Massachusetts DOR Proposes Brownfields Tax Credit Regulations

On March 9, the Massachusetts Department of Revenue (DOR) posted on its internet page, 830 CMR 63.38Q.1: Massachusetts Brownfields Tax Credit (WORKING DRAFT), which proposes regulations for the first time since passage of the landmark 1998 Brownfields Act. According to the DOR, the public comment period is currently open until April 3, 2020. Comments on the draft regulation can be sent to rulesandregs@dor.state.ma.us. According to the DOR, working draft regulations are not published in the Massachusetts Register. Upon formal issuance of a proposed regulation, DOR will issue a Notice of Public Hearing as well as comply with all other statutory requirements for notice with the secretary of state and newspaper publication as required by Massachusetts General Laws (MGL) chapter 30A. Additional communications and guidance from DOR on this regulation will be sent via email and through postings on the DOR website, where you can sign up for email updates.

The following is a list of topics covered by the proposed regulations:

1. Statement of Purpose; Outline of Topics, Effective Date
2. Definitions
3. General Rule
4. Net Response and Removal Costs; 15% of Assessed Value Requirement
5. Eligible Costs
6. Application Process
7. Limitations, Claiming and Carry Forward of Credit
8. Transfer of the Credit
9. Allocation of Credit Among Partners, Members or Owners
10. Ordering, Non-refundability of Credit
11. Recapture; Payments in Error
12. Appeal Process for Denial or Partial Denial of Applications for Credit

The proposed working draft regulations deal with virtually every aspect of the Brownfields Tax Credit (BTC) process, including defining who is eligible to claim a credit, what costs will be considered eligible expenses and, most important, specifying the types of expenses that will not qualify, including some that previously were covered under the instructions to the application (Form BCA) and the Technical Information Release (TIR), TIR 99-13, issued on Aug. 16, 1999, approximately a year after the BTC was created. The proposed working draft also identifies the type of documentation that will be required to support a BTC application, some of which may be beyond the scope of requirements under the Massachusetts Contingency Plan in certain circumstances. Additionally, procedures regarding appeals of denials or partial denials of BTCs are also revised from those stated in DOR's Administrative Procedure No. 636 issued Dec. 5, 2013. While the regulations are not yet law, DOR proposes to apply them to all "applications received on or after [the date the draft is circulated for public and practitioner comment]." Accordingly, all Brownfields developers and their licensed site professionals (LSPs) should pay careful attention to these latest developments.