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Taxes – sales tax US

It’s that time of the year again… tax time! It may not be one of the more enjoyable times of the year, but it is definitely one of the

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

more important dates on the calendar. Hopefully, you have listened to all the advice and have started planning in advance. If so, you probably already know that the

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

government has introduced a new way for you to lower your federal taxes, maybe even dramatically lower your taxes; you now have the choice to claim your state sales

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

tax to lower your taxable income on your federal tax return.

Deducting your sales tax in the US

While you used to be able to deduct amounts paid in state

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

ales tax, Congress took it off the books in the Tax Reform Act of 1986. Thanks, Congress. Fortunately, it is now back. Depending on your specific circumstances and

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

here you live in the US, this could be extremely important for your tax planning.

Deducting your state income tax vs. state sales tax

The change in the law

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

means you now have the choice between deducting your state income tax vs. your state sales tax. No matter what you choose, however, you have to first decide to ite

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

ize your deductions. Instead of going through the process of itemizing your deductions, the IRS gives you the opportunity to take a pre-determined deduction from yo

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

r taxable income, based on your income level and state of residence. According to the IRS, most people will simply chose the pre-determined number – as many as 66%

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

of all tax payers take the easy way out.

For some people, the pre-determined numbers is going to be the better choice. A lot of the people who choose the pre-deter

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

ined deductions, however, are doing so for the sake of simplicity. Plan ahead and make sure you are picking the best option before signing on for the pre-determined

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

deductions.

The ability to deduct amounts paid in state sales tax could significantly lower the amount of money you end up paying in income tax, or at least lower

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

than what you would pay under the pre-determined deductions. This ability is particularly important if you live in one of the few states - Wyoming, Washington South

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

Dakota, Tennessee, Florida, Texas and Nevada – where there is no state income tax. Previously, if you were a resident of this state you could not claim any state ta

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

deductions. Now, thanks to the new rules, if you are a resident of one of these lucky states you can now claim their state sales tax to reduce their taxable income

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

on their US tax forms.

When will you be better off deducting your state sales tax? If you have made any significant purchases – such as a car, a boat, an airplane

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

luxury items or major events such as a wedding – the sales tax you paid last year could be more than you paid in state income taxes.

Save your receipts!

T

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

e most important thing to get your finances in order is to start planning for tax time now. The ability to deduct amounts paid for state sales tax will only be usef

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

ul if you have the receipts to back your itemizations up. Make sure you hold on to receipts for your expensive items, and fight the natural instinct to take the eas

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

way out and select the pre-determined deduction. If you have paid a lot of state sales tax in the US, this is your chance to pay less tax to the federal government

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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