Federal Brownfields Tax Incentive
Originally signed into law as part of the Tax Relief Act of August 1997, and codified through Section 198(a) of the Internal Revenue Code, the Federal Brownfields Tax Incentive (Incentive) is intended to spur the cleanup and revitalization of brownfield properties. The Incentive expired December 31, 2009. In December 2010, it was extended to December 31, 2011 and made retroactive to December 31, 2009. The Incentive provides the following benefits to taxpaying stakeholders conducting environmental cleanup at eligible brownfield properties:
- Allows environmental cleanup costs at eligible properties to be fully deductible in the year incurred, rather than capitalized and spread over a period of years;
- Allows the types of properties eligible for the incentive to include those with petroleum contamination; and
- Allows previously filed tax returns to be amended to include deductions for past cleanup expenditures.
To qualify for the Incentive, the property must be 1) "held by the taxpayer" for trade, business, or income generation purposes; and 2) meet certain contamination requirements. In addition, the site cannot be listed on, or proposed for, EPA's Superfund National Priorities List. Please see the link to EPA's guidance on the right hand side of this page for additional information.
The State's role is to determine whether there has been a release, threat of release, or disposal of any hazardous substances at or on the proposed property, thus meeting the contamination requirements. The State does not determine which project costs are eligible for the Incentive. It is expected that taxpayers will rely on tax counsel, not their designated state agency, for clarification of other issues related to the Federal Brownfields Tax Incentive, including land use/site ownership requirements. A tax advisor may also provide guidance on how using the Incentive may impact the tax credits available under New York State's Brownfield Cleanup Program.
Taxpayers must obtain a statement from a designated state agency regarding the eligibility of the property for the Incentive. In New York State, the designated state agency is the Department of Environmental Conservation (DEC). To obtain a statement from DEC, fill out a Federal Brownfields Tax Incentive Application and submit it to the address indicated on the form.
New York State Contact Information
For further information regarding New York State's role in the Incentive contact:
New York State Department of Environmental Conservation
Bureau of Program Management
Division of Environmental Remediation
Albany, New York 12233-7012
phone (518) 402-9764
Federal Contact Information
For additional information regarding the Federal Brownfields Tax Incentive, visit USEPA's Brownfields Tax Incentive Web Page (see "Links Leaving DEC's website" on the right menu).