Published on February 20, 2014
"A diversified real estate services company“ 233 Needham Street, Suite 510 Newton, MA 02464 (617) 431-2266 Brownfields Tax Credit
• Introduction Under Massachusetts General Laws Chapter 21E (“21E”) an Owner, Lessee, or Operator of a property that has environmental contamination is required to clean up the site, even if that person or entity was not responsible for the contamination. This strict liability obligation has tended to dampen prospective development. • Accordingly, in 1998, the Brownfields Act was passed, acknowledging that, where the contamination was caused by a prior owner, and cleaned up by the current Owner, Lessee, or Operator the State will issue a tax credit of 25% (for a cleanup that achieved a permanent solution with restrictions) or 50% (for a cleanup that achieved a permanent solution) of the eligible costs incurred to clean up the site. This Brownfields Tax Credit (“Tax Credit”) is intended to act as a financial incentive to foster cleanup of Brownfields sites and encourage development of properties that otherwise may remain unused. • The Tax Credit can be used or sold in order to act as a tax incentive or a reimbursement for a portion of the costs incurred during the remediation.
WHAT IS THE MASSACHUSETTS BROWNFIELDS TAX CREDIT? o The Massachusetts Brownfields Tax Credit (BTC), is a tax credit used by Massachusetts taxpayers as a direct dollarfor-dollar offset for taxes owed to the Commonwealth. o The BTC is earned following the remediation of an environmentally contaminated property (per MGL CH 21E and the MCP i.e. MCR 40.0890) that has “achieved” a permanent solution, evidenced by the filing of a Remediation Action Outcome (RAO) or Remedy Operation Status (ROS) with the MA Department of Environmental Protection (DEP)
SOME BTC SPECIFICS o The BTC amounts to 50% of the eligible costs of a qualified remediation when the permanent solution does not contain an Activity and Use Limitation (AUL), and the BTC amounts to 25% of the eligible costs where a site is closed with an AUL; o The BTC is personal to the taxpayer and does not transfer with a transfer of the property; o The costs that are BTC eligible are those "direct" environmentally related costs, such as LSP costs, lab testing costs, 21E related legal expenses, soil removal and disposal, excavation, demolition, clean fill costs, transportation, and site preparation. o BTC costs are reviewed and verified by the Department of Revenue (DOR). o The BTC may be used by the taxpayer to offset up to 50% of taxes, and the unused balance may be carried to the next tax year for an additional 4 years, (i.e a total of 5 years) o The BTC may be transferred to any MA taxpayer.
CURRENT REQUIREMENTS TO RECEIVE THE BTC: oThe taxpayer cannot have been the cause of the contamination. oThe taxpayer must be the owner or lessee of the contaminated site during the cleanup period. oThe site must be closed out with a permanent solution (RAO or ROS). oThe money spent on the remediation must amount to at least 15% of the site's assessed value at the time the remediation began. oThe site must be in an Economically Distressed Area. oThe site must be used for business purposes. oThe remediation expenses must be incurred an entity, trust, not-for profit corp. (i.e. not a government, state, municipal entity) oThe RAO or ROS must be filed with DEP before August 5, 2013 (unless the statue is extended).
SERVICES THE CHERRYTREE GROUP PROVIDES o Consulting • • Preparation and filing of the tax credit application; • Work with relevant State or Federal Department(s) to obtain the tax credit approval: and • o Analyze the project’s eligibility for the tax credits; In-house legal and accounting services to support the tax credit application. Brokerage/Syndication • o Back-Office Support/Capability • o Secure a Buyer for the tax credit or purchase the tax credits ourselves, giving you a guarantee of funding. Assisting in structuring and closing on the tax credit purchase (includes accounting, legal, consulting); Post-transaction • Perform post transaction tax consulting to institute a tax beneficial structure (as tax credit proceeds are taxable).* *Additional fees apply for this service.
Please Visit Our Website For More Information : www.cherrytree-group.com Please contact us at: 233 NEEDHAM STREET, SUITE 402, NEWTON, MA 02464 •Tel: 617-431-2266 •FAX: 781-431-2270 •INFO@CHERRYTREE-GROUP.COM
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