Treasury Offers $1 Billion in Tax Credits for Biotech
The Treasury Department released new guidelines for applying for tax credits to fund promising new therapies, with small medical research firms eligible to receive up to $5 million each out of a $1 billion pie.
The Therapeutic Discovery Credit was established as part of the health care reform bill. The program will provide tax credits and grants to small firms that show significant potential to produce new and cost-saving therapies and provide jobs. The tax credit is only available to firms with fewer than 250 employees that are engaged in valuable biomedical research.
It will help advance research to fund and find valuable life-saving treatments, helping reduce the long-term growth of health care costs, said Treasury Secretary Timothy Geithner during a conference call. It will increase the competitiveness of our biotech industry, helping to create high-quality, high-paying jobs here at home.
The credit targets projects that show significant potential to produce new therapies, address unmet medical needs, reduce the long-term growth of health care costs and advance the goal of curing cancer within the next 30 years. The credits allocation will also take into consideration which projects show the greatest potential to create and sustain high-quality, high-paying jobs in the U.S. and to advance U.S. competitiveness in the fields of life, biological and medical sciences.
A significant goal of the Affordable Care Act is to foster innovation in health care, said National Institutes of Health director Francis Collins during the conference call. As a medical doctor, I celebrate what this will provide us in terms of advances which can improve the health of our nation. But we can propel these goals by fostering new discoveries and the development of life-saving treatments.
To provide an immediate boost to U.S. biomedical research and the small businesses that conduct it, the credit is effective for investments made in 2009 and 2010. Firms can opt to receive a grant instead of a tax credit, so startups that are not yet profitable can benefit as well.
The Internal Revenue Service has released Notice 2010-45 providing guidance on the process by which firms can apply to have their research projects certified as eligible for the credit. Companies may submit applications for certification beginning June 21, 2010. Applications must be postmarked no later than July 21, 2010.