Companies in the life sciences industries with an investment that meets certain criteria may be eligible for tax credits or cash grants equal to 50 percent of their investment. But time is of the essence, as just $1 billion is being made available for taxable years 2009 and 2010. That’s the message of the recently issued BDO Knows: Credits & Incentives alert.Thanks to recently enacted legislation, an “eligible taxpayer – one employing no more than 250 employees in all its businesses – can receive a 50 percent credit or grant for a “qualified therapeutic discovery project (QTDP). That means that if an eligible taxpayer makes a $1 million qualified investment, that business may receive a $500,000 tax credit or grant.“This is a great opportunity for our clients in the life sciences industries, says Chris Bard, BDO Research and Development national practice leader. “They need to act quickly, though, because only $1 billion will be provided with respect to taxable years 2009 and 2010.QTDPs are projects designed to treat, prevent, or diagnose a disease or condition, or to develop a product, process, or technology to further the delivery or administration of therapeutics.To become a QTDP, a project must be certified by the Treasury Department. Treasury will consider projects’ medical potential to result in new therapies and significantly advance the goal of curing cancer within 30 years, as well as their economic potential to reduce long-term U.S. health care costs, create high-paying jobs in the U.S. and advance U.S. competitiveness in the fields of life, biological and medical sciences.The Treasury Department is expected to develop an application process and publish an application by May 22, so businesses should act quickly to ensure they don’t miss out on these valuable credits and grants.“We are already helping clients prepare for this process and take the next steps, Bard says.Next steps for companies that may have qualified investments include:• Determine whether the business is an “eligible taxpayer.• Review the projects to determine which ones may be QTDPs.• Use project accounting that allows qualified and non-qualified costs to be identified and differentiated.• Prepare to complete the application. Although the application hasn’t been published yet, the definitions of “eligible taxpayer,” qualified investment and “QTDP give an idea of what information is needed.• Monitor the relevant websites indicated in the alert for information on when the application will be published, as well as other guidance.• Analyze the impact the credits or grants could have on the business’s other tax positions, including the research credit and orphan drug credit. • Finalize the application and file it in a timely fashion.• Track project costs and documentation.• Check for certification from and payment by Treasury.If you think you might benefit from the new tax credits or grants, please contact Bard to discuss this opportunity further.
