| Date: | 06/04/2025 |
|---|---|
| Organization: | Massachusetts Department of Revenue |
| Regulatory Authority: | Massachusetts General Laws |
| Official Version: | Published by the Massachusetts Register |
830 CMR: DEPARTMENT OF REVENUE
830 CMR 62.6X.2: TAXATION OF INCOMES
830 CMR 62.6X.2 is amended by adding the following:
830 CMR 62.6X.2: Offshore Wind Capital Investment Credit
(a) Statement of Purpose. 830 CMR 62.6X.2 explains the calculation of the Offshore Wind Capital Investment Credit allowed to eligible taxpayers for certain capital investments in offshore wind facilities. The Credit is available through the Offshore Wind Tax Incentive Program, effective November 10, 2022 until January 1, 2033, applicable for tax years beginning on or after January 1, 2023, and codified at M.G.L. c. 62, § 6(cc), M.G.L. c. 63, § 38MM; and M.G.L. c. 23J, § 8A.
The Offshore Wind Capital Investment Credit is allowed to Certified Offshore Wind Companies that develop and expand offshore wind industry-related employment opportunities in the Commonwealth and also make substantial capital investments that promote renewable energy-related economic development in the state by supporting and stimulating growth of the offshore wind industry.
(b) Outline of Topics. 830 CMR 62.6X.2 is organized as follows:
(1) Statement of Purpose, Outline of Topics, Applicable Tax Years
(2) Definitions
(3) General Rule
(4) Eligibility for the Credit
(5) Procedural Requirements for Claiming the Credit
(6) Limitations on the Credit
(7) Distribution of Credit Awarded
(8) Application of the Credit
(9) Annual Cumulative Cap
(10) Recapture of the Credit
(11) Special Rules Applicable to Pass-through Entities
(c) Applicable Tax Years. The credit is available for capital investments made on or after January 1, 2023.
For purposes of 830 CMR 62.6X.2, the following terms have the following meanings.
Capital Investment. Expenses incurred for the site preparation and construction, repair, renovation, improvement or equipping of a building, structure, or facility or other improvements to real property, including, but not limited to, site-related utility and transportation infrastructure improvements.
CEC. The Massachusetts Clean Energy Center or the Massachusetts Clean Energy Technology Center established pursuant to M.G.L. c. 23J, § 2.
Certification Proposal. A proposal from an offshore wind company consisting of information required under M.G.L. c. 23J, § 8A(b) and submitted to the CEC for consideration and approval to enable certification of the offshore wind company pursuant to M.G.L c. 23J, § 8A.
Certified Offshore Wind Company. A certified offshore wind company as defined in M.G.L. c. 23J, § 1.
Commissioner. The Commissioner of Revenue or the Commissioner’s duly authorized representative.
Credit. The offshore wind facility capital investment tax credit provided at M.G.L. c. 62, § 6(cc) and M.G.L. c. 63, § 38MM; and authorized pursuant to the Offshore Wind Tax Incentive Program established under M.G.L. c. 23J, § 8A.
Department. The Massachusetts Department of Revenue.
Material Noncompliance. The failure of a Certified Offshore Wind Company to substantially achieve the new state revenue, job growth and capital investment projections set forth in its Certification Proposal or any other act, omission or misrepresentation by the Certified Offshore Wind Company that is determined by the CEC to frustrate the public purpose of the Massachusetts Offshore Wind Tax Incentive Program.
Offshore Wind Facility. Any building, complex of buildings or structural components of buildings, including water access infrastructure, and all machinery and equipment used in the manufacturing, assembly, development or administration of component parts that are primarily used to support the offshore wind industry.
Owner. Any individual or entity subject to tax under M.G.L. c. 62 or M.G.L. c. 63 that: (i) holds title to an offshore wind facility; or (ii) has entered into ground leases for the land underlying the facility for at least 50 years.
