The greatest impact of tax in clinical research

Originally published on the Greenphire website prior to the merger with Suvoda in 2025.

Snapshot: 

• Tax burdens create participant hardship: $50 visit stipends caused one diabetes patient to lose food stamps due to $200 monthly income increase.
• Participants delay compensation to avoid penalties: Many reschedule visits or wait months to cash checks to prevent losing government benefits.
• Industry consensus supports reform: 75% of sites and 63% of sponsors believe the $600 tax threshold should be eliminated or increased.
  

The Participant Burden of Tax

The clinical research industry is riddled with regulatory oversight for obvious reasons. However, tax is not typically the first thing that comes to mind when thinking about regulatory compliance associated with clinical trials. In fact, participants enrolled in a clinical trial are often unaware of the potential tax impact associated with receiving payments throughout the study.

Unfortunately, payments received for participation in clinical research are considered reportable income. When the reportable payments disbursed to an individual trial participant total more than $600 over the course of a tax year, a Form 1099-MISC is required to be sent to the payee and  reported to the IRS.

While managing tax in clinical research can be burdensome for sponsors, Clinical Research Organizations (CROs) and sites, the stakeholder facing the greatest impact is the participant. Study participants are volunteering their time and effort – taking time away from work, family, and other duties – to advance scientific research and should not be seemingly penalized for doing so. Taxation and tax management distracts from research and adds undue burden, and can disproportionately affect populations who may already be financially disadvantaged (due to socioeconomics, healthcare, expenses, etc.). 

In a recent Site Survey, Greenphire asked for site perspectives around taxation in clinical trials and the impact on participants. The following real-life examples were shared by sites:

• Our participants have already spent a great deal of time, effort, and money getting transportation to our facilities while also struggling with finances and living in impoverished conditions. A patient on a diabetes trial that I was coordinating received $50 per visit, and in the beginning of the trial he reported this stipend as an increase in his income for the month. Since there were 4 visits in the first month, the reporting of an additional $200 in income caused him to lose most of his allotted amount of food stamps. However, the visits began to space out, and by the time the decrease in his food stamps allotment took effect, he also was no longer receiving much in stipends, and this caused serious hardship for him.

• We have multiple patients who have voluntarily elected to wait to receive part of their stipend until next year, or rescheduled visits to avoid earning a visit stipend, so that they will not go over the reporting limit and affect their SSDI and food stamp eligibility. We also have patients who have waited to cash their checks for months, sometimes to the point that the bank will no longer cash it and we have to issue a new one, because they are concerned about going over the $2,000 in liquid assets maximum set for Medicaid recipients.

• Multiple patients have been put under additional financial stress because they are used to filing very simple taxes at the end of the year, but when they receive a 1099 from our site, they now need to pay for tax preparation help.

Driving Change 

As an industry, we recognize the burden that taxation in clinical trials places on study participants. According to a recent Greenphire Survey, 75% of sites and 63% of sponsors and CROs feel that the tax on clinical trial stipends over $600 should be eliminated or increased to more than $1,000. Now is the time for change; Greenphire and other organizations have been working to influence the way taxes impact clinical trial participants.

Let’s work together and make our voices heard to drive a better future for clinical research.