IRS Says Evaluation Wanted to Determine Out Tax on Price Reimbursement

Aug. 16, 2021, 10:11 PM

Agency memo addresses tax treatment of drug free reimbursement
Analysis includes how much U.S. entity benefits from paying fee

The U.S. entity of a pharmaceutical company must consider several factors to determine how much it is responsible for tax on a reimbursement payment for a fee, including how much it benefits from paying the fee, the IRS said.

In a Chief Counsel Advice memo published Aug. 13, the IRS addressed the treatment of a reimbursement payment for the Affordable Care Act’s Branded Prescription Drug Fee—a fee or excise tax on entities that import or manufacture branded prescription drugs. The fee cannot be deducted.

The memo considers a case involving a U.S.-based limited risk distributor entity that is part …