The 2012 Appropriations Act (the “Act”) was signed into law by Governor Patrick on July 11, 2011. Section 36 of the Act establishes a life sciences tax incentive program and authorizes up to $25 million in tax incentives annually including “refundable jobs credit.” These incentives are available to certified life sciences companies in the Commonwealth.
In 2008, Massachusetts General Laws Chapter 23I established the Massachusetts Life Sciences Center (“the Center”), for the purpose of improving the Commonwealth’s competitive standing in the life sciences field by investing in life sciences research, leveraging revenues and encouraging cooperation and innovation among public and private institutions involved in life sciences research and related applications. The Center administers the Massachusetts Life Sciences Investment Fund to expand life sciences-related employment opportunities in the commonwealth and to promote health-related innovations by supporting and stimulating research and development, manufacturing and commercialization in the life sciences. A certified life sciences company may be eligible for benefits from the life sciences tax incentive program and grants, loans or other investments from the Massachusetts Life Sciences Investment Fund. These benefits are intended to address the significant capital expenditures associated with the life sciences R&D cycle and the high costs of translating research into commercially viable products.
Section 36 of the Act expands the life sciences tax incentive program which authorizes up to $25 million in tax incentives annually. In 2009 the Center awarded $24.4m in incentives. In 2010 $23.9m in incentives were awarded.
New Life Sciences Jobs Incentive Refundable Credit
In addition to the existing incentives, the Act establishes a new life sciences jobs incentive refundable credit (pursuant to Chapter 68 of the Acts of 2011) for certified life sciences companies that commit to add a minimum of 50 net new full-time, permanent jobs in Massachusetts in a calendar year or companies desiring to re-locate to Massachusetts that commit to add a minimum of 50 net new full-time, permanent jobs in Massachusetts in a calendar year. The amount of the jobs credit is negotiated between the Center and the certified life sciences companies and is roughly based on the number of jobs to be created in the Commonwealth. This jobs credit is effective for tax years beginning on or after January 1, 2011. Certified life sciences companies must execute a tax incentive agreement with the Center to be eligible for the refundable tax credit. If such refundable tax credit exceeds the amount of tax that may be offset by the credit for a taxable year, to the extent authorized under the Life Sciences Tax Incentive Program, 90% of such excess credit shall be refundable to the certified life sciences companies. Excess credit amounts may not be carried forward to other taxable years.
Certified Life Sciences Companies
To qualify for the tax incentive program, companies must receive certification from the Center and must demonstrate both the scientific and job creating merit of their expansion plans. The Center certifies life sciences companies. Applicants must be a legally organized, “for-profit” entity engaged in life sciences research, development, manufacturing or commercialization in the Commonwealth of Massachusetts. “Life sciences” is defined by statute as advanced and applied sciences that expand the understanding of human physiology and have the potential to lead to medical advances or therapeutic applications in a broad list of specified technology areas.
Certification as a life sciences company is based upon a determination of the following factors: projected new state revenue generated, agreements with banking institutions regarding the state small business capital access program, business activity within the Commonwealth including, but not limited to, the number of full-time employees employed in the Commonwealth; the life sciences company’s potential to further technological advancements in the life sciences; the life sciences company’s potential to offer a breakthrough medical treatment for a particular disease, or medical condition; the life sciences company’s potential for leveraging additional funding or attracting additional resources to the Commonwealth; the life sciences company’s potential to promote life sciences manufacturing in the commonwealth; and evidence of potential royalty income and contractual means to recapture such income. The ability to create and retain jobs is the primary criterion for selection. It therefore is imperative that applicants provide accurate information regarding actual full-time Massachusetts employees (over 35 hours per week) and credible estimates regarding projected employment targets. Third party contractors or employees paid by employment agencies should not be counted as employees of the applicant.
Application Deadline of October 7, 2011
Interested applicants will be required to submit an on-line application. Applications will be accepted on an ongoing basis via the Center’s web site up until the deadline of October 7, 2011 at noon. See www.masslifesciences.com for more information on the Center.