Lawmakers are floating a proposal to extend sales and use tax exemptions for manufacturing and biotech research to contract research organizations.
Wisconsin law currently provides a sales and use tax exemption for in-house machinery and other equipment used exclusively for research in the manufacturing and biotechnology fields. Sen. Howard Marklein, R-Spring Green, and Rep. David Armstrong, R-Rice Lake, are circulating a bill that would extend that exemption to third-party research use.
LRB-4571/4911 would allow Wisconsin contract research organizations to claim the sales and use tax exemption on machinery and equipment used for research, as long as the research would have been eligible if the customer’s own employees had done it.
Contract research organization use is part of a growing national trend, which many Wisconsin businesses are following, the cosponsorship memo argues.
“Outsourcing research can be particularly helpful for startups and other small businesses by removing the need to develop and staff in-house research facilities,” the memo notes.
CROs and research labs in Wisconsin employ some-15,000 people and about $75 million on supplies and equipment every year, according to the memo.
“This drives up their costs and puts them and their customers at a competitive disadvantage compared to states that do allow CROs to claim an exemption,” the lawmakers argue.
