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The Internal Revenue Service (“IRS”) today issued Notice 2010-45, which provides procedures under which an eligible taxpayer may apply for certification from the IRS with respect to a qualifying therapeutic discovery project for a credit or a grant under the program. Appendix A of this Notice provides the information required to be filed as part of the application. In addition to the $1 billion limitation nationwide, the IRS provides a $5 million cap for any single taxpayer.

Applications for Section 48D certification will be made on Form 8942, “Application for Certification of Qualified Investments Eligible for Credits and Grants Under the Qualifying Therapeutic Discovery Project Program.” Form 8942 and its instructions will provide the manner for submitting applications and will be released no later than June 21, 2010.

For the primary 2009-2010 allocation round, an application for certification may be filed from the date the application form is released (no later than June 21, 2010), through July 21, 2010. Each application will be subject to a preliminary review, by the Department of Health and Human Services (“HHS”) to make sure the project is a qualifying therapeutic discovery project and by the IRS to determine whether the applicant is an eligible taxpayer (can create jobs and advance US competitiveness) and whether the application is otherwise complete. Preliminary review of timely-filed applications will end on September 30, 2010.

In the primary 2009-2010 allocation round, the Service will approve or deny the taxpayer’s application for Section 48D certification no later than October 29, 2010, and will notify the taxpayer, by letter, of its decision. If the application for certification is approved, the date of the certification letter will be treated as the approval date and will indicate the amount approved for.

The IRS will make payment of the amount of any grant during the 30-day period beginning on the later of (i) the date of the application for the grant, or (ii) the date the qualified investment for which the grant is being made is made.

In summary, companies should start working on the application following the questions and guidance provided with Appendix A of Notice 2010-45 and focus on a complete, accurate and quality of data to be submitted with the application.

Please contact Michael Hadjiloucas or John Pennett for further information.