As was widely reported, Congress approved legislation late Monday, January 22, 2018 to provide continuing appropriations for federal agencies through February 8, 2018, ending the government shutdown that began Saturday.

As a “sweetener” to attract votes from Republicans and Democrats alike, the Republican majority included several extraneous provisions in the legislation continuing government funding, one of which further suspended the medical device excise tax for two more years. The 2.3% industry-wide tax payment would have been due to the Treasury Department by January 29, 2018, but has been postponed to take effect no earlier than January 1, 2020.

The medical device tax was launched in 2013 to help fund the Affordable Care Act and adversely impacted the medical device manufacturing sector. Congress acted to impose a moratorium on the collection of this excise tax for 2016 and 2017, but the moratorium lapsed on December 31, 2017 because Congress had not enacted continuation legislation. Merely a week before the first payment would have been due this year, the medical device industry found temporary relief in the Continuing Resolution signed into law last evening.

Although the delay is certainly welcomed by medical device manufacturers, many will not be at ease until the medical device tax is repealed. Most manufacturers in this industry are considered small businesses and would be forced to make difficult decisions in order to pay the tax, including possible layoffs or delayed capital expenditures. While medical device manufacturers can breathe a sigh of relief now that a two-year moratorium has become law, we fully expect Congressional supporters of this sector to continue to press for legislation repealing the excise tax permanently when the opportunity next presents itself.