The Massachusetts Brownfields Tax Credit (MBFTC) program has been extended for five years through August of 2018. It was set to expire in August of this year.

The MBFTC helps lessen the impact of the often weighty hurdles facing qualifying owners and operators of real property. The credit provides funds to help offset cleanup costs such as site contamination. The cost of an approved cleanup can be significant. Without the credit, these costs can lead to the abandonment of a project. The credit can be transferred from one taxpayer to another.

Taxpayers (including non-profits) are allowed a credit against their Massachusetts tax liability for the net environmental response and removal costs incurred on properties located within an economically distressed area. The amount of the credit varies according to the degree of the environmental remedy. The MBFTC is 25 percent for cleanups that result in activity and use restrictions (such as limiting the remediated property to industrial or commercial use) or 50 percent for cleanups that achieve the higher cleanup standard associated with unrestricted use of the remediated property.

Although the credit was originally designed simply as an incentive to clean up contaminated land, additional benefits of the credit include:

• Induced investment in economically distressed areas (Gateway Cities)
• Expanded housing choices
• Smart growth
• Job creation in existing communities
• Enhanced community services
• Reduction in state infrastructure spending

Brownfields tax credits have created 14,000 temporary jobs and over 7,000 permanent jobs in Massachusetts. They have resulted in $1.99 billion in direct capital investments and $88.3 million in annual state tax revenues (according to The Worcester Business Development Corporation).

KLR has facilitated the placement of over $10 million MBFTC’s for our clients. By doing so, we have helped reduce their cash outlay for state taxes by over $1 million. The extension of the credit will allow us to continue to assist our clients and the businesses generating the credits for at least five more years.

For more information on Brownfields or other tax credits please contact Robert D’Andrea, CPA or any member of our Research & Development Tax Credit Team.