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Virginia Administrative Code
Title 23. Taxation
Agency 10. Department of Taxation
Chapter 210. Retail Sales and Use Tax
12/22/2024

23VAC10-210-3070. Research; general provisions.

A. Definitions. The following words and terms, when used in 23VAC10-210-3070 through 23VAC10-210-3074, shall have the following meanings, unless the context clearly indicates otherwise:

"Basic research" means a systematic study or search in a scientific or technical field of endeavor with the ultimate goal of advancing knowledge or technology in that field. The development of a tangible product or process need not occur in basic research activities. Examples of basic research activities include medical, chemical, or biological experiments conducted in a laboratory environment.

"Direct use" means those activities which are an integral part of basic research or research and development activities, including all steps of these activities, but not including secondary activities such as administration, general maintenance, product marketing, and other activities collateral to the actual research process.

"Exclusive use" means items are used solely in basic research or research and development activities.

"Experimental sense" means work is conducted through tests, trials, tentative procedures, or policies adopted under controlled conditions to discover, confirm, or disprove something doubtful.

"Laboratory sense" means work is conducted in a place equipped for experimental study in a science and providing an opportunity for experimentation, observation, or practice in a field of basic scientific or traditional physical science research.

"Research" means basic research and research and development as defined in this section.

"Research and development" means a systematic study or search directed toward new knowledge or new understanding of a particular scientific or technical subject and the gradual transformation of this new knowledge or new understanding into a usable product or process. Research and development must have as its ultimate goal: (i) the development of new products; (ii) the improvement of existing products; or (iii) the development of new uses for existing products. Research and development does not include the modification of a product merely to meet customer specifications unless the modification is carried out under experimental or laboratory conditions in order to improve the product generally or develop a new use for the product.

B. Generally. The tax does not apply to tangible personal property purchased or leased and used directly and exclusively for research in the experimental or laboratory sense.

Research does not include testing or inspection of materials or products for quality control; however, in the case of an industrial manufacturer, processor, refiner or converter, testing and inspection for quality control is deemed to be an exempt activity under 23VAC10-210-920. Additionally, research does not include environmental analysis, testing of samples for chemical or other content, operations research, feasibility studies, efficiency surveys, management studies, consumer surveys, economic surveys, research in the social sciences, metaphysical studies, advertising, promotions, or research in connection with literary, historical, or similar projects.

Statutory Authority

§§ 58.1-203 and 58.1-609.3(5) of the Code of Virginia.

Historical Notes

Derived from VR630-10-92 §§ 1.1, 1.2; revised July 1, 1969; January 1, 1979; January 1, 1985; amended, eff. July 1, 1994.

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