Application Guidelines Released for the Therapeutic Discovery Tax Credit

June 7, 2010

The IRS has released guidelines for applying for the new Therapeutic Discovery Tax Credit.

The tax credit targets projects that show significant potential to address unmet medical needs, produce new therapies, reduce the long-term increase of the cost of healthcare, and help cure cancer. Additional consideration will be given to projects that show the greatest potential to create and sustain high-paying, high-quality jobs in the U.S. and to advance U.S. competitiveness in biological and medical science.

The amount of the tax credit that a company can receive equals up to 50% of the cost of qualifying biotech research, up to a maximum of $5 million per company. The aggregate amount of credits to be awarded cannot exceed $1 billion, and only companies with 250 or fewer employees are eligible for the credit. Companies can receive a grant instead of a tax credit, thereby allowing start-up businesses that are not yet profitable to take advantage of the program.

The new guidelines describe the process for applying to have research projects certified as eligible for the credit. Companies may submit applications for certification beginning June 21, 2010. The final deadline for submitting applications is July 21, 2010. The Department of Health and Human Services will evaluate each project's potential to meet the goals of producing new therapies or reducing health care costs. Only projects that show a reasonable potential to meet these goals will be certified as eligible for the credit. The IRS will issue certifications by October 31, 2010, based on the determinations made by the Department of Health and Human Services.

To view the complete IRS guidelines concerning the tax credit, click here.

Frost Brown Todd is ready to assist clients that wish to pursue this valuable opportunity. Please contact any of the attorneys listed below to discuss the impact of the tax credit on your organization.

Joseph J. Dehner - 513.651.6949 -

Samuel G. Graber - 502.568.0248 -

William G. Strench - 502.568.0207 -

Steven J. Goldstein - 513.651.6131 -