A bipartisan group of senators today urged the Internal Revenue Service and Treasury Department to quickly clarify how they will determine when companies become eligible for an expanded renewable tax credit.
As part of January’s “fiscal cliff” deal, Congress agreed to apply the production or investment tax credits to wind, geothermal and other projects that begin construction by the end of this year, a more generous application than the previous requirement that projects be in service by the deadline. But industry officials are awaiting guidance from Treasury and IRS on how the begin-construction requirement will be implemented.
“The new iteration of the PTC and ITC will allow the United States to continue to diversify its energy portfolio through new generation from clean energy sources. However, a lack of clear IRS guidance regarding the construction threshold and criteria necessary to claim the incentives may soon result in uncertainty among potential investors,” Sens. Michael Bennet (D-Colo.), Jerry Moran (R-Kan.) and 15 other senators wrote in a letter to Treasury and the IRS today.
Industry sources have said they expect the Treasury guidance, which could come as soon as this month, to closely track with the requirements around the “1603″ clean energy grant program established in the 2009 stimulus law. That program included a similar begin-construction eligibility trigger, and companies were allowed to achieve “safe harbor” status enshrining their eligibility once 5 percent of a project’s projected costs had been spent.
The senators seem to endorse that approach for the tax credit guidance in their letter today.
“Including key features from prior guidance on the commence construction criteria may help expedite the process and avoid any prolonged delays in investment that might result from significantly revised rules,” they write.
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