Tax Act Reference Guide

This reference guide includes information from Memo OTT-00-01 and RPAC-20-02, organized according to four common research activity categories:

  • Sponsored Research
  • Material Transfers
  • Visitor
  • Clinical Trials

Refer to Memos OTT-00-01 and RPAC-20-02 for additional information and/or context. Proposed activities falling outside the safe harbors should be relocated to a space that is not bond-financed, if possible. If relocation is not possible, the activity should be reported via the annual Private Activity Questionnaire (PAQ), and it will require a private business use calculation to be performed by the campus Capital Planning/Budget office.

Sponsored Research Agreement (Single Party)

Staying in the Safe Harbors (IRS Revenue Procedure 2007-47)

Outside the Safe Harbors/Private Business Use

 

Must meet the following 4 criteria:

1. Single sponsor funds Basic Research (OTT- 00-01 page 4 and Definitions; RPAC-20-02, FAQ 13)

Recharge facilities, unless “general public” or “incidental use” exemptions apply. (RPAC-20-02, FAQ 13)

 
2. UC must solely own any technology created using bond-financed facility (e.g., inventions, works of authorship, materials). (OTT- 00-01 page 4-5)

Sponsor given sole or joint ownership of such technology. (OTT-00-01, pages 4-5)

 

3. UC controls the manner in which research is performed at the bond-financed facility. (RPAC-20-02, Principle 6)

4. Sponsor IP Rights (OTT-00-01 p. 4-5; RPAC-20-02, Principle 1)

a. Except for NERF licenses, sponsor must pay a fair, competitive price for use of resulting technology.

b. Price paid for sponsor’s use of resulting technology is determined at the time the license or other resulting technology is available for use.

Except for NERF licenses, pre-negotiated financial terms of a license to future technology or a present grant of a license may trigger a private business use that needs to be monitored, unless the pre-negotiated financial terms (e.g., royalty range) reflect “fair market value” of an anticipated, pre-identified technology as of the time the technology is available for use. (RPAC-20-02, Principle 2; FAQ 2 and FAQ 4)

Exclusive licensing of resulting technology is permitted, including subject inventions resulting solely from federal sponsorship. (OTT-00-01 page 4; RPAC-20-02, Principle 2)

Sponsor dictates to UC what it can or cannot charge third parties for a non-exclusive license to UC resulting technology. (RPAC-20-02, Principle 5 and FAQ 9)

Federal sponsorship (and the government’s resulting free NERF) does not constitute a private business use by the federal government.  (RPAC-20-02, page 3)

 

 

 

Cooperative Research Agreement (multi-party)

Staying in the Safe Harbors (IRS Revenue Procedure 2007-47)

Outside the Safe Harbors/Private Business Use

Must meet the following criteria:

1. Multiple, independent sponsors fund Basic Research. (OTT-00-01, page 5 and Definitions; RPAC-20-02, page 11 and FAQ 13)

Recharge facilities, unless “general public” or “incidental use” exemptions apply. (RPAC-20-02, FAQ 13)
2. UC must solely own any technology created using bond-financed facility. (OTT-00-01, page 5)

Any sponsor(s) given sole or joint ownership of such technology. (OTT- 00-01, page 5)
3. UC controls the manner in which research is performed at the bond-financed facility. (RPAC-20-02, Principle 6)

A group or committee not majority controlled by UC determines the research to be performed and/or the manner in which the research is performed by UC (RPAC-20-02, Principle 6 and FAQ 10)
4. Sponsor IP Rights: Sponsors are entitled to no more than a NERF license to use the resulting technology. (OTT-00-01, page 5)

One sponsoring entity retains an exclusive option or license to UC resulting technology. (OTT-00-01, page 5)

Sponsor(s) dictates to UC what it can or cannot charge third parties for a non-exclusive license to UC resulting technology. (RPAC Memo, Principle 5 and FAQ 9)

 

Material Transfer

Staying in the Safe Harbors (IRS Revenue Procedure 2007-47)

Outside the Safe Harbors/Private Business Use

Must meet the following criteria:

1. Basic Research (OTT-00-01, page 4 and Definitions; RPAC-20-02, FAQ 13)

Material provider given sole or joint ownership of technology created using bond-financed facilities. (OTT-00-01 p. 4-5)

2. Sponsor IP Rights (RPAC-20-02, FAQ 6)

a. if material provider is considered a single party sponsor, see Sponsored Research Agreement (above, page 1)

b. if material provider is considered a multi-party sponsor, see Cooperative Research Agreement (above)

 

If material provider is considered a multi-party sponsor, the grant/option to exclusive access to resulting technology to either a) the material provider or b) a sponsor of the activity is outside the safe harbor. (RPAC-20-02, FAQ 6)

 

Penalty clauses are not subject to Tax Act requirements. (RPAC-20-02, FAQ 15)

 

 

Visitor

Visitor use of bond-financed UC facilities constitutes a private business use of bond proceeds regardless of how intellectual property is treated. (RPAC-20-02, FAQ 12)

Clinical Trials

UC Bond Counsel has developed a separate set of guidelines for clinical trial activities. In general, patient care activities conducted by UC at its facilities are not considered private business use of facilities funded with bond proceeds. (RPAC-20-02, FAQ 11)