Massachusetts Life Sciences Center Opens Applications for 2021 Tax Incentive Program

The Massachusetts Life Sciences Center (MLSC) is now accepting applications for its 2021 Tax Incentive Program (TIP). The state has allotted $20 million to this year’s program to help grow its life sciences ecosystem through job creation, and the program deadline is Feb. 5, 2021 12 pm ET.

My BDO colleagues and I have outlined key details of the program below.

 

To be eligible, companies must be:

• Operating in the life sciences space

• Registered to do business in Massachusetts and filing a state tax return

• Employing at least 10 permanent full-time equivalent employees (defined as working at least 35 hours/week) in the state as of Dec. 31, 2020

• Committed to hiring at least 10 new employees in the state during calendar year 2021, and retaining those jobs through 2024

 

Key questions to consider about TIP

1. What constitutes life sciences?

According to the program, “life sciences” means advanced and applied sciences that expand the understanding of human physiology and have the potential to lead to medical advances or therapeutic applications including, but not limited to, agricultural biotechnology, biogenetics, bioinformatics, biomedical engineering, biopharmaceuticals, biotechnology, chemical synthesis, chemistry technology, diagnostics, genomics, image analysis, marine biology, marine technology, medical devices, nanotechnology, natural product pharmaceuticals, proteomics, regenerative medicine, RNA interference, stem cell research and veterinary science.

 

2. What does TIP provide?

Awarded applicants will be granted $15,000 per FTE--so a minimum of $150,000--that can be used through 10 different tax incentives on the company’s state tax return. Several of these incentives are refundable, enabling an award recipient to receive cash from the state, even if no income tax is paid:

• Life sciences investment tax credit (90% refundable)

• FDA user fees credit (90% refundable)

• Extension of net operating losses from five to 15 years

• Elimination of throwback provision

• §38M research credits (90% refundable)

• §38W life sciences research credit

• Deduction for qualified orphan drug expenses

• Designation as R&D company for sales tax purposes

• Sales tax exemption for certain property

• Life sciences jobs incentive credit (90% refundable)

 

3. What criteria will MLSC apply in choosing recipients?

MLSC will evaluate applicants on whether they meet the following criteria and other factors included in the program solicitation:

• Credible estimates regarding projected employment targets. (Third-party contractors or employees paid by employment agencies should not be counted as FTEs.)

• Wide geographic distribution of state operations

• Wide distribution of life sciences technologies and industries supported by MLSC

• Diversity among businesses at different stages of product development and commercialization

 

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