Life Sciences Tax Incentive Program

Under Governor Deval Patrick’s recently signed Life Sciences Act (an Act Providing for the Investment in and Expansion of the Life Sciences Industry in the Commonwealth, St. 2008, c. 130), Massachusetts-based life sciences companies will be granted over $1 billion in benefits over the next 10 years on a competitive basis. The legislation establishes the Life Sciences Investment Program to promote the life sciences business sector within Massachusetts and to include:

• $500 million in infrastructure investment
• $250 million in life sciences grants
• $250 million in various tax breaks
  

Because the Massachusetts Life Sciences Center received over 80 applications for the Life Sciences Tax Incentive Program, their Board of Directors did not consider tax incentive awards at its September meeting. Instead, the Tax incentive awards will be considered by the Board before the end of 2009. The postponement will allow the Center time to fully consider each application and reach the soundest possible set of recommendations in the first year of this program.

The aforementioned tax breaks are part of the Life Sciences Tax Incentive Program (established by the Life Sciences Act) and will include:

• FDA User Fees Credit
  
• Extension of Net Operating Losses (NOLs) from 5 to 15 years
  
• Elimination of the Throwback Provision in the Sales Factor Used in Apportioning Corporate Income
  
• § 38M Research Credit Refundable
  
• Life Sciences Research Credit
  
• Deduction for Qualified Clinical Testing Expenses for Orphan Drugs
  
• Sales Tax Exemptions for Property for Use in the Development of Certain Facilities and Utility Systems
  

The legislation authorizes the Massachusetts Life Sciences Center to manage and approve applications from life sciences companies for specified tax benefits. We can expect further guidance as the Department of Revenue issues regulations for the administration of the Life Sciences Act and its Life Sciences Tax Incentive Program.

Please contact Feeley & Driscoll's Boston Accounting team by Email or call us at 1 (888) 875-9770.

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