Massachusetts Department of Revenue Finalizes Brownfields Tax Credit Regulations (830 CMR 63.38Q.1), Effective July 9, 2021

Friday, July 9, 2021

The Massachusetts Department of Revenue (DOR) has finalized brownfields tax credit regulations, effective July 9, 2021.

The Massachusetts brownfields tax credit was established in 1998 by the “Act Relative to Environmental Cleanup and Promoting the Redevelopment of Contaminated Property” (Stat. 1998, c. 206). The “Brownfields Act,” as it is generally known, also included amendments to Mass. Gen. Laws Chapter 21E (the Massachusetts Oil and Hazardous Material Release Prevention and Response Act) and thus created financial incentives and liability relief for parties undertaking brownfields development projects. Now codified as M.G.L. c. 62 §6(j) and M.G.L. c. 63 §38Q, brownfields tax credits are based on “net response and removal costs” incurred by a qualifying taxpayer or nonprofit organization during the redevelopment of a qualifying “brownfield” site. Reflecting the close relationship between the credit and activities undertaken pursuant to Chapter 21E, “net response and removal costs” are defined as “expenses paid by the taxpayer for the purpose of achieving a Permanent Solution or Remedy Operation Status in compliance with Chapter 21E.”

Since 1998, DOR has issued numerous Technical Information Releases and Directives that have served as guidance for those seeking to obtain brownfields tax credits. These regulations are the first effort by DOR to codify its practices and are the culmination of a process begun in 2020 when DOR published a “working draft” of the regulations. In an email to stakeholders on July 8, 2021, DOR announced the effective date of the regulations (July 9, 2021) and also that it would be issuing “a revised administrative procedure for the program.”

DOR’s announcement also provided the following summary of the changes to the brownfields tax credit program:


  • Scope of Review on Appeal – For partial appeals, DOR will review only the denied portion of an application; the approved portion of an application will only be reviewed if there was a material misrepresentation or omission.
  • Denial Explanation – DOR will provide an explanation for each credit denial.
  • Asbestos Eligibility – DOR will deem asbestos removal costs to be generally eligible as long as the soil immediately under the building is contaminated and the building’s demolition was required in order to achieve a permanent solution.
  • Multiple Releases – For purposes of determining whether an applicant’s costs equal or exceed 15% of the assessed value of the property (as is required to become eligible for the credit), an applicant may aggregate net response and removal costs over a 3-year period when there are multiple contaminated sites on one property.
  • Effective Date of Regulation – By its terms, the regulation will go into effect when it is made public on July 9, 2021.

Subregulatory Guidance

  • Intake Timeline – When an application is submitted, DOR will contact the applicant within 30 days to notify them of which examiner has been assigned to the case and to outline the application review process.
  • Intake Narrative – To accelerate DOR’s initial review, applicants will be directed to provide a narrative explaining why submitted costs are eligible.
  • Review Process Updates – Applicants will receive a status update from the examiner assigned to their case every 60 days.
  • Expedited Timeline – An expedited process will be established for lower-dollar, less complex BTC projects, i.e. those worth $250K or less. Such applicants will be contacted within 7 days and will receive updates every 30 days.
  • Appeals Timeline – DOR has established a timeframe for the processing of appeals. The stages of the process are as follows:
    1. Appeal is initiated. This occurs when the Office of Appeals receives the appeal.
    2. Initial Scheduling Letter sent. Within 30 days of Stage 1.
    3. Complete Appeal filed by Applicant. Within 60 days of Stage 1.
    4. Opening Conference held. Within 90 days of Stage 1.
    5. Information and Document Requests (IDRs) issued and answered. These are to be issued by the Appeals Officer within 60 days of the Opening Conference (Stage 4) and are to be answered by the Applicant within 30 days after they were issued.
    6. Formal Scheduling Letter sent (if no settlement has been reached). Within 60 days after all IDRs have been answered.
    7. Formal Hearing held. No later than 60 days after the Formal Scheduling Letter has been issued.
    8. Formal Letter of Determination issued. 60 days after the Formal Hearing. If the appeal is complex, this stage may be extended by an additional 90 days.
Many provisions in the proposed regulations reflected DOR practices that have challenged developers of brownfields properties in the past. The provisions that DOR highlighted in its announcement suggest that some, but not all, concerns expressed during the public comment process have been heeded. For example, while asbestos removal costs may now be eligible as an expense “paid for the purposes of achieving a Permanent Solution or Remedy Operation Status in compliance with Chapter 21E,” the new appeals procedure suggests that DOR may continue to attempt to “second guess” decisions made by a claimant’s LSP regarding the nature and scope of remediation. Nonetheless, brownfields tax credits will remain a significant incentive for developers of impacted properties. These new regulations only underscore the importance of considering brownfields credits eligibility in the initial stages of planning a brownfields development project.

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