Brownfield Tax Incentive
Brownfield Redevelopment ~ Transactional Support & Funding Programs
The Brownfields Tax Incentive is a federal tax initiative designed to spur the cleanup and redevelopment of brownfields. Under the Brownfields Tax Incentive, environmental cleanup costs for eligible properties may be treated as fully deductible business expenses for the year in which costs are incurred or paid. To claim the tax incentive, the taxpayer must receive a statement of eligibility from the Pennsylvania Department of Environmental Protection.
Federal Taxpayers Relief Act
The Brownfields Tax Incentive, intended to spur the cleanup and redevelopment of brownfields in distressed urban and rural areas, was originally signed into law in August 1997 as part of the Taxpayer Relief Act (Public Law 105-34). On December 20, 2006, President Bush signed the Tax Relief and Health Care Act of 2006. The new law includes an extension and expansion of the Brownfields Tax Incentive. Under the new law, the incentive was renewed, effective after December 31, 2005, and extended until December 31, 2009.
The Brownfields Tax Incentive allows environmental cleanup costs to be deducted in the year incurred, rather than capitalized over time. The legislation expanded the scope of the Brownfields Tax Incentive to include deduction of expenses for the cleanup of petroleum products (crude oil, crude oil condensates, and natural gasoline), which had previously been ineligible.
To be eligible the property must meet the following requirements concerning land use and contamination.
- The property must be held by the taxpayer incurring the eligible expenses for use in a trade or business, or for the production of income, or the property must be properly included in the taxpayer's inventory.
- A release or threat of release or disposal of any hazardous substance at or on the property. The term "hazardous substance" is defined in the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and the Tax Relief and Health Care Act of 2006.
- Sites on the EPA National Priorities List ("Superfund List") are not eligible.
Additional information on the Brownfields Tax Incentive is available on the US EPA web site.
Requesting DEP Statement of Eligibility for Federal Brownfields Tax Incentive
The taxpayer must receive a statement from the Department of Environmental Protection that there has been a release or threat of a release of a hazardous substance at or on their property to meet the contamination requirement of the Brownfield Tax Incentive. Should you find your property meets the contamination requirement, you may then complete a request for Statement of Eligibility.
When submitting a request to DEP for Statement of Eligibility for the Brownfield Tax Incentive, please be sure to include the following information and documentation:
- Contact person's name, mailing address and telephone number
- Property location (Address, Local Municipality, County), If known, latitude and longitude
- Property county map parcel identification number
- Evidence, such as analytical results and photographs, of a release (or threat of release) or disposal of any hazardous substance.
The request for the Statement of Eligibility must include the following statement:
"The above referenced property is an area at or on which there has been a release (or threat of release) or disposal of a hazardous substance, as defined by the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) and Tax Relief and Health Care Act of 2006. The property is not listed or proposed for the EPA National Priorities List (Superfund list)."
Mail the request for the Statement of Eligibility to the following address:
Brownfields Tax Incentive
Land Recycling Program
Department of Environmental Protection
P.O. Box 8471
Harrisburg PA 17105-8471
The Department of Environmental Protection will only verify that the site owner has provided documentation that demonstrates that the a release of a hazardous substance exists at the site. The Department of Environmental Protection is not qualified to offer tax advice. The property owner is advised to seek legal or tax counsel on questions of eligible activities or any other questions on eligible costs under the federal Brownfield Tax Incentive. A good reference for a business considering the Brownfield Tax Incentive is IRS publication 954 (Rev. June 2001) "Tax Incentives for Empowerment Zones and other Distressed Communities (pdf)".
For more information, contact Dave Crownover with the Land Recycling and Cleanup Program at 717-783-7502, e-mail: dcrownover@pa.gov
