MASSPORT: Ports: About the Port: Tax Credit Info

Tax Credit Info

Background
The Harbor Maintenance Tax (HMT) was created as a "fee" under the Water Resources Development Act of 1986. It is an ad valorem (value) tax assessed on goods imported and exported through most U.S. seaports. Specifically, the tax is assessed in all U.S. seaports which receive federal funding for maintenance dredging by the U.S. Army Corps of Engineers (unless exempted). In 1997, the U.S. Supreme Court struck down the Harbor Maintenance Fee on exports as unconstitutional. The HMT on imports is currently in force.

The tax is assessed at 0.125% of the value of goods ($1.25 per $1,000). The funds are accumulated in the Harbor Maintenance Tax Trust Fund for disbursement to the Army Corps of Engineers for dredging projects in qualifying U.S. ports.

Impacts On Boston
The HMT is a particular burden for the Port of Boston. As the closest major port to Canada, many New England shippers choose to pay additional trucking charges in order to route cargo via the Port of Montreal, where no HMT is assessed.

Boston’s imports are typically of higher value than those at other U.S. ports. The HMT burden per container is correspondingly greater on goods coming through the Port of Boston than at most other U.S. ports, creating additional incentive for diverting shipments through Canada.

The Massachusetts Harbor Maintenance Tax Credit
On August 9, 1996, Governor Weld signed into law a measure entitled, "An Act Relative to Credit for Harbor Maintenance Taxes Paid" (HMTC). Passage of this law will enable the state to offer a dollar-for-dollar tax credit to corporations that pay the HMT on goods moving through Massachusetts ports. The credit can be applied against current and future taxes paid in the Commonwealth.

The HMTC is subject to the following limitations:

The credit is applicable for cargo shipped on or after July 31, 1996.

HMTC applies only to corporate taxes paid to Massachusetts.

HMTC applies only to containerized and break-bulk cargo and vehicle shipments.

Cargo must be carried on sea and ocean-going vessels through Massachusetts ports.

The credit does not apply to the shipment of bulk cargo or passengers.

The credit applies to HMT assessments made on cargo only relative to their unloading at a Massachusetts port.
Break-bulk cargo is defined in the bill as "general goods, commodities or wares which are customarily shipped in boxed, bagged, crated or unitized form, held in the vessel’s general holding areas, and handled by the piece, unit or in separate lots: without limiting the generality of the foregoing definition of break-bulk cargo, that term shall include road motor vehicles and other odd-size cargo, but shall not include containerized cargo or bulk cargo."

Enforcement
The Massachusetts Department of Revenue has developed regulations pertaining to the new law.

Companies wishing to take advantage of HMTC should maintain careful records of HMT fees paid on or after July 31, 1996 and be prepared to show proof that the shipment went by waterborne means through an eligible Massachusetts port.

For further information on HMTC call the Massachusetts Department of Revenue at (617) 626-3250.

This document was prepared by the Massachusetts Port Authority in consultation with state and federal agencies, as a guideline for potential HMTC users. Massport makes no representations as to the accuracy of the information contained herein. Massport recommends that claimants verify the permissibility of claims with the Massachusetts Department of Revenue.