Massachusetts Brownfields Act is a statute that allows eligible developments to receive a tax credit of up to 50% of costs directly incurred in remediating environmental contamination in situations where the contamination was not caused by the taxpayer. The credit is awarded based on the amount of eligible remediation expenses that are approved by the Department of Revenue (DOR). Not all of the expenses submitted for a Brownfields Tax Credit (BTC) however, are initially approved by the DOR.
Recently this appeals process has changed. Previously, appeals were dealt with “in house” through the Brownfields Audits Staff. Now the Department of Revenue has imparted a much more formal process in which the DOR releases a letter of proposed denial of the application which leaves 30 days for the client/consultant to request an appeal with the Department of Appeals within the DOR.
It is still too early to fully see the implications of this change in appeals process. One important change however, is that the DOR will now issue BTC’s for the amount that they are initially approved. This means that if certain expenses are denied, this does not stop a credit from being issued to the amount of the undisputed expenses with the option for another credit to be issued reflecting expenses that are approved after a successful appeals process. Prior to this change, BTCs were not awarded until any dispute was settled.
Generally speaking, the appeals process for the Massachusetts BTC is now more formal. While this is not inherently a good or a bad thing, it does mean that now more than ever it is beneficial to have a consultant who is familiar with the DOR’s appeals process for Brownfields related expenses on your side.