Tenant. Any individual or entity subject to tax under M.G.L. c. 62 or M.G.L. c. 63 that is a lessee of an offshore wind facility.
A Certified Offshore Wind Company that is the Owner or Tenant of an Offshore Wind Facility, to the extent authorized by the Offshore Wind Tax Incentive Program, is allowed a refundable Credit up to an amount equal to 50% of the owner’s total Capital Investment in the Offshore Wind Facility. The total amount of the Credit awarded shall be distributed in equal parts over the five taxable years that correspond to the period in which the Owner or Tenant is certified pursuant to M.G.L. c. 23J, § 8A.
An Owner or Tenant of an Offshore Wind Facility is eligible to receive the Credit if it demonstrates the following:
(a) Eligible Owner. An Owner is eligible to receive the Credit if it demonstrates to the CEC that:
(i) it is a Certified Offshore Wind Company;
(ii) it has made a total Capital Investment in the Offshore Wind Facility of at least $35,000,000; and
(iii) the Offshore Wind Facility will employ not less than 200 new full-time employees by the fifth year of the Owner’s certification period under section M.G.L. c. 23J § 8A.
(b) Eligible Tenant. A Tenant is eligible to receive the Credit if it demonstrates to the CEC that:
(i) it is a Certified Offshore Wind Company;
(ii) the Owner of the Offshore Wind Facility has made a total Capital Investment in the Offshore Wind Facility of at least $35,000,000;
(iii) it occupies a leased area of the Offshore Wind Facility that represents not less than 25 per cent of the total leasable square footage of the facility; and
(iv) it will employ at least 50 full-time employees by the fifth year of the Tenant’s certification period pursuant to M.G.L. c. 23J § 8A.
Before an offshore wind company may receive a Credit, it must be certified by the CEC pursuant to M.G.L. c. 23J, § 8A. Applications for certification must be submitted in the manner required by the CEC. Upon certification, the CEC, in consultation with the Department, may allow a Credit to the offshore wind company subject to the limitations in 830 CMR 62.6X.2(6).
No Credit will be allowed to a Certified Offshore Wind Company until approval has been expressly granted in writing by the Secretary of the Executive Office of Administration and Finance, following review of an estimated tax benefit cost analysis submitted by the CEC, in consultation with the Department.
(a) Interaction with Other Credits. A Certified Offshore Wind Company taking the Credit may not take either the Offshore Wind Jobs Credit allowed under M.G.L. c. 62, § 6(bb) and M.G.L. c. 63, § 38LL or the Economic Development Incentive Program Credit allowed under M.G.L. c. 62, § 6(g) and M.G.L. c. 63, § 38N in the same taxable year, for the duration of the five-year certification period.
(b) Limitation by the CEC. The CEC, in consultation with the Department, may limit the amount of the Credit to a specific dollar amount or duration as deemed appropriate.
(c) Section 32C Inapplicable. In determining the amount of the Credit allowable for a taxable year the provisions of M.G.L. c. 63, § 32C shall not apply.
(d) Limitation for Tenants. The amount of the Credit awarded to a Tenant for a taxable year shall not exceed the Tenant’s total lease payments for occupancy of the Offshore Wind Facility for the taxable year.
The total amount of the Credit awarded must be claimed in equal parts over the five taxable years that correspond to the period in which the Owner or Tenant is certified pursuant to M.G.L. c. 23J, § 8A.
For each taxable year in which a Credit is claimed under 830 CMR 62.6X.2(7), the Credit shall be applied against the Certified Offshore Wind Company’s liability as reported on its tax return, as first reduced by any other available credits. The balance of the Credit, if any, shall be refunded to the Certified Offshore Wind Company. The provisions of M.G.L. c. 62C and M.G.L. c. 62D including, without limitation, provisions allowing offsets of refunds for unpaid tax assessments, child support obligations, or other applicable obligations also apply to refunds under 830 CMR 62.6X.2(8). The Credit is not transferable.
