Tax Credit and Grant Opportunity for Life Sciences Companies

Window of Opportunity | One Month!

Program Highlights:

  • Life Science companies with fewer than 250 FTEs eligible
  • Project expense years: 2009 and 2010
  • Maximum cash or credit amount: $5M
  • Multiple projects/applications can be submitted
  • Forms and Instructions are now available
  • Application decisions will be made within 30 days
  • Applications are due no later than 21 July 2010

Introduction:

One of the results of the Health Care Reform Bill was the appropriation of a poll of $1 Billion in tax credits or grants to support the costs of research by small and mid-size life sciences companies paid or incurred in 2009 and 2010. This program is advantageous for companies without income tax liability.

Subject to some exceptions, the QTDP (Qualifying Therapeutic Discovery Project) credit or grant is available to any business with 250 or fewer employees at the time the application is submitted. No applicant will be allocated more than $5 million in QTDP tax credits or cash grants and because of the wide open application process most winning projects will receive less than the requested amount and completion is expected to be very intense.

Applicants will choose between the tax credit and cash grant during the application process.

The final deadline for application submission is 21 July 2010 and submissions after this date will not be considered.

Application Process and Selection Criteria

Life sciences companies must apply to the Treasury Department for an allocation from this incentive pool using IRS Form 8942. The Treasury will approve or deny applications within 30 days of submission.

A QTDP is a project designed to achieve any of the following objectives:

  • To treat or prevent diseases or conditions by conducting pre-clinical activities, clinical trials, and clinical studies, or carrying out research protocols, for the purpose of securing approval of a product by the Food & Drug Administration or Public Health Service,
  • To diagnose diseases or conditions or to determine molecular factors related to diseases or conditions by developing molecular diagnostics to guide therapeutic decisions, or
  • To develop a product, process, or technology to further the delivery or administration of therapeutics.

In addition to the life science component of the selection process the financial impact of the QTDP will be reviewed to determine which submissions will likely:

  • create and sustain (directly or indirectly) “high-quality, high-paying” jobs in the U.S., and
  • advance U.S. competitiveness in the fields of life, biological, and medical sciences.

The following entities are not eligible for this program:

  • Foreign businesses unless more than 50% of their income from the relevant project is subject to U.S. federal income tax,
  • Federal, state, or local governments,
  • Tax-exempt organizations,
  • Partnerships or
  • Other pass-through entities.

Additionally, the following are not eligible project expenses: CEO and other officer’s compensation, interest expense, facility maintenance expenses, service costs or such costs as determined by the IRS.

The QTDP credits and grants are subject to recapture if the patents or other resulting property are transferred within five years.

An applicant must complete a separate IRS Form 8942 for each QTDP for which it is seeking a QTDP tax credit or cash grant and this form is due for release 18 June 2010.

The following is a summary of the QTDP Credit Project Credit established in by the Health Care Reform and by IRS Notice 2010-45.  Interested applicants should thoroughly review IRS instructions and form 8942.

Please feel free to contact Lauriston Taylor at Next Stage Solutions; if we may assist you in any way.

Lauriston Taylor, Controller Consultant

o:  617. 449.7728, x-712

c:  978. 397.6412

f:   978. 339.5202

The GPS of Finance


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