Tax 11.20(2)(e)2.b.b. Submissions to management, the board of directors, review committees, or other similar groups regarding the research projects, activities, and the expenditures.
Tax 11.20(2)(e)2.c.c. Documents prepared by, or on behalf of, internal audit, including quarterly and annual reports that refer in any manner to the research activities.
Tax 11.20(2)(e)2.d.d. Minutes, notes, or other similar recordings from budget, board of director, managerial or other similar meetings concerning the research activities.
Tax 11.20(2)(e)2.e.e. Project authorizations, budgets, or work orders that initiate a research project.
Tax 11.20(2)(e)2.f.f. Position and department descriptions of employees identified as providing qualified research.
Tax 11.20(2)(e)2.g.g. The internal authorization policies for approving a research project.
Tax 11.20(2)(e)2.h.h. Patent applications.
Tax 11.20(2)(e)2.i.i. Project summaries and/or project reports and project meeting minutes.
Tax 11.20(2)(e)2.j.j. Prototype and process testing reports, field and lab verification data/summary data.
Tax 11.20(2)(e)2.k.k. Papers, treaties, or other published documents regarding the taxpayer’s research.
Tax 11.20(2)(e)2.L.L. Complete copies of contracts, including all modifications, letter agreements, memoranda of understanding, or similar documents for research performed by, or on behalf of, a third party.
Tax 11.20 NoteExample: This example illustrates records that are generally acceptable as adequate to document the exemptions under par. (a).
Tax 11.20 NoteCompany A is engaged in manufacturing in Wisconsin at a building assessed under s. 70.995, Stats. Company A attempts to make a new and improved widget. Upon approval of a project, Company A documents the scope and goals of the project, the uncertainties that exist in accomplishing these goals, and the processes by which Company A hopes to eliminate the uncertainties. In addition, contemporaneously with conducting the research project, Company A documents: (1) the location or locations at which the research is conducted, (2) the machinery and equipment used in the project and the manner used, (3) the various materials and supplies used in attempting to produce the improved widget, the purpose and manner in which such items were used, (4) the processes applied, (5) the results achieved throughout the research process, and (6) the point at which Company A either abandons the research project or achieves the goal of eliminating the uncertainties involved with the development of the new widget. Company A purchased various machinery and equipment, and supplies and materials used in conjunction with development of the new widget without tax claiming the purchases are exempt under par. (a). In general, contemporaneous records kept in the manner and detail described will be accepted and used by the department in making its determinations regarding whether the taxpayer is entitled to claim the exemptions under par. (a).
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 NoteNote: Treas. Reg. section 1.41-4 provides interpretation and guidance concerning what constitutes qualified research under section 41 (d) (1) of the Internal Revenue Code. Treas. Reg. section 1.41-4 is available at https://www.ecfr.gov/cgi-bin/text-idx?SID=55d6d62e711e2571238fb720003f7232&mc=true&node=se26.1.1_141_64&rgn=div8 or https://www.ecfr.gov/cgi-bin/ECFR?page=browse.
Tax 11.20(3)(c)(c)
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.