Navigating Sales Tax in the Life Science Industry

This guide addresses the complexities of sales tax compliance in the life sciences industry, highlighting the challenges and potential solutions for companies operating in this sector. It outlines the significant financial implications of sales tax, which can be the largest expenditure for life science firms due to the need for goods related to facility build-outs, equipment, and testing inventory. The document details how nexus can be established through various means, including physical presence and employee activities across state lines. It explains the importance of understanding state-specific sales tax exemptions, particularly for equipment and materials used in manufacturing and research and development activities. The guide also discusses the taxability of products, noting that while prescription medicines are generally exempt, over-the-counter medicines are typically taxable. Additionally, it emphasizes the need for life science companies to document their tax compliance efforts to mitigate risks associated with noncompliance.