Bailed tangible personal property for research and development

From the 2024 DOR Tax Exemption Study

82.12.0265 - Bailed tangible personal property for research and development Description A bailee’s research, development, experimental, and testing activities is not subject to use tax so long as the property was not subject to sales tax or use taxes when acquired by the bailor. "Bailment" consists of a bailor granting the temporary right of possession of tangible personal property to another person (bailee) for a stated purpose without consideration or transfer of ownership. Purpose Tangible personal property owned by the federal government used by federal contractors is subject to bailment. Such contractors are normally subject to use tax on the value of materials incorporated into federal projects. The purpose of the exemption is to improve the competitive position of instate businesses competing for the federal contracts by reducing the associated tax burden. Taxpayer ($ in millions): savings FY 2024 FY 2025 FY 2026 FY 2027 State Taxes $0.000 $0.000 $0.000 $0.000 Local Taxes $0.000 $0.000 $0.000 $0.000 Repeal of Repealing this exemption would not increase revenue because currently no exemption taxpayers use it. Potential ($ in millions): revenue gains FY 2024 FY 2025 FY 2026 FY