Tax Development Oct 22, 2014
On October 31, 2014, the first quarterly sales and use tax return filings are due under the new California manufacturing/research and development (R&D) partial exemption. The exemption was effective July 1, 2014, and this filing will be taxpayers’ first opportunity to test reporting procedures to ensure all qualifying purchases have been identified. If exemption certificates were not timely provided to vendors, a claim must be filed with the vendor to recover the excess tax paid.
The exemption is applicable to equipment procured by businesses engaged in manufacturing or certain R&D. Eligible companies include manufacturers in aerospace, textiles, pharmaceuticals, printing, and food, as well as biotechnology research and experimental development activities in agriculture, electronics, environmental biology, botany, computers, chemistry, food, fisheries, forestry, geology, health, mathematics, medicine, oceanography, pharmacy, physics, veterinary, and other allied fields. Extractive and agricultural companies may not be eligible for the exemption, depending on the apportionment method used for California franchise tax purposes.
For more information concerning this tax exemption’s rules of establishment, qualification of purchases, how to file a refund claim, and more, please view Ryan’s complimentary on-demand webinar, California Manufacturing Exemption Update | Key Provisions and Open Questions.
TECHNICAL INFORMATION CONTACTS:
John P. Lyon
Principal
Ryan
213.627.1719
john.lyon@ryan.com
Richard V. Carlson
Principal
Ryan
213.627.1719
rich.carlson@ryan.com