Re: HELP! New Contract Mfg. requirements
The physical maker of the medical device pays the tax, except if:
- All of your production is shipped outside USA (by you, not your customer), in which case no tax is due but you still have to document the situation and prove it to the tax collectors.
- Or, as above but the shipment outside USA is by your customer, in which case you can get a rebate for the tax you had to pay, but only if your customer provides you with documentation and only if you can prove that you didn't raise your prices to offset the impact of the tax.
- The Specification Developer has a patent on the device design, in which case maybe they pay and not you, or maybe not. You'll need documentation from your customer.
- The item you produce is used in further manufacturing to arrive at a finished medical device, and you can prove that fact and that the further use is within 6 months of your shipment date for each unit, in which case maybe the further manufacturer pays and not you, or maybe not. You'll need documentation from your customer.
In your case, you say further sterilization is (sometimes?) done. I don't know if sterilization counts as a further manufacturing operation, or not. I've heard both ways.
MIRGMGR: You appear to have clarity beyond most that I have spoken to regarding the Medical Device Excise Tax. As the original post our company is still tripping on what constitutes "further manufacturing" and whether we can apply this exemption to private labelers of our software.
We manufacture a class II medical device software which integrates with radiological systems such as sensors, panoramic systems etc. Our distribution occurs on 3 levels:
1. We sell our software & licensing directly to the user
2. We sell our software & licensing to vendors that "bundle" our software with other medical device hardware.
3. We are contracted to private label our software with an OEMs branding and default setting requirements. these OEMs in turn bundle the private-label software with their medical device hardware.
4. We are contracted to private label our software with a vendor's branding, our defualt settings. the vendor then "bundles" their private labeled software with other medical device hardware.
I'm clear with scenario's 1 and 2 but the third one has us and our accountants thrown for a loop. Do scenario's 3 and/or 4 meant the definition of further manufacturing?
Appreciate your input.