On Dec. 7, 2020, the Massachusetts Life Sciences Center (MLSC) began accepting applications for a new round of the Center’s Life Sciences Tax Incentive Program, which offers tax incentives to companies engaged in life sciences research and development, commercialization and manufacturing in Massachusetts. The Program, part of the state’s Life Sciences Initiative, is approved to award up to $30 million in tax incentives each year (up from $25 million for periods prior to Jan. 1, 2019). The primary goal of the program is to incentivize life sciences companies to create new sustained jobs in Massachusetts.
The deadline for applications to be submitted is February 5, 2021 by noon EST. Interested applicants are required to submit an online application. Applications will be accepted on an ongoing basis via the MLSC website (https://www.masslifesciences.com/programs/tax-incentive/) until the deadline. The MLSC is hosting information sessions to provide more information and answer any questions from December to early-January. The Center anticipates making award announcements by the end of April 2021.
To date, after eleven rounds of the program, the Center’s Life Sciences Tax Incentive Program has awarded more than $241 million to over 291 life science companies of all sizes, resulting in combined net new hire commitments or actual new hires of more than 8,162 jobs among active and completed awards. CBIZ & MHM has assisted clients with the application process and has developed tools to help with gathering the required data and calculations.
Applicants are generally companies that have transitioned or are transitioning from pure life sciences research and development (“R&D”) to commercialization and manufacturing. The Center recognizes the significant capital investment associated with the life sciences R&D cycle, and the high cost of translating research into commercially viable products. To qualify, applicant companies must be engaged in life sciences research, development, manufacturing or commercialization in the Commonwealth of Massachusetts; must be a Certified Life Sciences Company by the MLSC (note, companies do not have to be certified prior to submitting a Life Sciences Tax Incentive Program application); and must demonstrate both scientific and economic merit to their expansion plans. Companies must also employ at least 10 permanent full-time employees as of Dec. 31, 2020 and must commit to hiring at least 10 net new jobs in calendar year 2021, and be able to retain those jobs through 2025.
The Tax Incentive Program consists of the following incentives:
- Life sciences investment tax credit (refundable)
- FDA user fees credit (refundable)
- Extension of net operating losses from 5 to 15 years
- Elimination of throwback provision
- 90% refund of already-available excess §38M research credits (refundable)
- §38W life sciences research credit
- Deduction for qualified orphan drug expenses
- Designation as R&D company for sales tax purposes
- Sales tax exemption for certain property
- Life sciences jobs incentive credit (refundable)
We have the experience to assist life science companies in the certification and application process, as well as with other tax matters affecting life science companies. If you have any questions or require assistance, please contact us.
Michael Corrente is a Managing Director in the Tax Group and the the Leader of the Life Sciences Practice in New England. He can be reached at 617.761.0699 or firstname.lastname@example.org.
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