Medical Excise Tax on Retail Receipts

Images show a “2.3% medical excise tax” on receipts as part of Obamacare. Are these images real or fake?

The images are real, but the tax was erroneously collected by a couple of retailers in early 2013.

Let’s first take a look at the claims being circulated. Below is the text of an email has been going around for several months:

Subject: 2.3% Medical Excise Tax
I hope other retailers take a clue from Cabela’s .

The 2.3% 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.

Images of two different receipts have been included in the claims regarding Cabela’s charging this tax, as seen below.

 

Let’s take a look at some of the claims being circulated

Excise Tax

Obamacare did call for a 2.3% sales tax on the sale of certain medical devices beginning January 1, 2013. This can be found in Section 4191 of the IRS Code. There has been some debated as to what constitutes a “medical device” though many common “medical devices” such as bandages, glasses, and hearing aids are exempt from the tax.

The IRS has a Frequently Asked Questions regarding the tax and which items qualify (See link below)

Cabela’s Receipts

The receipts shown above are real, but Cabela’s did not decide to rebelliously show this tax. They  instead accidentally added it to purchases made on January 1, 2013. Cabela’s spokesman Joe Arterburn stated, “It was a glitch in the system” and stated all customers would be issued a refund. Credit and debit card purchases were automatically refunded.

Bottom Line

The medical excise tax is real, but it is not being hidden from consumers. Scans of the receipts show a glitch which occurred on the first day the new tax took effect, and it was immediately corrected.

Sources

• Cabela’s blames ‘glitch’ for Jan. 1 tax error, promises refunds (Janice Podsada, Star Herald: January 9, 2013)
• Medical Device Excise Tax: Frequently Asked Questions (IRS)