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FDA: Relax, apps are safe from device tax

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Democratic Rep. Henry Waxman said the latest House debate over taxing apps was a waste of Congress' time.

The angst over the medical device tax has made its way to the world of mobile app development, as some lawmakers and tech companies worry that the FDA will impose its slow-footed process on innovation and the IRS will lop 2.3% off of smartphone revenue.

Neither is true, the feds said in House hearing covered by Reuters, as the FDA plans to vet only programs that offer a therapeutic or diagnostic service, and mobile apps are protected from the device tax through a provision in the IRS' guidance.

The FDA isn't planning to release its full guidance on apps until October, but the agency has said it wants to subject only a small subset of health-related apps to the 510(k) clearance process, which is much speedier than the PMA path required of innovative medical devices.

"However, when 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," the FDA's Christy Foreman wrote in a blog post. "These are the small percentage of mobile apps that pose a risk of serious illness or death to patients."

As for the device tax, the IRS exempts items that "are generally purchased by the general public," and while that's a little nebulous, it would certainly apply to anything found on in the App Store or Android Market.

This latest snap over the tax came about as House Republicans invited a new constituency, app developers, into their now sweeping repeal effort. But, because lawmakers already know about the retail provision in the IRS' rules and the FDA had already explained its plan for app regulation, the whole thing was a waste of time, Democratic Rep. Henry Waxman said.

"There are too many pressing issues before us for the committee and this Congress to get bogged down for three days in what amounts to an inaccurate talking point about FDA over-regulation and a nonexistent iPhone tax," Waxman said at the hearing, according to The Hill.

- here's the FDA's note on the issue
- read the Reuters story
- check out The Hill's write-up

Special Report: 5 Things You Need To Know About the Medical Device Tax

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