The CEC, in consultation with the Department, may annually authorize not more than $35,000,000 in tax incentives under M.G.L. c. 23J, § 8A, including the Offshore Wind Facility Capital Investment Credit allowed under M.G.L. c. 62, § 6(cc) and M.G.L. c. 63, § 38MM and the Offshore Wind Jobs Credit allowed under M.G.L. c. 62, § (6)(bb) and M.G.L. c. 63, § 38LL. The annual cumulative cap includes the total value of any tax incentive awarded under the Offshore Wind Tax Incentive Program established under M.G.L. c. 23J, § 8A(d) and taken over a five-year period, including the current year costs of tax incentives allowed in previous years.
The CEC may revoke a Certified Offshore Wind Company’s certification after an investigation by the CEC, in consultation with the Department, if it has made a determination that the Certified Offshore Wind Company was or is in material noncompliance with its Certification Proposal. Revocation shall take effect on the first day of the company’s tax year in which such material noncompliance occurred. Once an Offshore Wind Company’s certification is revoked, the following will occur:
(i) the Certified Offshore Wind Company will not be allowed any Credit that was allowed by the original certification, starting as of the effective date of the revocation;
(ii) any Credit taken after the effective date of the revocation must be recaptured and repaid as additional tax due for the taxable year in which such determination was made, regardless of when such material noncompliance occurred.
The Commissioner has the authority to assess additional taxes due as a result of these recapture rules by making deficiency assessments or jeopardy assessments as appropriate under M.G.L. c. 62C, § 26; 830 CMR 62C.26.1.
Example. Offshore Wind Company is awarded a $5,000,000 Credit to be claimed in equal parts during its five-year certification period beginning with its taxable year 2024. Offshore Wind Company claims a $1,000,000 Credit on its returns for each of its taxable years 2024, 2025, and 2026. In taxable year 2027, the CEC makes a determination that Offshore Wind Company was in material noncompliance during its 2025 taxable year. The revocation is effective on the first day of its taxable year 2025. Offshore Wind Company must repay $2,000,000 (i.e. the Credit claimed for its taxable years 2025 and 2026) as additional tax due for its taxable year 2027. Offshore Wind Company will not be allowed a Credit for its taxable years 2027 and 2028.
(a) Pass-Through Entities Not Taxed at Entity Level. In the case of a Certified Offshore Wind Company that is not taxable at the entity level, such as a partnership, limited partnership, limited liability partnership, limited liability company treated as a partnership for tax purposes, or a trust that is not subject to tax at the entity level, the Credit may be passed through to the entity’s partners, members, beneficiaries or other owners pro rata or pursuant to an executed agreement among such persons, documenting an alternative distribution method. The total amount of the Credit passed through such entity and claimed by its partners, members, beneficiaries, or other owners in any taxable year, however, shall not exceed the Credit amount that has been issued and is allowable for such year, as further limited by 830 CMR 62.6X.2(6).
(b) Pass-Through Entities Taxed at Entity Level. A pass-through entity subject to tax at the entity level, such as a subchapter S corporation or a trust that is subject to tax at the entity level, may claim the Credit against its entity level tax. Alternatively, the Credit may be passed through to the entity’s shareholders members, beneficiaries, or other owners pro rata or pursuant to an executed agreement among the entity’s owners, documenting an alternative method. These alternatives are mutually exclusive. A pass-through entity may not apply part of the Credit to its own entity level tax and pass through any remaining Credit. The total amount of Credit passed through to the shareholders, members, beneficiaries, or other owners, in any taxable year, shall not exceed the Credit amount that has been issued and is allowable for such year as further limited by 830 CMR 62.6X.2(6).
(c) The Elective Pass-Through Entity Excise. A pass-through entity that elects to pay the pass-through entity excise under M.G.L. c. 63D shall not apply the Credit to reduce such excise.
WORKING DRAFT FOR PRACTITIONER COMMENT - 6/4/25
