My first suggestion is that, if a PMA approval hasn't happened yet, and assuming that the Sponsor is not engaged in other activities triggering the FDA establishment registration requirement, then the Sponsor should ponder about the fact that FDA instructs establishments not to register at the pre-approval stage. Avoiding unnecessary establishment registration will save $5,546 / year (in today's MDUFMA dollars). That could really add up to a lot of savings given that PMA product development and PMA approval campaigns are usually multi-year efforts.
Regarding a firm's lack of having yet submitted its first Federal (U.S.) income tax return, I would certainly and politely question FDA's statement, "…A consequence of this requirement is that you cannot qualify as a small business under MDUFA if you have not submitted a Federal (U.S.) income tax return…". Specifically, section 738(d)(2)(B)(iii) of the Act is, as far as I know, still in effect and includes a bridging provision for firms that haven't yet submitted their first Federal income tax return. That provision says that, in the case of an applicant that has not previously submitted a Federal income tax return, then the applicant and each of its affiliates shall instead demonstrate the "small business" evidence via submission of a signed certification in the English language from the national taxing authority of the country in which the applicant or, if applicable, affiliate is headquartered, certifying that the applicant or affiliate meets the criteria for a "small business". Firms need to be sure to give due consideration to this bridging provision when at a pre-revenue / pre-taxation stage.
However, the Act's section 738(d)(2)(B)(iii) bridging provision may not need to be used at all even though seemingly so at first glance. Indeed, many corporations must submit periodic Federal income tax returns (e.g., Form 941 QUARTERLY Federal Tax Return) during the year leading up to the annual tax return. Such periodic returns are in fact official Federal income tax returns. Accordingly, leveraging such periodic Federal tax returns may also be a viable strategy, specifically, by submitting all of the year's periodic Federal income tax returns in order to officially and statutorily demonstrate that year's current Federal income status. Some discussion with the Agency may be needed for that strategy in order to determine if the Agency interprets the Act's phrase "most recent Federal income tax return for a taxable year" to only mean an annual tax return, or if that could also be interpreted to mean the current year's Federal income tax returns to date. If needed, I wouldn't hesitate to assert with the Agency that a compilation of the year's periodic Federal income tax returns would meet the statutory criterion "most recent Federal income tax return for a taxable year" called for by the Act.
Hope this helps.
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Kevin Randall, ASQ CQA, RAC (U.S., Europe, Canada)
Principal Consultant
Ridgway, CO
United States
© Copyright 2021 by ComplianceAcuity, Inc. All rights reserved.
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Original Message:
Sent: 28-Jul-2021 13:04
From: Anonymous Member
Subject: FDA - Small Business Application for company's in business less than one fiscal year
This message was posted by a user wishing to remain anonymous
Hi Kevin,
Thank you for the question. The SMA was pursued prior to the PMA filing in order to take advantage of cost savings. User Fees for each PMA filing for small businesses drop from approximately $12,500 to $4,700 (rounded figures) with a small business classification - so the cost savings is material.
Original Message:
Sent: 27-Jul-2021 15:56
From: Kevin Randall
Subject: FDA - Small Business Application for company's in business less than one fiscal year
My first question just for reasons of baseline due diligence is to ask whether the device even needs to be registered yet. Remember that if the subject device requires premarket notification clearance [i.e., section 510(k)notification] or approval (i.e., PMA), then the FDA instructs that the firm wait to register the device until the premarket submission is cleared or approved.
------------------------------
Kevin Randall, ASQ CQA, RAC (U.S., Europe, Canada)
Principal Consultant
Ridgway, CO
United States
© Copyright 2021 by ComplianceAcuity, Inc. All rights reserved.
Original Message:
Sent: 27-Jul-2021 14:22
From: Anonymous Member
Subject: FDA - Small Business Application for company's in business less than one fiscal year
This message was posted by a user wishing to remain anonymous
Hello Everyone,
I am working with a small business that has registered with the FDA, and it was incorporated in March of 2021. As the company is so new - it has not filed an annualized income tax filing for the company yet. However, the FDA has declined the approval of "small business" via the SMA (companies with gross receipts of < $100 MM) becuase there has been no tax filing. Estimated tax filings (quarterly) and proforma documents were declined.
Per the FDA: "Sections 738(d)(2)(B) and 738(e)(2)(B) of the FD&C Act require an applicant to pay the standard fees for its submissions unless it demonstrates it is a small business by submitting a copy of its most recent Federal (U.S.) income tax returns (and returns of all affiliates). A consequence of this requirement is that you cannot qualify as a small business under MDUFA if you have not submitted a Federal (U.S.) income tax return. FDA cannot accept a foreign tax return or state tax return in place of a Federal (U.S.) income tax return."
Has anyone else experienced this? The purpose of the SMA is to support/promote small businesses in this industry and this is directly in contrast to that....
If anyone has any thoughts I would greatly appreciate input/insight.
Many Thanks.