PolitiFact: Email about health care tax is way off

Gwinnett County resident Don Smith shared the email with us and asked if it was accurate.

The email contained a photo of a receipt from Cabela’s, a Nebraska-based retail store that sells sporting goods, guns and camping gear. Cabela’s is not in Georgia. Underlined in yellow on the receipt is the amount charged for a “medical excise tax.”

“The 2.3 (percent) Medical Excise Tax that began on January 1st is supposed to be ‘hidden’ from the consumer, but it’s been brought to the public’s attention by hunting and fishing store Cabela’s who have refused to hide it and are showing it as a separate line item tax on their receipts,” the email says.

The email says it went on the Internal Revenue Service’s website and did some research.

“And what do I find under ‘MEDICAL DEVICES’ under ‘MANUFACTURERS TAXES?,’ ” The following discussion of manufacturers taxes applies to the tax on: Sport fishing equipment; Fishing rods and fishing poles; Electric outboard motors; Fishing tackle boxes; Bows, quivers, broadheads and points; Arrow shafts; Coal; Taxable tires; Gas guzzler automobiles; and Vaccines.”

Our colleagues at PolitiFact Ohio recently examined a similar email and determined anyone who gets it in their inbox should put it in their trash bin.

First, though, it is true that there is a medical device excise tax. The tax is designed to offset the added costs of expanding health coverage to the uninsured, according to the Congressional Budget Office. It became law at the beginning of this year. A 2.3 percent tax is imposed on some devices.

The federal Food, Drug and Cosmetic Act has broad definitions of the types of devices that can be taxed. They’re typically devices used by physicians or medical offices. The items that cannot be taxed include eyeglasses, contact lenses and hearing aids. PolitiFact Ohio found that none of the items listed in the chain email are included as medical devices.

So why would Cabela’s tax its customers? It was an error, the business told PolitiFact Ohio.

A Cabela’s spokesman blamed a companywide “glitch” in its sales register system. The problem added a 2.3 percent “medical excise tax” to all purchases at its stores on Jan. 1. The error was caught the same day, the spokesman said, and the charges would be refunded.

Is the tax “hidden”? Obviously not, if it was included on the Cabela’s bill. The Medical Device Manufacturers Association, a Washington, D.C.-based group, has vigorously lobbied against the tax and supported congressional bills to repeal it, saying it will take money the industry uses for research and development. In a March press release, the association said manufacturers had paid $388 million in taxes to the federal government since the tax started in January.

To sum up, the email claims a medical excise tax “is supposed to be hidden from the consumer.” That’s incorrect. The email also implies that items that can be taxed include fishing rods and some cars. Again, incorrect. Lastly, the email says Cabela’s sporting goods store “refused to hide” the tax. Wrong. The company said it made a mistake when it taxed customers and would refund them.

Delete the email if it comes your way. Pants on Fire!

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Sources:

Email forwarded to PolitiFact Georgia, July 16, 2013

Internal Revenue Service, "Medical Device Excise Tax: Frequently Asked Questions," Updated May 22, 2013, www.irs.gov/uac/Medical-Device-Excise-Tax:-Frequently-Asked-Questions

Medical Device Manufacturers Association, "Medical Device Manufacturers Association Applauds Passage of Medical Device Tax Repeal Amendment," March 21, 2013, www.medicaldevices.org/node/1470

PolitiFact Ohio, "Chain email claims the health care law a hidden tax on sporting goods," June 12, 2013, www.politifact.com/ohio/statements/2013/jun/14/chain-email/chain-email-claims-health-care-law-contains-hidden/