The Suffolk County Superior Court ruled that the Massachusetts Department of Revenue exceeded its authority by engaging its own licensed site professional (LSP) to re-examine a taxpayer’s environmental hazard remediation efforts for purposes of the state’s environmental cleanup tax credit. The taxpayer acquired contaminated property in 2015 and engaged an LSP-of-record the following year to prepare a development and remediation plan in accordance with the governing statutes and regulations. The taxpayer conducted remediation activities in accordance with the plan and claimed a credit of 50% of its response and removal costs in 2020. The Department denied the credit, and during the ensuing administrative appeal, retained its own LSP to assist its evaluation and ultimately sustained its denial of most of the credit. The taxpayer filed suit in Superior Court in January 2025.
The court held that the Department’s retroactive adjustment of the credit, based on after-the-fact analysis of cleanup costs, was not a reasonable basis to deny the credit, and that the Department lacked authority to undertake the environmental review that it did. The court further emphasized the “important statutory and regulatory role” of the LSP-of-record and concluded that this role should not be undermined by a subsequently retained consultant.