Obamacare’s controversial medical device tax isn’t bringing in nearly as much cash as expected, according to a federal report issued Tuesday.
The Treasury inspector general for tax administration found that the number of filings for the medical device excise tax, instituted as part of the Affordable Care Act, is already lower than expected — and so is the resulting revenue. The was supposed to bring in $1.2 billion for the first two quarters of 2013, but the federal government only collected $913 million.
The Internal Revenue Service still doesn’t have the ability to identify the medical device manufacturers that are actually required to submit the proper forms and pay the excise tax.
Even for the companies that have paid the tax so far, the IRS doesn’t have the proper processing systems to make sure the amount of tax paid is correct. The IG report found discrepancies in the amount of excise tax paid in 276 out of 5,107 medical device tax forms it examined — resulting in a $117.8 million discrepancy between the amount of tax collected and the amount auditors expected.
Not to mention, the IRS incorrectly charged companies late penalties 219 times, to the tune of $706,753. They corrected 133 of the overcharges, but didn’t reverse the remaining penalties until the IG office reminded the agency of its failure.
“While the IRS has taken steps to educate medical device manufacturers of the medical device tax during implementation, it faces challenges to definitively identify manufacturers subject to the medical device excise tax reporting and payment requirements,” said J. Russell George, the treasury inspector general for tax administration.
The medical device tax was included in Obamacare to help finance the health care law’s more expensive provisions, but critics immediately took aim at the excise tax for increasing health care costs and costing jobs. A February report from trade group Advanced Medical Technology Association concluded that the tax has already cost 33,000 jobs in the medical device industry from both layoffs and a lack of new hires, and predicted that it would kill another 132,000 in the future. (RELATED: Health Industry Group: Yes We’ve Suffered Massive Obamacare Job Losses)
The medical device tax is just one of many included in the health care law. It’s supposed to bring in $20 billion by 2019, according to the Joint Committee on Taxation; the federal government expects to collect $438 in Obamacare taxes by 2019, all told.