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WOLF & CO Alerts Tax Incentive Deadline for Life Science Companies Fast Approaching

Tax Incentive Deadline for Life Science Companies Fast Approaching



This is the last week for qualifying life sciences companies to apply for tax incentives offered by the Massachusetts Life Sciences Center (MLSC).

The MLSC is offering up to $20 million in tax incentives for life sciences companies planning to grow in Massachusetts. The goal of the program is to “expand life sciences-related employment opportunities, promote health-related innovations, and stimulate research and development, manufacturing, and commercialization in the life sciences.”

In working with our life sciences clients on these incentives in prior years, we’ve experienced firsthand how the state is looking to reward the life sciences companies that invest in Massachusetts.

Applications must be submitted online by 12pm EST on Friday, February 5, 2021. Visit the MLSC Incentive Page for detailed information and the SmartSimple Application portal to apply.

Overview of Tax Incentives

The program is meant to address the expenditures associated with the life sciences research and development (R&D) cycle and the high costs of converting research into marketable products. Incentives under this program may be claimed after July 1, 2021. Through 10 rounds of the program, more than 256 awards totaling over $221 million have been awarded to life sciences companies of all sizes, sectors, and geographic distribution across Massachusetts.

The program offers 10 different types of tax exemptions and credits including refundable tax credits for R&D costs, investment tax credits, and job credits. The program includes the following tax initiatives:

  • Life science investment credit
  • U.S. Food and Drug Administration (FDA) user fee credit
  • Extension of net operating losses from 5 to 15 years
  • Elimination of throwback provision in calculation of sales tax
  • 90% refund of already available excess Section38M research credits
  • Life sciences research credit
  • Deduction for qualified orphan drug expenses
  • Designation as an R&D company for sales tax purposes
  • Sales tax exemption for certain property
  • Life sciences job incentive refundable credits

Eligibility

A company is eligible if it:

  • Is registered to do business in Massachusetts
  • Operates in the life sciences space
  • Had at least 10 permanent full-time employees (35 hours/week) employed as of December 31, 2020
  • Commits to hiring at least 10 net new jobs in calendar year 2021 and is able to retain those jobs through 2025
  • It files a Massachusetts tax return for either calendar year ended December 31, 2019 or a fiscal tax year ending after December 31, 2019 and prior to October 31, 2020

With just under one a week before the deadline, there is still time to sign up to potentially reap these benefits.