Q: Does the health care law contain a “hidden” tax on hunting and fishing equipment?
A: No. There is a 2.3 percent excise tax on certain medical devices. Cabela’s, a Nebraska sporting goods company, applied the tax to some of its customers’ purchases by mistake.
FULL QUESTION
Medical Excise Tax on Retail Receipts?
This is an image of a sales receipt from Cabela’s, a popular sporting goods store.
The 2.3% Medical Excise Tax that began on January 1st is supposed to be “hidden” from the consumer, but it’s been brought to the public’s attention by hunting and fishing store Cabela’s who have refused to hide it and are showing it as a separate line item tax on their receipts, the email states.
I did some research and found directly from the IRS’s website information that PROVES this to be true and an accurate portrayal of something hidden in Obamacare that I was not aware of! Now being skeptical of this I went to the IRS website and found this!
Q1. What is the medical device excise tax? A1. Section 4191 of the Internal Revenue Code imposes an excise tax on the sale of certain medical devices by the manufacturer or importer of the device.
Q2. When does the tax go into effect? A2. The tax applies to sales of taxable medical devices after Dec. 31, 2012.
Q3. How much is the tax? A3. The tax is 2.3 percent of the sale price of the taxable medical device. See Chapter 5 of IRS Publication 510, Excise Taxes, and Notice 2012-77 for additional information on the determination of sale price. IRS.gov
Chapter Five http://www.irs.gov/publications/p510/ch05.html
So being more curious I clicked on “Chapter 5 Of IRS Publication 510.”
And what do I find under “MEDICAL DEVICES” under”MANUFACTURERS TAXES”?
The following discussion of manufacturers taxes
Applies to the tax on:
Sport fishing equipment;
Fishing rods and fishing poles;
Electric outboard motors;
Fishing tackle boxes;
Bows, quivers, broad heads, and points;
Arrow shafts;
Coal;
Taxable tires;
Gas guzzler automobiles;
and
Vaccines.
IRS.gov I think we have definitely been fooled, if we believe that the Affordable Care Act is all about health care.
It truly does appear to be nothing more than a bill Laden with a whole lot of taxes that we the people have yet to be aware of.
Please pass this on . .Where is our press ? I guess it’s just like Nancy Pelosi said…….We have to pass it to see what is in it .What is next? What else is there we do not know about?
God help us!
FULL ANSWER
On Jan. 1, Cabela’s, an outdoor equipment retailer based in Sidney, Neb., applied a 2.3 percent “medical excise tax” to some of its customers’ purchases. It shouldn’t have.
The Affordable Care Act includes a 2.3 percent excise tax on some medical devices to help finance the expansion of health coverage for the uninsured. But it’s a tax manufacturers and importers of medical devices will have to pay. It’s not a direct tax on consumers or a tax on manufacturers and importers of sporting goods and outdoor gear.
Cabela’s spokesman Joe Arterburn said a “glitch” in the company’s cash register system led to the errors, according to a report in the Omaha World-Herald. The faulty transactions occurred that one day, and all customers were offered a refund, he told the paper.
Unfortunately, that story came after some of those customers circulated images of their receipts online — such as the one in the email above — as evidence of a “hidden” tax in the health care law. Eight months later, we’re getting questions about it from readers.
What the Tax Covers
The tax, which started Jan. 1, is 2.3 percent of the sales price of taxable medical devices. Title 26, Section 48.4191-2 of the Federal Code of Regulations explains that, generally, “a taxable medical device is any device, as defined in section 201(h) of the Federal Food, Drug, and Cosmetic Act (FFDCA), that is intended for humans,” and one “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.” The devices are typically used by medical professionals.
Not all devices will be taxed, though. Eyeglasses, contact lenses and hearing aids are specifically exempt. There is also a “retail exemption” for devices generally purchased by the public for individual use. Some devices that are exported can be sold tax-free, too.
But the author of the email above claims to have done “research” and discovered that the tax also applies to such items as “sport fishing equipment; fishing rods and fishing poles; electric outboard motors; fishing tackle boxes; bows, quivers, broad heads, and points; arrow shafts; coal; taxable tires; gas guzzler automobiles; and vaccines.” Not true.
The IRS’ frequently asked questions page on the medical device tax refers readers to two additional sources of information: Chapter 5 of IRS Publication 510 and Notice 2012-77. It’s the first resource that led the unknown author of this viral message astray.
IRS Publication 510 deals with all things excise taxes, and Chapter 5, specifically, covers “manufacturers taxes.” That’s where the anonymous author found the list of items including fishing equipment, bows and cars. But that section discusses other, previously existing taxes for manufacturers, not new ones imposed by the health care law. A clue: The tax rate for the items discussed in that chapter aren’t the same as the medical device tax rate.
The publication says the tax on fishing rods and fishing poles is “10% of the sales price not to exceed $10 per article.” The tax on fishing tackle boxes and electric outboard boat motors: 3 percent of the sales price. The tax on bows is even higher, at 11 percent.
The email’s author should have started at the beginning of IRS Publication 510. The document, which was last revised in July 2012, includes a “What’s New” section. There it explains that the health care law “imposes a 2.3 percent excise tax on the sale of certain medical devices by the manufacturer, producer, or importer of the device.” It says nothing about arrow shafts and quivers or vaccines and taxable tires.
— D’Angelo Gore
Sources
Podsada, Janice. “Cabela’s blames ‘glitch’ for Jan. 1 tax error, promises refunds.” Omaha World-Herald. 8 Jan 2013.
26 C.F.R. § 48.4191-2 (2013)
Internal Revenue Service. Medical Device Excise Tax: Frequently Asked Questions. Web page. Accessed 17 Sep 2013.
Internal Revenue Service. Medical Device Excise Tax. Web page. Accessed 17 Sep 2013.
Internal Revenue Service. Publication 510, Excise Taxes. Jul 2012, accessed 17 Sep 2013.
Internal Revenue Service. Notice 2012-77. 7 Dec 2012, accessed 17 Sep 2013.