The IRS has just issued the revised Form 637, which provides for registration of a manufacturer which claims exemption from the medical device excise tax for purchases or sales for export or for use in further manufacturing.
In the case of exports of components or finished devices from the U.S., no excise tax is due by reason of the export exemption in I.R.C. § 4221(a)(2). Sales (or imports) of components that are also considered listed devices for other uses for incorporation by the purchaser into an overall finished medical device are exempt under the “further manufacture” exemption in I.R.C. § 4221(a)(1).
The general manufacturers’ excise tax rules provide for a detailed registration system under which, in order for the exemption from tax to apply, the manufacturer and the purchaser must register with the IRS, and certain information must be exchanged, upon each exempt transaction, including the parties’ registration numbers and the exempt purpose for which the taxable item is being used. (Treas. Regs. §§ 48.4222(a)(1)-1, 48.4221-1(c)). However, a foreign purchaser need not be registered in order for the U.S. manufacturer to qualify for the export exemption. (Treas. Reg. § 48.4221-3).
IRS Form 637 serves as the application form for this registration and requires the taxpayer to list all taxable articles it manufactures, the taxable articles it intends to export and to whom the export will be made, the taxable articles to be purchased for further manufacturing, and the taxable articles to be sold for further manufacturing and who will be doing the further manufacturing. This registration must be accepted by the IRS and a registration number issued before the manufacturer can engage in tax-free sales.