Wisconsin Department of Revenue Explains New Sales Tax Exemption for Qualified Research
Wednesday, April 25th, 2012
The Wisconsin Department of Revenue (DOR) recently published a fact sheet explaining the new sales tax exemption for tangible personal property used in "qualified research." Wisc. Fact Sheet: Sales and Use Tax Exemption for Qualified Research (Dept. of Revenue Apr. 20, 2012).
Effective January 1, 2012, Wisconsin exempts sales of certain items to persons who are engaged primarily in manufacturing or biotechnology for use directly and exclusively in "qualified research." This exemption expressly applies to both (1) machinery and equipment, including attachments, parts, and accessories, used exclusively and directly in qualified research and (2) tangible personal property that is consumed or destroyed or loses its identity while being used exclusively and directly in qualified research. See Wis. Stat. sec. 77.54(57)(b).
Wisconsin defines "qualified research" by cross referencing that term in section 41(d) of the Internal Revenue Code (26 U.S.C. sec. 41(d)). To be "qualified research," the activity must satisfy all of the following requirements:
- It must be in connection with the taxpayer's trade or business;
- It must be research and development in the experimental or laboratory sense;
- It must be undertaken for the purpose of discovering information which is technological in nature;
- It must be intended to be useful in the development of a new or improved business component of the taxpayer; and
- It must constitute an element of a process of experimentation.
Several research-oriented activities are excluded from "qualified research." For example, research that relates to style, taste, cosmetic, or seasonal design factors, is not "qualified research." Similarly, none of the following activities are "qualified research": the ordinary testing or inspection for quality control; efficiency surveys; management studies; consumer surveys; advertising; promotions; or research in connection with literary, historical, or similar projects. Consequently, items purchased for use in connection with these activities are taxable.
Transaction (buying or selling things), Tax (the tax on this activity), Resources (our people, our website, our support services) - TTR, Inc.
TTR has a website that companies subscribe to and use daily. This website provides a list of everything that can be bought or sold in the U.S. It provides simple answers to whether buying or selling these items is taxable (subject to a sales tax or other tax), and it provides all the legal authority to support these tax answers.
TTR likes to keep things simple and fun, which is why it has great people who provide help to clients on any support questions they have about transaction tax issues.
Please visit TTR on the web at www.ttrus.com or call 866.578.8193.
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