IRS Details Resolution Process for Disputes Over New Drug Excise Taxes

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The Internal Revenue Service outlines in Revenue Procedure 2011-24 the steps that companies should take if they want to dispute the amount of the new fees they will be assessed under a new excise tax on branded pharmaceutical drugs. Under the Patient Protection and Affordable Care Act, companies selling more than $5 million per year of branded prescription drugs must pay a share of a $2.5 billion annual fee for the industry. The fee, which is treated as an excise tax under the tax code, is split among all covered entities and is based on their proportion of prescription drug sales for the previous calendar year. The agency says it will calculate the tax for the companies and mail them a bill by May 16, 2011. If the companies believe that the notification contains one or more errors in the mathematical calculation of the fee, subtractions from the fee because of the law's rebate for “orphan” drugs or other items, program drug sales data, or any other errors, the company must provide a written error report to IRS postmarked by June 1, 2011.