If you’ve been following our series about multi-state tax facts for various facets of the technology industry, you may be aware of one more niche we haven’t discussed yet: BioTech and Pharmaceutical companies. While both these categories fall under scientific research and medicine, they’re integral to technology as well.
- BioTech organizations research living cells, studying and discovering ways to duplicate or modify them so they’re more predictable. This research has a lot of potential for curing or improving the lives of those with all sorts of diseases and conditions, and is at the forefront of scientific discovery, which is reliant on top-of-the-line, innovative tools and technology.
- Pharmaceutical companies specialize in everything surrounding drugs, specifically in-house research and licensing from academia and other businesses (including BioTech companies).
7 Multi-State Tax Facts BioTech and Pharmaceutical Companies Need to Know About
Fact 1: BioTech companies need to be aware of where they’re creating nexus beyond where the company is physically located. Many BioTech firms keep the research in their primary location, which limits instances of nexus being established in other states; however, some companies outsource some aspects of the research, which means nexus could be established beyond their home state.
Fact 2: Pharmaceutical companies may establish nexus in states in which sales representatives visit, even if they don’t complete a sale. In many states common sales activities may trigger nexus.
Fact 3: Although BioTech companies often don’t need to worry about sales tax, they do need to pay use tax on items they purchase to conduct research.
Fact 4: BioTech companies that purchase equipment for research may qualify for some state sales tax exemptions, such as California’s Manufacturer’s Exemption. Many other states have similar exemptions. You just need to know what to look for!
Fact 5: Both BioTech and Pharmaceutical companies need to keep track of income tax and net operating losses by each state in which they’ve established nexus. This is something we can help you with!
Fact 6: BioTech and Pharmaceutical companies may want to file income tax in states they have nexus in; this can help them establish net operating losses properly.
Fact 7: Many profitable BioTech and Pharmaceutical companies are eligible for various tax credits; they should check for any available in states in which they have nexus.
Miles Consulting’s Work with BioTech and Pharmaceutical Companies
BioTech and Pharmaceutical companies may not come to mind when you think of the technology industry, but they’re an important niche in the field. As such, it’s important for these businesses to think through nexus, net operating losses, credits and more.
Do you want to know more about multi-state tax issues and how they may affect your business? Contact us today for advice, and stay tuned for our final post of this series next week, which will discuss how technology services are becoming more taxable!
Miles Consulting Group, Inc. is a professional service firm in San Jose, California specializing in multi-state tax solutions. Our firm addresses state and local tax issues for our clients, including general state tax consulting, nexus reviews, tax credit and tax incentive maximization, income tax and sales/use tax planning and other special projects. To learn more, contact us today at www.MilesConsultingGroup.com.
