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Mobile Apps Exempt from Medical Device Tax, Report Says

With the 2.3% medical device tax on the forefront of a legislative battle, many companies are wondering how much collateral damage will be caused by the levy. In particular, medical app developers have questioned if they would be subject to the 2.3% tax on mobile software sales. According to a report by Reuters, mobile app development will not be impacted by the medical device tax. In a U.S. House hearing, representatives from the United States Food and Drug Administration stated that the federal watchdog agency would only vet programs that offer a diagnostic or therapeutic service. Mobile apps are protected through a provision in IRS guidelines. According to the government agency, full guidance on mobile apps will not be released until October of this year. Only a small number of health-related mobile apps will need to jump through 510(k) regulatory hoops. Christy Foreman is the Director of the Office of Device Evaluation at the FDA. In a blog post, she stated, "[W]hen a mobile app is doing the job of a medical device that requires FDA clearance or approval, it's only logical that both should be governed by the same rules." She continued, "These are the small percentage of mobile apps that pose a risk of serious illness or death to patients." According to IRS guidelines, items purchased by the general public will not be subject to the medical device tax. While IRS guidelines are often nebulous, this exemption would apply to mobile apps found in the Android and Apple app stores.

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