|Organization:||Massachusetts Department of Revenue|
|Referenced Sources:||Massachusetts General Laws|
Personal Income Tax
On May 11, 1990, the Massachusetts Department of Labor and Industries (DLI) issued a Policy Statement LP-5 (DLI Policy Statement) which provides that a person need not be licensed as a deleader-contractor in order to cover the lead-contaminated exterior of buildings described in the Massachusetts lead paint statutes, G.L. c. 111, §§ 190-199, with siding, shingles, or other materials. Under the DLI Policy Statement, all interior deleading work and any exterior deleading that will generate lead-contaminated dust still must be performed by a deleader-contractor licensed by DLI. The Department of Revenue is issuing this Technical Information Release (TIR) to explain how the new DLI policy will affect the ability of owners or tenants to claim a lead paint removal credit under G.L. c. 62, § 6(e), on their individual income tax returns.
Massachusetts General Laws, chapter 62, section 6(e) provides an income tax credit for lead removal expenses. In relevant part, the statute states:
(e) Any owner or tenant of a residential premises who pays for the removal or covering of any paint, plaster, soil or other accessible materials containing dangerous levels of lead shall be allowed a nonrefundable credit in the amount of the cost of said removal or covering or one thousand dollars per dwelling unit, whichever is less. Such credit shall be allowed if the presence of lead is established by an inspector licensed by the childhood lead poisoning prevention program and, following such removal or covering, such inspector files a form with the department of revenue, in recordable form, certifying that the unit has been deleaded in compliance with section one hundred and ninety-seven of chapter one hundred and eleven, and removal or covering is conducted by a deleader licensed by the department of labor and industries except as provided in section one hundred and ninety-seven B of chapter one hundred and eleven (emphasis added).
The Department of Revenue has issued regulations interpreting G.L. c. 62, § 6(e), and explaining how a taxpayer may claim the lead removal credit. See 830 CMR 62.6.2 (Regulation). In general, this Regulation provides that only the reasonable and necessary fee of a "qualified deleader" can be reimbursed through the income tax credit. A "qualified deleader" is "any person, corporation, or entity which has been certified or licensed by the Department of Labor and Industries under 454 CMR 22.03 to remove or cover paint or other materials containing dangerous levels of lead." The Regulation specifically states that if work is not performed by a qualified deleader, the credit is not available. 830 CMR 62.6.2(6)(c).
The effect of the DLI Policy Statement on the lead paint tax credit is as follows. Under the express statutory language of G.L. c. 62, § 6(e), quoted above, the credit is available only for work performed by a licensed deleader. Therefore, taxpayers may not claim a credit for the work of unlicensed individuals or contractors who cover exterior lead paint with siding, shingles, etc., even if the premises are properly inspected before and after the work is conducted.
As a practical matter, however, the limitation of the credit to work performed by licensed deleaders will not prevent taxpayers from obtaining a lead paint removal credit for the proper deleading of a residential premises. In order to obtain a credit under G.L. c. 62, § 6(e), a taxpayer must delead an entire dwelling unit. The covering of exterior lead paint that may be performed by unlicensed individuals under the DLI Policy Statement will rarely be sufficient in itself to bring an entire unit into compliance with G.L. c. 111, §§ 190-199. In almost all cases, the exterior lead covering conducted under the DLI Policy Statement will be associated with other work, such as interior deleading or the dust-generating deleading of exterior window frames, porches, etc., that still must be performed by a licensed deleader. The credit will still be available for this related work of a licensed deleader, provided that the requirements of the Regulation are otherwise met. The fact that exterior lead covering is done by an unlicensed individual or contractor in accordance with the DLI Policy Statement will not preclude an owner or tenant from obtaining a credit for related deleading work done on the same residential premises by a licensed deleader.
The following examples illustrate the application of the lead paint removal credit. The examples assume that all lead paint inspectors are licensed by the Department of Public Health.
Example 1. Peter owns a single family house in Waltham. An inspection of the premises reveals the presence of paint containing a dangerous level of lead on both the interior and exterior of the premises. Peter has the exterior of the house, with the exception of the window and door frames, covered with vinyl siding. The siding is installed by a contractor that is not a licensed deleader. Peter has the interior of the house and the exterior window and door frames deleaded by a deleading contractor licensed by DLI. The premises are reinspected and are certified as complying with G.L. c. 111, §§ 190-199. Under these circumstances, Peter may claim a lead removal credit equal to the lesser of $1000 or the charges of the licensed deleader plus the fee of the inspector. The charges of the siding contractor do not qualify for the credit.
Example 2. Paul owns a two-family house in Springfield. He is contemplating re-siding the house, and he has the exterior tested for the presence of paint containing a dangerous level of lead. He does not have the interior inspected. The test of the exterior reveals the presence of lead-contaminated paint which Paul covers with siding as provided by the DLI Policy Statement. All the accessible lead paint on the exterior of the building is covered in this manner.
Under these circumstances, Paul may not claim a lead removal credit. The credit is available only when an entire dwelling unit, including all accessible interior surfaces, is deleaded, as certified by a licensed inspector. Removal or covering of lead-contaminated paint on a building's exterior is insufficient for obtaining a credit, whether or not this removal or covering is performed by a licensed deleader, unless the interior is also inspected and certified as complying with G.L. c. 111, §§ 190-199.
Example 3. Mary owns a single family house in Andover. She has the entire premises, both interior and exterior, inspected for the presence of paint or other accessible materials containing a dangerous level of lead. The only contaminated material found is lead paint on the exterior siding. In accordance with the DLI Policy Statement, Mary has the lead paint covered with new siding by a contractor that is not a licensed deleader. The premises are then reinspected and certified as complying with G.L. c. 111, §§ 190-199. Under these circumstances, Mary may claim a lead removal credit for the fee of the licensed inspector or $1000, whichever is less. The charges of the siding contractor do not qualify for the credit.
Stephen W. Kidder
Commissioner of Revenue
August 27, 1990