption where no separate charge for tax is made . The Treasury Department and the IRS intend that the forthcoming proposed regulations will propose a rule providing that when the § 5000D tax is separately charged on the invoice or records pertaining to the sale of a designated drug by the manufacturer, the tax is not part of the price of the designated drug. Thus, if a manufacturer computes the § 5000D tax and charges it as a separate item on the invoice or records pertaining to the sale in addition to the stated sale price, the amount of § 5000D tax so charged does not become part of the price and no § 5000D tax is due on the amount of § 5000D tax so charged. When no separate charge is made as to the § 5000D tax on the invoice or records pertaining to the sale of a designated drug, it will be presumed that the amount charged for the designated drug includes the proper amount of § 5000D tax and the price of the designated drug; therefore, the amount charged will be allocated between the amount of the § 5000D tax and the price. For example, if a manufacturer charges a purchaser $100 for a designated drug during the first 90 days in a statutory period and does not make a separate charge for the § 5000D tax, $65 is allocated to the § 5000D tax and $35 is allocated to the price of the designated drug. This example only illustrates the presumption in section 3.02 of this notice; it does not illustrate other concepts described in this notice.

.03 Procedural rules . The Treasury Department and the IRS intend that the forthcoming proposed regulations will propose applying the Excise Tax Procedural Regulations in 26 CFR part 40 (Excise Tax Procedural Regulations) generally to chapter 50A of the Code (and thus to § 5000D), with some limited exceptions.

1 Unless otherwise specified, all “section” or “§” references are to sections of the Code or the Excise Tax Procedural Regulations (26 CFR part 40).

2 The term “designated drug” means any negotiation-eligible drug (as defined in § 1192(d) of the SSA) included on the list published under § 1192(a) of the SSA that is manufactured or produced in the United States or entered into the United States for consumption, use, or warehousing. See § 5000D(e)(1).

August 28, 2023 650 Bulletin No. 2023–35

In particular, the Treasury Department and the IRS intend to propose that the Excise Tax Procedural Regulations will apply to chapter 50A of the Code as follows:

(1) Returns: § 40.6011(a)-1(a)(1) . The Treasury Department and the IRS intend to propose that taxpayers would be required to report any § 5000D tax liability on IRS Form 720, Quarterly Federal Excise

Tax Return, according to the instructions applicable to the form. The IRS also intends to issue a new form that taxpayers would be required to attach to Form 720 to compute any § 5000D tax liability and report the § 5000D tax.

(2) Time for filing returns: § 40.6071(a)-1(a) . The Treasury Department and the IRS intend to propose

that the deadline for filing quarterly returns on Form 720 to report any § 5000D tax liability would be the last day of the first calendar month following the quarter of a calendar year (calendar quarter) for which the return is made. Therefore, taxpayers would be required to file a Form 720 reporting any § 5000D tax liability arising in a calendar quarter as follows:

(3) No semimonthly deposits . The Treasury Department and the IRS intend that the forthcoming proposed regulations would not apply § 40.6302(c)-1(a)(1) or any of the other semimonthly deposit rules in the Excise Tax Procedural Regulations to chapter 50A of the Code. Therefore, taxpayers liable for the § 5000D tax would not be required to make semimonthly deposits of § 5000D tax.

(4) Payment of tax: § 40.6151(a)-1 . The Treasury Department and the IRS intend to propose that the deadline for payment of the § 5000D tax would be the same as the filing deadline for Form 720. Taxpayers liable for the § 5000D tax would, therefore, be required to pay the § 5000D tax when they file the Form 720 for the calendar quarter during which the § 5000D liability arose. See § 40.6071(a)-1(a).