PETITION OF:

SECTION 1.

WHEREAS, the Commonwealth of Massachusetts’ contains over three million acres of forestland that add to the quality of life of its residents and support an important forest economic sector that includes thousands of landowners, hundreds of professional foresters , numerous timber harvesters and primary forest products manufacturers and a rural travel and tourism industry;

WHEREAS, this economic sector is an important part of Massachusetts’ rural economy. Working forests are also an integral part of a sustainable development approach by utilizing and protecting prime woodlands and focusing development towards village centers;

WHEREAS, this act, which shall be known as the Massachusetts Sustainable Forests Incentives act, will provide private landowners, professional foresters, timber harvesters, and primary forest products manufacturers with economic incentives that encourage a viable forest industry based on sustainable forest management by increasing infrastructure investment, by creating jobs in rural areas, and by assisting in the conservation of prime forestlands critical for the protection of habitat, water resources, recreation, and tourism.

SECTION 1. chapter 62 is hereby amended by inserting after section 6I, the following section:

Section 6J

(a) For the purposes of this section, unless the context clearly requires otherwise, the following words shall have the following meanings:-

“Licensed Forester”, shall mean an individual meeting the qualifications and licensed by the Forester Licensing Committee created under chapter 132 of the general laws.

“Massachusetts Forest Entity”, shall mean a sole proprietor or other legal entity, including but not limited to, corporation, s-corporation, general or limited partnership, or limited liability company organized for the purpose of either cutting, harvesting, milling, marketing or processing primary forest products and registered with the Secretary of State where applicable.

“Qualified Forest Investments”, shall mean funds invested in depreciable facilities or equipment or business plans precedent to such investments made either for the purpose of producing on-site renewable wood based heat or electricity generation, energy efficiency or environmental quality improvements made to existing renewable wood based heat or electricity systems ,or for investments that create value-added primary forest products or that modernize forest industry infrastructure to, make it more competitive in the national or world markets or to expand local markets for forest products.

"Qualified Forest Landowner", shall mean an individual or legal entity holding a legal interest, right, or title to ten acres or more of forestland that meets the definition of forest in chapter 61 or chapter 61a of the general laws.

“Sustainable forest management” shall mean activities that occur on forested land that is classified under chapter 61, chapter 61A or chapter 61Bof the general laws, or managed pursuant to the Forest Stewardship Program found under Title XII, a Cooperative Forestry Assistance Act of 1978 of the federal laws or managed pursuant to other recognized forest certification systems...

“Taxpayer”, shall mean an individual who pays income tax as defined in chapter 62 of the general laws or a corporation or other legal entity engaged in business in the Commonwealth that pays tax pursuant to the general laws.

(b) There shall be allowed as a credit against the tax liability of a Massachusetts Forest Entity imposed by this chapter, an amount equal to thirty- percent of the fair market value of investments made by the Massachusetts Forest Entity for Qualified Forest Investments.

(1) In any single tax year, the credit taken may not exceed the amount due under a Taxpayer’s annual taxable income.

(2) Any portion of the credit, which is unused in any single tax year, may be carried over for a maximum of ten consecutive tax years following the tax year in which the credit originated.

(3) Individual taxpayers, subject to this chapter who are shareholders or partners in a Massachusetts Forest Entity may take a percentage of the tax credit earned by the Massachusetts Forest Entity under this section based on their distributive share of the Massachusetts Forest Entity.

(c) There shall be allowed as a credit against the tax liability of a Qualified Forest Landowner imposed by this chapter, an amount equal to one hundred percent of the fair market value of investments made by Qualified Forest Landowners for forest management or stewardship plans completed by Massachusetts’ Licensed Foresters that meet the requirements of chapter 61, 61a or 61b of the general laws or Title XII, a Cooperative Forestry Assistance Act of 1978 of the federal laws.

(1) In any single tax year, the credit taken may not exceed the amount due under a Taxpayer’s annual taxable income.

(2) Any portion of the credit, which is unused in any single tax year, may be carried over for two future tax years.

(3) The amount of this credit cannot exceed the current fee schedule rate for such plans approved by the Department of Conservation and Recreation.

(4) Forest management or stewardship plans receiving reimbursement from any state or federal programs are only eligible for this credit for the amount paid for an approved plan not covered by state or federal cost share payments.

SECTION 2. Chapter 63 is hereby amended by inserting after section 38Q, the following section:-

Section 38 R.

(a) For the purposes of this section, unless the context clearly requires otherwise, the following words shall have the following meanings:-

“Massachusetts Forest Entity”, shall mean a sole proprietor or other legal entity, including but not limited to, corporation, s-corporation, general or limited partnership, or a limited liability company organized for the purpose of either cutting, harvesting, milling, marketing or processing primary forest products and registered with the Secretary of State where applicable.

(b) There shall be allowed as a credit against the tax liability of a Massachusetts Forest Entity imposed by this chapter, an amount equal to thirty percent of the Qualified Forest Investments made by the Massachusetts Forest Entity for Qualified Forest Investments.

(1) In any single tax year, the credit taken may not exceed the amount due under a Taxpayer’s annual taxable income.

(2) Any portion of the credit, which is unused in any single tax year, may be carried over for a maximum of ten consecutive tax years following the tax year in which the credit originated until fully expended.

SECTION 3. Agencies of the commonwealth shall give preference to Massachusetts’ grown forest products that are of equivalent quality to other bids when awarding of bids for wood products purchased by the commonwealth.

SECTION 4.

(a) The Secretary of the Executive Office of Environmental Affairs, hereinafter referred to as the Secretary, shall promulgate regulations for the implementation of sections one and two under this chapter. Regulations shall be promulgated within ninety days of passage of this act.

(b) The Executive Office of Administration and Finance, in consultation with the Secretary, shall promulgate regulations to administer the provisions of section three under this chapter. Regulations shall be promulgated within ninety days of passage of this act. The Commissioner of the Department of Revenue, within five years of passage of this chapter, shall prepare a report to the Joint Committee on Taxation and the Joint Committee on Environment, Natural Resources and Agriculture, calculating the tax savings to individuals and corporations.

(c) The Department of Revenue, in consultation with the Secretary of the Executive Office of Environmental Affairs, shall promulgate regulations to administer the tax incentives of sections one and two under this chapter. Regulations shall be promulgated within ninety days of passage of this act. The Commissioner of the Department of Revenue, within five years of passage of this chapter, shall prepare a report to the Joint Committee on Taxation and the Joint Committee on Environment, Natural Resources and Agriculture, calculating the tax savings to individuals and corporations.

SECTION 5

Tax credits provided by this chapter shall apply in taxable years beginning on or after January 1, 2007 and all taxable years thereafter.

SECTION 6. Nothing in this chapter shall be interpreted in any way to alter or amend any permitting requirements, reporting requirements, allocation procedures, or other requirements set forth in any other provision of the general laws.