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Companies can reap substantial tax benefits by protecting the environment. Property tax exemptions are offered in many states for water, ground, or air pollution abatement.
 

Water pollution abatement is normally equated with waste treatment since it implies that the water is initially polluted before it is treated. Air and ground pollution abatement are more preventive, keeping the pollutants from getting into the environment.

How is the Exemption Applied?

More than 20 states provide some form of personal property tax exemption at the state level and a few also grant exemptions at the local level. (See chart.)

The exemptions may be solely for machinery and equipment (tangible personal property) which is used to prevent or abate pollution. Some states, particularly those that don’t impose a personal property tax, may grant the exemption against real estate taxes. This is a logical result where the pollution control facilities, as in the case of water treatment plants, require the dedication of real estate to create treatment ponds. Some states and localities also grant exemptions for pollution control from income, as well as sales & use taxes.

In most states, the equipment or facility must be used “primarily” for pollution control purposes to receive a tax exemption. A few states, Wisconsin among them, require that the property be used “solely” or exclusively for pollution control. Other states allow proration of the cost between pollution and non-pollution purposes, with the former being exempt.

What POER Provides

Most pollution control equipment must be certified by a state agency at the time of installation before you can claim it as exempt on your tax returns and renditions. The application process is fairly detailed and requires a lot of paperwork and pictures to document the claim. POER provides these services to our clients. Companies with concerns about the proprietary or confidential nature of their processes may choose to take their own pictures. Our consultants help ensure that the proper types of photographs are submitted to qualify for tax exemptions. We, as a matter of course, enter into confidentiality agreements with all of our clients who request them, but you should also protect against potential disclosure by the regulating authority to third parties.

Our inventory services team always seeks to identify components of our clients’ processes that may qualify for pollution control benefits. Frequently, the overall process may not qualify but a smaller segment of the process, which may have originally been bundled by a supplier into the cost of the whole, may qualify for exemption. We make every effort to identify those smaller segments and to submit them for approval by the state regulatory agency. In several cases, we have significantly increased our clients’ tax exemptions by unearthing these otherwise subsumed expenditures.