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Calculate Medical Device Excise Tax and Run a Federal Excise Tax Summary Report

This article applies to:Avalara AvaTax

Use the Federal Excise Tax Summary report to view your federal medical device excise tax (MDET) summary liability by region. This can help you manually complete federal medical device excise tax forms. Before you begin, you must identify the AvaTax System tax codesHoverTT.png or custom tax codes for which the MDET should be applied for the companyHoverTT.png. Custom tax rules are then imported to identify the excise tax rate for the appropriate entity use codeHoverTT.png and tax codeHoverTT.png combinations.

There is a moratorium on the federal medical device tax until on December 31, 2019. Until then, use this report to see what your medical device excise tax liability might be once the moratorium period is over.

To run a report, follow the steps below in Generate any report, and then customize your report based on the requirements described below in Generate a Federal Excise Tax Summary report. You can generate reports at any time; however, report data updates every 30 mintues. For more recent transaction activity, see the transactions list on the Transactions tab.

For more information about this and other report types, and to learn how to run these reports, read our report descriptions. Learn how these reports are linked to one another, or review the answers to our frequently asked questions about reports.

Calculate medical device excise tax

The federal medical device excise tax (MDET) is part of the Health Care and Education Reconciliation Act of 2010. Use AvaTax to calculate medical device excise taxes and generate a report to assist in filing the appropriate federal IRS tax forms. To support this, AvaTax includes two entity use codes and a report. The entity use codes, used in combination with a tax code, support the proper tax calculation.

The entity use codes to support the MDET are:

  • MED1 - calculates excise tax only (exempt sales and seller's use tax)
  • MED2 - calculates excise tax in addition to sales and seller's use tax (taxable sales and seller's use)

These entity use codes are available when creating or adjusting a transactionHoverTT.png, calculating tax with the Basic or Advanced Tax Calculator, or importing tax rules.

SST companies selling into SST states need to use entity use code MED2. Entity use code MED1 isn't allowed because exemption certificatesHoverTT.png are required for SST transactions to exempt sales tax.

To calculate the MDET for your company's transactions, follow the steps below in AvaTax.

  1. Import a tax rule for the US with the Federal Medical Device Excise Tax Import template. A Tax Rule Import Template with an example tax rule for excise tax on a medical device is provided. Tax rules for MDET may not be added manually into the Admin Console at this time.
    1. TaxRuleTypeId = 0 (Column C)
    2. TaxTypeId = E ( Column M)
    3. RateTypeId = M (Column N)
    4. EntityUseCode = MED1 or MED2 (Column L)
    5. IsAllJuris = 0 (Column J)
    6. Value = The current MDET rate (for example, 0.023) (Column O)
  2. Create a new transaction or import transactions for medical devices.
    1. Enter a tax code and the entity use code MED1 or MED2. Entity use codes MED1 and MED2 can be selected in the Admin Console when creating a transaction.
    2. If you're importing transactions, enter a value for TaxCode (Column I), and use MED1 or MED2 for the EntityUseCode (Column G).

Generate any report

To generate any type of report:

  1. On the Reports tab, select a report category. When making your selection, be aware that the first section is for sales tax reports and the second section is for consumer use tax reports.
  2. From the the Company or Separate Reporting Entity list, select a company or reporting entity.
  3. From the Select Report list, select a report. Fields specific to the report you select display.
  4. Type or select values in the fields that display to determine what's included in the report. Remember:
    • The HTML file format isn't  recommended for displaying large reports.
    • The EXCEL file format is limited to the number of rows Microsoft Excel supports.
    • Large reports take time to generate. Don't cancel the report.
  5. Click Generate.

Generate a Federal Excise Tax Summary report

The Federal Excise Tax Summary report shows your federal medical device excise tax (MDET) summary liability by region.

To generate a Federal Excise Tax Summary report:

  1. From the Company list, select the companyHoverTT.png from which to pull transactionsHoverTT.png for the report.
    1. To use transactions from all companies, select All.
    2. To select more than one company, hold Ctrl and click each company name.
  2. To set the date range for transactions to include in the report, next to Select Date Range, select or enter the desired date range.
  3. From the File Format list, select the file format for the report.
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