Section 31L: Medical device company tax credit; credit transfer program
Section 31L. (a) As used in this section the following words shall, unless the context otherwise requires, have the following meanings:?
''Department'', the department of revenue.
''Medical device'', an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent or other similar or related article, including a component part or accessory, which is recognized in the official National Formulary or the United States Pharmacopoeia, or any supplement thereto, intended for use in the diagnosis of disease or other conditions or in the cure, mitigation, treatment or prevention of disease in humans or other animals, and which does not achieve any of its primary intended purposes through chemical action within or on the body of a human or other animals and which is not dependent upon being metabolized for the achievement of its primary intended purposes.
''Medical device company'', (1) a domestic corporation organized under or subject to chapter 156B or chapter 156D, (2) a limited liability company organized under chapter 156C and otherwise subject to this chapter, or (3) a corporation, organization or association, established, organized or chartered under laws other than those of the commonwealth and otherwise subject to this chapter and, in each case, which has a usual place of business within the commonwealth wherein medical devices are developed or manufactured.
''Medical device tax credit'', the tax credit established pursuant to this section that the medical device company generated but was unable to claim as of the close of the last taxable year for which a return was filed because of limited tax liability.
''Private financial assistance'', the proceeds of the sale of available tax credits pursuant to this section.
''User fees'', the monetary amount actually paid by a medical device company to the United States Food and Drug Administration during the taxable year for a pre-market approval to market new technologies developed or manufactured in the commonwealth or for a clearance pursuant to section 510(k) of the Federal Food, Drug, and Cosmetic Act 21 U.S.C. 360e and 360 to market upgrades, changes or enhancements to existing technologies that are developed or manufactured in the commonwealth as stipulated in United States Public Law 107?250, the Medical Device User Fee and Modernization Act.
(b) There shall be allowed to any medical device company as a credit against the tax liability imposed under this chapter an amount equal to 100 per cent of the cost of user fees paid by such medical device company during the taxable year for which the tax is due.
(c) The department shall establish a medical device tax credit transfer program to allow medical device companies doing business in the commonwealth with unused medical device tax credits to transfer such credits for use by a purchasing company in exchange for private financial assistance to be provided by such company to assist in the funding of costs incurred by the medical device companies. The private financial assistance shall be used to fund expenses incurred in connection with the operation of the medical device company in the commonwealth, including costs associated with fixed assets, such as the construction and acquisition and development of real estate, materials, start-up, tenant fit-out, working capital, salaries, research and development expenditures, and any other expenses determined by the department to be necessary to carry out the purposes of the program. A medical device company that wishes to participate in the program shall file an application with the department on a form prescribed by the department that sets forth the medical device tax credit amounts eligible for transfer, the use to which the medical device company intends to put the private financial assistance to be provided, the identity of the purchasing company, the amount of the financial assistance to be provided, and such other information as the department may require. No such medical device tax credits may be surrendered unless the purchasing company provides financial assistance in an amount at least equal to 75 per cent of the medical device tax credit amounts eligible to transfer. The department shall review such application and, if the proposed transfer meets the requirements of this section the department shall issue, upon receipt of a notarized statement signed under the pains and penalties of perjury by an authorized representative of the medical device company that the purchasing company has provided the specified financial assistance, a certificate to the purchasing company reflecting the medical device tax credit amounts transferred, a copy of which shall be attached to each tax return by a purchasing company in which such medical device tax credits are used. The purchasing company shall treat the medical device tax credit amounts purchased under the program as a credit against its excise under this chapter. The purchasing company must use the medical device tax credit amounts in tax returns filed within 5 years of the issuance of the certificate, after which period the credits will expire. The purchasing company may not use the medical device tax credit amounts to reduce the excise tax to less than the amount due under subsection (b) of section 32, or subsection (b) of section 39. No medical device company surrendering medical device tax credits under the program may use the benefits to reduce its tax liability under this chapter.
(d) The commissioner shall promulgate rules and regulations relative to the administration and enforcement of this section.