Would you be interested in having the government fund 50% of your 2009 and 2010 research expenditures? As long as your business has less than 250 employees, you have until July 21st to submit your application to the IRS on Form 8942.
As part of the Patient Protection and Affordable Care Act signed into law on March 23, 2010, the federal government set aside $1 billion toward the Qualifying Therapeutic Discovery Project Program. According to the IRS in theirQ and A on the Tax Credit or Grant for Qualifying Therapeutic Discovery Projects:
The credit is a tax benefit targeted to therapeutic discovery projects that show a reasonable potential to:
- Result in new therapies to treat areas of unmet medical need or prevent, detect or treat chronic or acute diseases and conditions,
- Reduce the long-term growth of health care costs in the United States, or
- Significantly advance the goal of curing cancer within 30 years.
Allocation of the credit will also take into consideration which projects show the greatest potential to create and sustain high-quality, high-paying U.S. jobs and to advance U.S. competitiveness in life, biological and medical sciences.
What Expenses Qualify?
Per theinstructions to the Form 8942, up to $10 million in costs paid or incurred during 2009 and 2010 in connection with your approved project qualify. Eligible expenses include:
- Employee wages
- Supplies and lab costs
- Equipment purchases
- Payments to third-party contractors
- Other costs “necessary for and directly related to the conduct of the project”
Not all costs qualify, however. Make sure to exclude salaries paid to the CEO, interest expense, and facility costs including mortgage or rent payments, insurance, utilities, and maintenance costs. More information is available inIRS Notice 2010-45.
You’ll need to act quickly to apply for this grant. The deadline to submit the Form 8942 is July 21, 2010. With the application, you’ll also need to include aProject Information Memorandum.
While the IRS is collecting this information, the US Department of Health and Human Services will be the organization to determine whether your project meets the requirements for this program. The IRS will then dole out the $1 billion based on the total eligible costs of all the certified projects. While the maximum grant is 50% of each project’s cost, the percentage will drop across the board if total costs for all of the approved projects exceed $2 billion.
Assuming you get the paperwork submitted by the July 21st deadline, expect to hear from the IRS by the end of October whether your therapeutic discovery project has been accepted into this lucrative program.