Brownfields IRA

(a)

In general

Subpart C of part II of subchapter E of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 468B the following new section:

468C.

Special rules for Hazardous Waste Remediation Reserves

(a)

In general

There shall be allowed as a deduction for any taxable year the amount of payments made by the taxpayer to a Hazardous Waste Remediation Reserve (hereinafter referred to as the Reserve) during such taxable year. (b)

Limitation on amounts paid into Reserve

The amount which a taxpayer may pay into the Reserve for any taxable year shall not exceed the lesser of— (1)$1,000,000, or (2)the excess (if any) of $1,000,000 over the amount paid into the Reserve for all prior taxable years. (c)

Income and deductions of the taxpayer

(1)

Inclusion of amounts distributed

There shall be includible in the gross income of the taxpayer for any taxable year— (A)any amount distributed from the Reserve during such taxable year, and (B)any deemed distribution under subsection (e). (2)

Deduction when economic performance occurs

In addition to any deduction under subsection (a), there shall be allowable as a deduction for any taxable year the amount of the qualified hazardous waste costs with respect to which economic performance (within the meaning of section 461(h)(2)) occurs during such taxable year. (d)

Hazardous Waste Remediation Reserve

(1)

In general

For purposes of this section, the term Hazardous Waste Remediation Reserve means a reserve established by the taxpayer for purposes of this section. (2)

Reserve exempt from taxation

Any Hazardous Waste Remediation Reserve is exempt from taxation under this subtitle unless such Reserve has ceased to be a Hazardous Waste Remediation Reserve by reason of subsection (e). Notwithstanding the preceding sentence, any such Reserve shall be subject to the taxes imposed by section 511 (relating to imposition of tax on unrelated business income of charitable, etc. organizations). (3)

Contributions to Reserve

The Reserve shall not accept any payments (or other amounts) other than payments with respect to which a deduction is allowable under subsection (a). (4)

Use of Reserve

The Reserve shall be used exclusively to pay the qualified hazardous waste costs of the taxpayer. (5)

Prohibitions against self-dealing

Under regulations prescribed by the Secretary, for purposes of section 4951 (and so much of this title as relates to such section), the Reserve shall be treated in the same manner as a trust described in section 501(c)(21). (e)

Deemed distributions

(1)

Disqualification of Reserve for self-dealing

In any case in which a Reserve violates any provision of this section or section 4951, the Secretary may disqualify such Reserve from the application of this section. In any case to which this paragraph applies, the Reserve shall be treated as having distributed all of its funds on the date such determination takes effect. (2)

Failure to spend funds

A Reserve shall be treated as having distributed all of its funds— (A)on the date which is 10 years after the date such Reserve was established unless, as of such date— (i)it has been determined that some property of the taxpayer is contaminated with hazardous waste, and (ii)a remediation plan has been prepared for such site, and (B)except as otherwise provided by the Secretary, on the date which is 10 years after the date such Reserve was established unless, as of such date, it is reasonably anticipated that the remaining funds in the Reserve will be distributed before the date which is 15 years after the date such Reserve was established. (f)

Penalty for distributions not used for qualified hazardous waste costs

The tax imposed by this chapter for any taxable year in which any amount distributed from a Reserve is not used exclusively to pay qualified hazardous waste costs shall be increased by 10 percent of such amount. (g)

Qualified hazardous waste costs

For purposes of this section, the term qualified hazardous waste costs means— (1)the costs paid or incurred by the taxpayer in connection with the assessment of— (A)the extent of the environmental contamination of a site which is owned by the taxpayer, and (B)the expected cost of environmental remediation required for such site, and (2)the costs paid or incurred by the taxpayer to remediate such contamination. (h)

Controlled groups

All persons treated as a single employer under subsection (a) or (b) of section 52 shall be treated as one person for purposes of subsection (b), and the dollar amount contained in such subsection shall be allocated among such persons in such manner as the Secretary shall prescribe. (i)

Time when payments deemed made

For purposes of this section, a taxpayer shall be deemed to have made a payment to the Reserve on the last day of a taxable year if such payment is made on account of such taxable year and is made within 21/2 months after the close of such taxable year.

(b)

Clerical amendment

The table of sections for subpart C of part II of subchapter E of chapter 1 of such Code is amended by inserting after the item relating to section 468B the following new item:

Sec. 468C. Special rules for hazardous waste remediation reserves

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.