Massachusetts Life Sciences Center Launches New Tax Incentive And Early-Stage Investment Programs

The Massachusetts Life Sciences Center (the "MLSC"), a

quasi-public agency tasked with implementing the State's $1

billion Life Sciences Initiative, is now accepting online

applications for its Life Sciences Tax Incentive Program and its

Life Sciences Accelerator Program. These programs are part of the

Center's broader effort to expand life-sciences employment

opportunities, promote health-related innovations and stimulate

research and development, manufacturing and commercialization in

the life sciences.

Life Sciences Tax Incentive Program

Under the Massachusetts Life Sciences Act, the Life Sciences Tax

Incentive Program became effective on January 1, 2009. The Act

authorizes the MLSC to offer a combination of nine different tax

incentives totaling $250 million over 10 years, limited to $25

million annually, to Certified Life Sciences Companies. These

incentives are intended to encourage growth in companies at all

stages of development.

The program consists of the following credits/benefits:

Life sciences investment tax credit (ITC)

FDA user fees credit

Deduction for orphan drug qualified clinical testing

expenses

Extension of net operating losses (NOLs) from five to 15

years

$38 million research credit refundability

Life sciences research credit

Designation as R&D company for sales tax purposes

Elimination of throwback provision in calculation of sales

factor for apportionment purposes

Sales tax exemption for property used in certain types of

development

The Massachusetts Department of Revenue has issued Technical

Information Release 08-23, which provides information about the tax

incentives and generally explains what follow-up guidance it

anticipates providing. The Technical Information Release is

available here.

Incentives are awarded on a competitive basis and are effective

from January 1, 2009 through December 31, 2018. They generally

apply for taxable years beginning on or after January 1, 2009.

The Tax Incentive Program is available only to life sciences

companies that are engaged in life sciences research, development,

manufacturing or commercialization in Massachusetts. Tax incentives

are provided to such a company only after the MLSC has certified it

as a Certified Life Sciences Company and authorized the incentives

and the Commonwealth's Secretary of Administration and Finance

has expressly granted them. Companies are limited to one

application per 12-month period, although the application may

request more than one tax credit...