Section 38Q: Environmental response actions; credit
[ First paragraph of subsection (a) effective until July 1, 2023 for tax years beginning on or after January 1, 2018. See 2018, 99, Sec. 36. For text effective July 1, 2023, see below.]
Section 38Q. (a) A business corporation which commences and diligently pursues an environmental response action on or before August 5, 2023 and which achieves and maintains a permanent solution or remedy operation status in compliance with chapter 21E and the regulations adopted under that chapter which includes an activity and use limitation shall, at the time the permanent solution or remedy operation status is achieved, be allowed a base credit of 25 per cent of the net response and removal costs incurred between August 1, 1998 and January 1, 2024 for any property it owns or leases for business purposes and which is located within an economically distressed area as defined in section 2 of chapter 21E, if these costs are not less than 15 per cent of the assessed value of the property before remediation, and if the site was reported to the department of environmental protection. A credit of 50 per cent of these costs shall be allowed for a corporation which achieves and maintains a permanent solution or remedy operation status in compliance with chapter 21E and the Massachusetts contingency plan provided in 310 CMR 40.0000 which does not include an activity and use limitation. Only a business corporation that is an eligible person as defined by section 2 of chapter 21E, and not subject to any enforcement action brought under chapter 21E, shall be allowed a credit.
[ First paragraph of subsection (a) as amended by 2023, 28, Secs. 32 and 33 effective July 1, 2023. See 2023, 28, Sec. 115. For text effective until July 1, 2023, see above.]
(a) A business corporation which commences and diligently pursues an environmental response action on or before August 5, 2028 and which achieves and maintains a permanent solution or remedy operation status in compliance with chapter 21E and the regulations adopted under that chapter which includes an activity and use limitation shall, at the time the permanent solution or remedy operation status is achieved, be allowed a base credit of 25 per cent of the net response and removal costs incurred between August 1, 1998 and January 1, 2029 for any property it owns or leases for business purposes and which is located within an economically distressed area as defined in section 2 of chapter 21E, if these costs are not less than 15 per cent of the assessed value of the property before remediation, and if the site was reported to the department of environmental protection. A credit of 50 per cent of these costs shall be allowed for a corporation which achieves and maintains a permanent solution or remedy operation status in compliance with chapter 21E and the Massachusetts contingency plan provided in 310 CMR 40.0000 which does not include an activity and use limitation. Only a business corporation that is an eligible person as defined by section 2 of chapter 21E, and not subject to any enforcement action brought under chapter 21E, shall be allowed a credit.
Any credit allowed under this subsection may be taken only after a response action outcome statement or remedy operation status submittal has been filed with the department of environmental protection as set forth in said Massachusetts Contingency Plan.
(b) If the corporation ceases to maintain the remedy operation status or the permanent solution in violation of said Massachusetts Contingency Plan prior to the sale of the property or the termination of the lease, the difference between the credit taken and the credit allowed for maintaining the remedy shall be added back as additional taxes due in the year the corporation fails to maintain the remedy operation status or permanent solution. The amount of the credit allowed for maintaining the remedy shall be determined by multiplying the original credit by the ratio of the number of months the remedy was adequately maintained over the number of months of useful life of the property. For the purposes of this subsection, the useful life of the property shall be the same as that used by corporations for depreciation purposes when computing federal income tax liability; provided, however, that in the case of real property that is not depreciable, the useful life shall be deemed to be 12 months.
(c) The credit allowed by this section shall be subject to the provisions of section 32C; provided, however, that the time period for carry over of the tax credit shall be as outlined in this section.
(d) For the purposes of this section, net response and removal costs shall be expenses paid by the taxpayer for the purposes of achieving a permanent solution or remedy operation status in compliance with chapter 21E; provided, however that no credit shall be allowed under this section for the amount of state financial assistance received from the Redevelopment Access to Capital Program established pursuant to section 60 of chapter 23A, or from the Brownfields Redevelopment Fund, established pursuant to section 29A of chapter 23G of the General Laws. For the purpose of the redevelopment access to capital program, the amount of state financial assistance shall be calculated as the amount of state funds paid on behalf of the borrower for participation in the program, and not the amount of the loan guaranteed. In the event the loan guarantee is invoked, any credit taken for the amount of the loan shall be added back as taxes due in the year the loan is paid.
(e) The credit allowed under this section shall not reduce the excise payable by said corporation to less than the amount due pursuant to subsection (b) of section 39 or any other applicable section.
(f) Notwithstanding the provisions of any general or special law to the contrary, any corporation entitled to a credit under this subsection for any taxable year may carry over and apply to its tax liability for any subsequent taxable year, not to exceed 5 taxable years, the portion of those credits, as reduced from year to year, which were not allowed under this subparagraph; provided, however, that in no event shall the taxpayer apply the credit in any taxable year in which it has ceased to maintain the remedy operation status or the permanent solution for which the credit was granted.
(g) All or any portion of tax credits issued in accordance with this section may be transferred, sold or assigned to a taxpayer with a liability under this chapter or chapter 62 or to a nonprofit organization. A corporation or nonprofit organization desiring to make a transfer, sale or assignment shall submit to the commissioner a statement which describes the amount of the Massachusetts environmental response action tax credit for which such transfer, sale or assignment of Massachusetts environmental response action tax credit is eligible. Such a corporation or nonprofit organization shall provide appropriate information so that the environmental response action tax credit can be properly allocated. The commissioner shall issue a certificate to the party receiving the environmental response tax credit reflecting the amount of tax credit received, a copy of which shall be attached by the party receiving the environmental response tax credit to each tax return in which the tax credits are used.
(h) The commissioner shall annually, not later than September 1, file a report with the house and senate committees on ways and means, the joint committee on community development and small businesses and the joint committee on economic development and emerging technologies identifying the total amount of tax credits claimed pursuant to this section and the total amount of tax credits transferred, sold or assigned pursuant to this section in the preceding fiscal year.