HI HB329

Narrows the general excise tax exemption for scientific contracts with the United States to apply only to amounts qualifying under Internal Revenue Code Section 41, including qualified research expenses, basic research payments, and energy research consortium contributions.

Replaces the previous broad exemption covering all gross proceeds from scientific work (including aerospace, biomedical, and oceanographic facilities) with a more limited exemption tied to federal tax code definitions.

Limits exempted gross proceeds to amounts properly claimed and allowable under IRC Section 41 for the same taxable period.

Addresses the legislature's finding that over 98 percent of these contracts are held by out-of-state entities paying no tax and that the exemption consumed 10 percent of the Department of Taxation's audit staff resources.

Takes effect on January 1, 2014.