Procurement

Reminder!  The reduced sales/use tax rate will only be applied to purchase orders for qualifying inventorial equipment (equipment $5,000 and over).

During checkout, in the "Eligible for Reduced Tax" drop-down, select "Yes" to route your requisition for Procurement Services review. Additionally, selecting the correct Purchasing Category  is essential to qualify for the reduced tax:

• The most commonly used account for equipment purchases in Life Sciences is 560230—Equip Non-Computing Equipment. This category applies to new equipment purchases other than computers with a cost equal to or greater than $5,000, including sales tax (freight if on original purchase order).; however, other equipment-related accounts may also qualify.
• Certain high-dollar repairs may also be eligible for equipment-related accounts.
• Fabrications, software, and computing equipment also qualify, but they must be coded under accounts designated for inventorial equipment to ensure proper classification:
  • 560200 - Equip Computer
  • 560210 - Equip Computer Upgrade Expansion
  • 560220 - Equip Fabricated (This category applies to purchases related to internally fabricated inventorial equipment with a total cost of $5,000 or more. A Fabrication Number from Equipment Management is required.)
  • 560230 - Equip Non Cmpt Equip
  • 560240 - Equip Non Cmpt Equip Upg Exp
  • 560250 - Equip Network
  • 560500 - Equip Capital Lease Cmpt
  • 560510 - Equip Capital Lease Non Cmpt
  • (Do not use:  560225 - Equipment  Hazardous Incl Laser MRI XRay Exhaust; 560260 - Equip Rental Allow Credit; 560265 - Equip Trade in Allow Credit)

If eligible, the professional buyer will take the necessary steps to take advantage of the reduced sales/use tax rate. Please note that any sales/use tax PO revisions do not update Oracle.  

Qualified Property:

"Qualified property" must have a useful life greater than one year and must be primarily used in research and development anywhere in California, including:

• Machinery and equipment, including component parts and contrivances such as belts, shafts, moving parts, and operating structures.
• Equipment or devices used or required to operate, control, regulate, or maintain the machinery, including, but not limited to, computers, data-processing equipment, and computer software, together with all repair and replacement parts with a useful life of one or more years, whether purchased separately or in conjunction with a complete machine and regardless of whether the machine or component parts are assembled by the qualified person or another party.
• Computers used to acquire data and or control research instrumentation are eligible.

"Qualified property" does not include:

• Consumables with a useful life of less than one year.
• Furniture, inventory, and equipment used in the extraction process, or equipment used to store finished products that have completed the manufacturing, processing, refining, fabricating, or recycling process.
• Tangible personal property used primarily in administration, general management, or marketing.
• Computers/PCs usedfor administrative tasks
• Property that will be used in less than 50% on research and development
• Property that will not be used in California at least 50% of the time.

Leases of qualified property are eligible for the partial sales tax exemption when payments are due and paid in the exemption period from July 1, 2014, through June 30, 2030, regardless of the lease inception date.

Qualified Person:

A qualified person is a principal investigator/researcher primarily engaged (50 percent or more of the time) or a department with 50% or more of its expenditures related to research and development in biotechnology, physical, engineering, or life science as described in the North American  Industry Classification System (NAICS) Codes 541711, or 541712 published by the United States Office of Management and Budget (0MB), 2012 edition.

541711 Research and Development in Biotechnology: This U.S. industry comprises establishments primarily engaged in conducting biotechnology research and experimental development. Biotechnology research and experimental development involves the study of the use of microorganisms and cellular and biomolecular processes to develop or alter living or non-living materials. This research and development in biotechnology may result in development of new biotechnology processes or in prototypes of new or genetically-altered products that may be reproduced, utilized, or implemented by various industries.

Includes Biotechnology research and development laboratories or service in botany, agriculture, bacteriology, biology, chemical sciences, entomology, environmental science, food science, genetics, health sciences, industrial research, medical sciences, physical science, veterinary sciences, Cloning, DNA technologies (e.g., microarrays), Nanobiotechnologies, Nucleic acid chemistry, Protein engineering research, Recombinant DNA

541712 Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology): This U.S. Industry comprises establishments primarily engaged in conducting research and experimental development (except biotechnology research and experimental development) in Agriculture, Bacteriology, Biology, Botany, Chemistry, Computers, Dental, Electronics, Engineering, Entomology, Environmental, Experimental farms, Fisheries, Food Science, Forestry, Genetics, Geology, Guided missile and space vehicle engines, Guided missile and space vehicle parts, Health Science, Industrial, Life sciences, Mathematics, Medical Science, Observatories, Oceanography, Photonics, Physical Science, Physics, Veterinary Science.

Qualified Activity:                                                                                        

The qualifying activity must primarily be engaged in research and development (more than 50% of the time). For UCR purposes, the qualifying activity will be defined as:

1. A qualifying extramurally sponsored research fund source; or
2. A department with 50% or more of total expenditures for the preceding fiscal year that are recorded under FUNCTN CATEGORY 44 - Research (supported via a Looker query) for all funding sources.
3. Initial complement funding where the appointment letter clearly designates the monies are to be used primarily research activities. Department should be able to document for audit purposes the related expenditures were primarily (50% or more) used for qualified research activities.