[Federal Register Volume 78, Number 49 (Wednesday, March 13, 2013)]
[Rules and Regulations]
[Page 15878]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-05703]



[[Page 15878]]

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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 48

[TD 9604]
RIN 1545-BJ44


Taxable Medical Devices; Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correcting Amendment.

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SUMMARY: This document contains corrections to final regulations (TD 
9604) that were published in the Federal Register on Friday, December 
7, 2012 (77 FR 72924). The final regulations provide guidance on the 
excise tax imposed on the sale of certain medical devices, enacted by 
the Health Care and Education Reconciliation Act of 2010 in conjunction 
with the Patient Protection and Affordable Care Act.

DATES: This correction is effective on March 13, 2013 and is applicable 
after December 31, 2012.

FOR FURTHER INFORMATION CONTACT: Natalie Payne, Michael Beker, or 
Stephanie Bland, at (202) 622-3130 (not a toll free number).

SUPPLEMENTARY INFORMATION: 

Background

    The final regulations (TD 9604) that are the subject of this 
correction is under section 4191 of the Internal Revenue Code.

Need for Correction

    As published, the final regulations (TD 9604) contain errors that 
may prove to be misleading and are in need of clarification.

List of Subjects in 26 CFR Part 48

    Excise taxes, Reporting and recordkeeping requirements.

Correction of Publication

    Accordingly, 26 CFR part 48 is corrected by making the following 
correcting amendments:

PART 48--MANUFATURERS AND RETAILERS EXCISE TAXES

0
Paragraph 1. The authority citation for part 48 continues to read in 
part as follows:

    Authority: 26 U.S.C. 7805 * * *

0
Par. 2. Section 48.4191-2 is amended by revising:
0
1. The second sentence of paragraph (b)(2).
0
2. The last sentence of paragraph (b)(2)(iv) Example 5., and Example 6.
0
3. Paragraph (b)(2)(iv) Example 7.
0
4. The last sentence of paragraph (b)(2)(iv) Example 8., Example 11., 
and Example 13.
    The revisions read as follows:


Sec.  48.4191-2  Taxable medical device.

* * * * *
    (b) * * *
    (2) * * * A device will be considered to be of a type that is 
generally purchased by the general public at retail for individual use 
if it is regularly available for purchase and use by individual 
consumers who are not medical professionals, and if the design of the 
device demonstrates that it is not primarily intended for use in a 
medical institution or office or by a medical professional. * * *
* * * * *
    (iv) * * *

    Example 5. * * * Based on the totality of the facts and 
circumstances, the mobile x-ray systems are not devices that are of 
a type that are generally purchased by the general public at retail 
for individual use.
    Example 6. * * * Accordingly, the pregnancy test kits are 
devices that are of a type that are generally purchased by the 
general public at retail for individual use.
    Example 7. X manufactures blood glucose monitors, blood glucose 
test strips, and lancets. X sells the blood glucose monitors, test 
strips, and lancets to distributors Y and Z, which, in turn, sell 
the monitors, test strips, and lancets to medical institutions and 
offices, medical professionals, and retail businesses. The FDA 
requires manufacturers of blood glucose monitors, test strips, and 
lancets to list the items as devices with the FDA. The FDA 
classifies the blood glucose monitors under 21 CFR part 862 
(Clinical Chemistry and Clinical Toxicology Devices) and product 
code NBW. The FDA classifies the test strips under 21 CFR part 862 
(Clinical Chemistry and Clinical Toxicology Devices) and product 
code NBW. The FDA classifies the lancets under 21 CFR part 878 
(General and Plastic Surgery Devices) and product code FMK.
    The blood glucose monitors and test strips are included in the 
FDA's online IVD Home Use Lab Tests (Over-the-Counter Tests) 
database. Therefore, the blood glucose monitors and test strips fall 
within the safe harbor set forth in paragraph (b)(2)(iii)(A) of this 
section. Further, the FDA product code name for NBW is ``System, 
Test, Blood Glucose, Over the Counter.'' Therefore, the blood 
glucose monitors and test strips also fall within the safe harbor 
set forth in paragraph (b)(2)(iii)(C) of this section.
    In addition, the lancets are supplies necessary for the 
effective use of DME as described in section 110.3 of chapter 15 of 
the Medicare Policy Benefit Manual. Therefore, the lancets fall 
within the safe harbor set forth in paragraph (b)(2)(iii)(D)(5) of 
this section.
    Accordingly, the blood glucose monitors, test strips, and 
lancets are devices that are of a type that are generally purchased 
by the general public at retail for individual use.
    Example 8. * * * Accordingly, both the single axis endoskeletal 
knee shin systems manufactured by X and the prosthetic legs made by 
Y are devices that are of a type that are generally purchased by the 
general public at retail for individual use.
* * * * *
    Example 11. * * * Accordingly, the urinary ileostomy bags are 
devices that are of a type that are generally purchased by the 
general public at retail for individual use.
* * * * *
    Example 13. * * * Based on the totality of the facts and 
circumstances, the NMRI systems are not devices that are of a type 
that are generally purchased by the general public at retail for 
individual use.
* * * * *

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Par. 3. Section 48.4216(c)-1 is amended by revising paragraph (e)(1) to 
read as follows:


Sec.  48.4216(c)-1  Computation of tax on leases and installment sales.

* * * * *
    (e) * * *
    (1) General rule. Payments made on or after January 1, 2013, 
pursuant to a contract for the lease, installment sale, or sale on 
credit of a taxable medical device that was entered into on or after 
March 30, 2010, are subject to tax under section 4191. The provisions 
of sections 4216(c) and 4217, paragraphs (a), (b), and (c) of this 
section, and Sec.  48.4217-2 apply.
* * * * *

LaNita VanDyke,
Chief, Publications and Regulations Branch, Legal Processing Division, 
Associate Chief Counsel (Procedure and Administration).
[FR Doc. 2013-05703 Filed 3-12-13; 8:45 am]
BILLING CODE 4830-01-P