IRS Proposes 'Substantive' Changes to Calculating Excise Taxes on Drugs Under Medicare
The IRS is proposing "substantive rules" related to excise taxes on certain sales of designated drugs by manufacturers, producers and importers during statutorily defined periods, it said in a notice released Dec. 31.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
The excise tax on the designated drugs is related to the Department of Health and Human Services' management of Medicare's prescription drug price negotiation program. The IRS is seeking comments by March 3 on whether to hold a public hearing on this excise tax.
"These proposed regulations would amend the Designated Drugs Excise Tax Regulations by providing substantive rules related to the section 5000D tax," the IRS said. "Specifically, these proposed regulations would provide definitions of certain terms, such as 'manufacturer, producer, or importer,' 'sale,' and 'price,' and rules governing the imposition and calculation of the section 5000D tax."
In defining the manufacturer, producer or importer, the proposed rule would clarify who makes the first sale. If the drug is imported, then the first sale occurs after the drug units have been entered into the U.S. for consumption, use or warehousing. "Each unit of a designated drug, therefore, has only one manufacturer, producer, or importer," according to the proposed rule.
The first sale of any units of a designated drug wouldn't generally be the sale of such units to the "[maximum fair price]-eligible individual or other sales of such units that typically occur 'down' or 'later' in the supply chain that begins with the maker of a drug and ends with its ultimate user," the IRS said.