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1 (January 19, 2007)

handle is hein.crs/crsuntaakkf0001 and id is 1 raw text is: Order Code RS21599 Updated January 19, 2007 CRS Report for Congress Brownfields Tax Incentive Extension Mark Reisch Analyst in Environmental Policy Resources, Science, and Industry Division Summary The brownfields tax incentive expires on December 31, 2007. Enacted in 1997, the provision allowed a taxpayer to fully deduct the costs of environmental cleanup in the year the costs were incurred (called expensing), rather than spreading the costs over a period of years (capitalizing). The provision was adopted to stimulate the cleanup and development of less seriously contaminated sites by providing a benefit to taxpaying developers of brownfield properties. In each of its budget proposals since FY2003, the administration has suggested that Congress make the tax incentive permanent. The 109th Congress renewed the provision through 2007 (P.L. 109-432) and made it effective retroactively to December 31,2005, when the previous extension expired. The law also made sites contaminated by petroleum products eligible for the tax incentive. The 1 10th Congress may wish to consider another extension, or making the incentive permanent, as well as considering repeal of the recapture requirement. Information on the extent of use of the brownfields tax incentive cannot be determined from federal income tax returns. However, to take advantage of the tax break, a developer has to obtain a certification from the state environmental agency that the site qualifies as a brownfield. CRS surveyed the agencies of all states in 2003 to ask how many applications they had received and approved. Twenty-seven states reported that they had received brownfield tax incentive applications, for a total of 161 applications, of which 147 were approved. The other 23 states reported that they received no requests for certification. The brownfields tax incentive expires on December 31, 2007. First enacted as part of the Taxpayer Relief Act of 1997 (P.L. 105-34), the incentive allows a taxpayer to fully deduct the costs of environmental cleanups in the year the costs were incurred (called expensing), rather than spreading the costs over a period of years (capitalizing). Its purpose is to encourage developers to rehabilitate sites where environmental 1 For purposes of the tax incentive, a brownfield site (qualified contaminated site) is a property held for use in a trade or business, for the production of income, or as inventory where there has been a release, or threat of release, or disposal of a hazardous substance. Sites on the Superfund National Priorities List are excluded (26 U.S.C. 198(c)). Congressional Research Service ' The Library of Congress Prepared for Members and Committees of Congress

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