Commercially sponsored research conducted for the benefit of the
general public is a tax exempt activity. Scientific research will be
regarded as carried on in the public interest if:
- The results of such research (including any patents, copyrights,
processes, or formulae resulting therefrom) are made available to
the public on a non-discriminatory bases;
- Such research is performed for the United States, or any of its
agencies or instrumentalities, or for a State or political
subdivision thereof; or
- Such research is directed toward benefiting the public.
IRS Rev. Rul. 76-296 found that
commercially sponsored research otherwise qualifying as scientific
research under section 501(c)(3) of the IRS Code, constitutes scientific
research carried out in the public interest when the results, including
all relevant information, are published in a timely fashion in such form
as to be available to the interested public. However, when the
publication is withheld or delayed significantly beyond the time
reasonably necessary to establish ownership rights, research is not in
the public interest and constitutes the conduct of unrelated business.
IRS Rev. Rul. 68-373 determined
that clinical testing of drugs purely for the purpose of obtaining FDA
approval is part of a commercial marketing process and is not scientific
research.
However, Private Letter Ruling #7936006
discusses a similar situation and reaches a different conclusion. It
looked at studies that "involve the search for new or improved
methods of treating human afflictions" and states that these are
"concerned with new applications of products or drugs in order to
improve the ability to treat various diseases and conditions." The
private letter ruling found such studies to be scientific research.
