Tax 11.20(2)(e)3.3. A business claiming an exemption under par. (a) shall provide records described in subd. 2. or any other information as required by the department to verify that activities are qualified research or that machinery, equipment, or other property or items are used exclusively and directly in qualified research. Tax 11.20(3)(3) Exemptions for raising animals used in qualified research or manufacturing. Tax 11.20(3)(a)(a) Sales of the following property and items to a person who is engaged in the business of raising animals are exempt if all of the animals raised by the seller of the animals are sold primarily to biotechnology businesses, public or private institutions of higher education, and governmental units for exclusive and direct use by those entities in qualified research or manufacturing: Tax 11.20(3)(a)1.1. Machines and specific processing equipment, including accessories, attachments, and parts for the machines or equipment, that are used exclusively and directly in raising such animals. Tax 11.20(3)(a)2.2. Seeds for planting, plants, feed, fertilizer, soil conditioners, animal bedding, sprays, pesticides and fungicides, breeding and other livestock, bees, beehives and bee combs, poultry, farm work stock, baling twine and baling wire, containers for fruits, vegetables, grain, hay, silage and animal wastes, plastic bags, plastic sleeves and plastic sheeting used to store or cover hay or silage, drugs, semen for artificial insemination, fuel, and electricity, that are used exclusively and directly in raising such animals. Tax 11.20 NoteExamples: (1) Company A raises various animals that it sells for use in qualified research. Company A sells more than 50% of the animals it raises to biotechnology businesses for exclusive and direct use in qualified research. All of the feed Company A purchases for exclusive and direct use in raising its animals is exempt.
Tax 11.20 Note(2) Company T raises various animals that it sells for use in qualified research. Company T uses cages to raise some of these animals. Company T’s purchases of cages are exempt only if more than 50% of all the animals raised by Company T are sold to biotechnology businesses, public or private institutions of higher education, and governmental units for exclusive and direct use by those organizations in qualified research or manufacturing.
Tax 11.20(3)(b)(b) For purposes of determining whether an activity is qualified research under par. (a), the regulations under Treas. Reg. section 1.41-4 apply, except that qualified research that is funded by a member of a combined group for another member of a combined group shall remain qualified research for purposes of this subsection. Tax 11.20(3)(c)1.1. Except as provided in subd. 2. and sub. (4) (am), a person claiming an exemption under par. (a) shall obtain a “Purchaser’s Statement to Seller for Animals Used in Qualified Research or Manufacturing,” Form S-209, from each of its customers described in par. (a) (intro.) and keep the completed forms as a part of its records to document the number of animals that were raised by the seller and sold to biotechnology businesses, public or private institutions of higher education, and governmental units for exclusive and direct use in qualified research or manufacturing. When completing Form S-209, the purchaser of the animals is attesting to the number of animals purchased and the number of animals used exclusively and directly in qualified research or manufacturing. Tax 11.20(3)(c)2.2. A person is not required to obtain Form S-209 from its customers that are public or private institutions of higher learning and governmental units. For purposes of the exemption in par. (a), animals sold to such customers are deemed to be sold to such customers for exclusive and direct use in qualified research. Tax 11.20 NoteNote: Form S-209 is available on the department’s web site at www.revenue.wi.gov. Tax 11.20(4)(4) Certification of biotechnology businesses by the department. Tax 11.20(4)(a)(a) Except as provided in par. (am), in order to be considered a biotechnology business for purposes of the exemptions under sub. (3), a business shall first obtain certification from the department as prescribed in this subsection. Tax 11.20(4)(am)(am) In lieu of Form S-209, a seller may accept a fully completed exemption certificate, Form S-211 or S-211E from a purchaser that is a biotechnology business indicating the percentage of the animals purchased from the seller that are for exclusive and direct use in qualified research or manufacturing. The seller of the animals may regard such animals claimed as exempt for exclusive and direct use in qualified research or manufacturing, subject to a request by the department that the seller obtain certifications described in par. (a) from the purchasers to verify the exemption. If the department determines that all of the animals raised by the seller are not sold primarily to biotechnology businesses, the department may invalidate the exemption and make an adjustment to reflect the correct tax. Tax 11.20 NoteExample: Company A raises and sells animals exclusively to purchasers that are biotechnology businesses. Based on the Forms S-209 and the fully completed exemption certificates received by Company A, 60% of all the animals it sells are sold to biotechnology businesses for exclusive and direct use in qualified research or manufacturing. Company A is audited by the department. The department requests that certain purchasers of animals be certified by the department as biotechnology businesses for years relating to the audit. Some of these purchasers are not certified as biotechnology businesses by the department. As a result, only 45% of Company A’s sales of animals are considered to be sold to biotechnology businesses for exclusive and direct use in qualified research or manufacturing. Since Company A does not sell more than 50% of the animals to biotechnology businesses, Company A does not qualify for the exemption under sub. (3) (a).
Tax 11.20(4)(b)(b) A business seeking certification or renewal of a certification under this subsection shall apply with the department in the manner prescribed by the department. The department may require any business submitting an application under this paragraph to provide additional information, as determined by the department, prior to the department granting or denying the applicant’s request for certification or renewal of a certification. Tax 11.20 NoteNote: Information concerning the certification process is available on the department’s web site at www.revenue.wi.gov. Tax 11.20 NoteExample: Additional information that may be requested by the department in processing an application includes documentation of the nature of the business’ income and expenses.
Tax 11.20(4)(c)(c) A business shall be certified by the department as a biotechnology business for the period described in par. (d) if, during that period, the business’ activities are primarily biotechnology. Tax 11.20(4)(d)(d) The certification period under par. (c) shall correspond to the business’ tax year as determined for federal income tax purposes, including short years, subject to the following conditions: Tax 11.20(4)(d)1.1. If a business is certified by the department with respect to a previous tax year, the certification is valid only for the previous tax year. Tax 11.20(4)(d)2.2. If a business is certified for a current tax year, the certification is valid until the expected end of the tax year unless, during such tax year the business’ tax year terminates earlier than expected. When a tax year terminates earlier than expected, the certification is valid until the actual end of the tax year as determined for federal income tax purposes. Tax 11.20(4)(e)(e) Notwithstanding any other provision in this subsection, the department may: Tax 11.20(4)(e)1.1. Revoke any certification granted under this subsection, but only upon information that either the business’ application for certification contained a misstatement as to the business’ gross income or expenses and deductions or the business no longer qualifies as a biotechnology business. Tax 11.20(4)(e)2.2. Require any business seeking certification to be certified only with respect to its previous tax years. Tax 11.20 NoteNote: The interpretations in s. Tax 11.20 are effective beginning January 1, 2012, pursuant to 2009 Wis. Act 28, except for the following amendments effective July 2, 2013, pursuant to 2013 Wis. Act 20: (a) “Qualified research” was amended to include research funded by one member of a combined group for another member of a combined group; (b) The exemption for property used in qualified research by persons engaged primarily in manufacturing in Wisconsin was amended to apply to property used in qualified research by a person engaged in manufacturing in Wisconsin at a building assessed under s. 70.995, Stats.; (c) The exemption for property used in qualified research was amended to include use by one member of a combined group who is conducting qualified research for another combined group member who is either engaged in manufacturing in Wisconsin at a building assessed under s. 70.995, Stats., or is primarily engaged in biotechnology; and (d) The change of the term “medicines” to “drugs.”