Relating to: exempting persons engaged in certain contract research services from the sales and use tax. (FE)

AB 670 exempts businesses providing certain contract research services from state sales and use tax. It defines "contract research services" as research conducted for a client that would qualify as "qualified research" if done by the client’s own employees. The bill specifically includes research funded between companies in the same corporate group and research covered under federal tax rules for "contract research expenses." This exemption directly benefits research service providers in the state, reducing their tax burden for qualifying work. The bill aligns state tax treatment with federal research credit definitions under the Internal Revenue Code.