Thinking of Preparing Your Own Brownfields Tax Credit Application? Cautionary Tales for Do It Yourselfers (DIYers)
ANDOVER, MA – Massachusetts has a robust package of liability protections and financial incentives for developers of properties, commonly known as “Brownfields,” which have been impacted by the presence or suspicion of environmental contamination. Due to the legacy of past uses, properties in areas across the state meet this definition.
One of the best incentives that is available to “eligible persons” – parties who did not cause or contribute to the contamination or own or operate the property at the time of the contamination – is the Massachusetts Brownfield Tax Credit program, operated by the Department of Revenue (DOR). This credit can reimburse up to 50% of the eligible costs incurred to put a property into productive commercial use. Cooperstown Environmental LLC of Andover, Massachusetts is a leader in this market niche. Cooperstown has become synonymous with Brownfield Tax Credits, as we have maintained a commanding market share since the program was expanded in 2006. Each year since statistics have been published by the state, our clients represent most of the credits awarded by the state.
Our work begins by identifying potentially eligible parties, and then conducting the necessary background research and documentation required to demonstrate eligibility. We prepare applications, work the applications through the rigorous state review process, and often purchase or broker the credits after award.
As part of this effort, we sometimes communicate with parties who decline our proven expertise and experience and instead decide that they will attempt to “go it alone” and self-prepare an application. After all, they reason, how hard can it be? The information is available on the internet – isn’t it? Can’t I just have my accountant do this for me? They may succumb to hubris – “I did go to Harvard, after all” we were once told. Or “I’ve done lots of other tax credit applications – this one should be no different.”
Unfortunately, our experience with such reasoning is that in many cases, intelligent, well intentioned “do it yourselfers” end up worse off than had they brought outside experts into the process. In the end, these DIYers receive fewer credits – or in some cases nothing – than do our clients.
The primary reason for the shortfall is that the rules of the program are anything but obvious. The publicly available guidelines are frustratingly incomplete or confusing; also, the program rules change over time so that guidance that may have been true even a couple of years ago have changed or no longer apply.
One candidate with whom we spoke – and who decided to do an application using in-house employees – missed a key deadline, ultimately resulting in the complete denial of a $1M+ application that otherwise would have been approved. Similarly, we are aware of many applicants who did not include potentially eligible expenses in an application that was approved – meaning they left money on the table. Often these failures have cost the parties tens of thousands of dollars, and in some cases hundreds of thousands of dollars. The phrase “penny-wise and pound foolish” certainly applies to these situations.
Why should you consider using Cooperstown to prepare your application? Simply because you will probably end up with more money in your pocket at the end of the day. Our expertise in understanding the program will maximize your application’s approvable cost base, leading to a larger credit. In addition, our market leading Brownfields Tax Credit brokering business, supported by a large volume of credit transactions, will maximize the sales proceeds if you choose to sell your credits to produce cash. And, our compensation is contingent on success – no credits, no cost to you.
Add it all up and the clear choice to optimize your Massachusetts Brownfields Tax Credit application is to partner with Cooperstown.