Tax – Page 3 – Global Power Law & Policy

Senate Finance Committee Releases New technology-neutral Energy Credits Legislation

May 05 2017

By Elizabeth C. Crouse and Mary Burke Baker

On Thursday, Senator Ron Wyden (D-OR), ranking member of the Senate Finance Committee, released new technology-neutral energy credits legislation that would revolutionize the existing Investment Tax Credit and Production Tax Credit provisions. The legislation features a graduated credit rate schedule based on the level of carbon emissions as compared to a carbon emissions baseline (keyed to “current” national average carbon emissions) that would be available without regard to technology or energy input. In a move that is consistent with cutting-edge energy innovations and responsive to the needs and concerns of many large power consumers and utilities, the credits would expressly be available for energy storage and carbon capture technology installed at power plants placed in service before January 1, 2019. Energy storage would include hydroelectric pumped storage, thermal storage, fuel cells, and–crucially–batteries, among others. Under Wyden’s legislation, the maximum credit rates would be 30% for the ITC and, for the PTC, 2.3 cents per kilowatt hour of electricity produced. In addition, the PATH Act “sunset” provisions on the PTC and ITC would be repealed and the proposal would temporarily extend other energy provisions during a transition period.

The proposed legislation would also create a technology-neutral clean fuel production credit, homeowner versions of the ITC, performance-based incentives for energy efficiency improvements to residential and commercial buildings, and clean energy bonds generally based on existing government bonds frameworks.

Although there are differences of opinion in the Congress on whether the tax code should offer energy incentives, Sen. Wyden’s proposal could come into play this year either as part of tax reform or the infrastructure debate. Senate Democrats recently released a blueprint for infrastructure that includes technology neutral energy reform.

Members of the K&L Gates LLP policy group are closely monitoring this and other tax and energy regulatory reform matters.

New Treasury Guidance Significantly Expands Field of Renewable Energy Projects That May Qualify for the PTC or ITC

May 25 2016

On May 5, the U.S. Treasury Department released Notice 2016-31 to address certain changes made to the Production Tax Credit (“PTC”) and Investment Tax Credit (“ITC”) in the Protecting Americans from Tax Hikes (“PATH”) Act of 2015, Pub. L. No. 114-113, Div. Q. The Notice generally extends the application of the “beginning of construction” and “continuous construction” requirements set forth in Notices 2013-29, 2013-60, 2014-46, and 2015-25, and also favorably modifies several key factors of both requirements. In addition, on May 18, the U.S. Treasury Department released a revised version of Notice 2016-31, which states that the provisions of Notice 2016-31 apply to any project for which a taxpayer claims the PTC or, via Code Section 48(a)(5), the ITC, that is placed in service after January 2, 2013.

Treasury Department Issues New Guidance on PTC and ITC

May 05 2016

Earlier today, May 5, the U.S. Treasury Department released Notice 2016-31 to address certain changes made to the Production Tax Credit (“PTC”) and Investment Tax Credit (“ITC”) in the Protecting Americans from Tax Hikes (“PATH”) Act of 2015, Pub. L. No. 114-113, Div. Q. The Notice generally extends the application of the “beginning of construction” and “continuous construction” requirements set forth in Notices 2013-29, 2013-60, 2014-46, and 2015-25, but also creates a few new provisions that apply to renewable energy projects seeking the PTC or ITC after the PATH Act revisions to the Internal Revenue Code.

Winds of Change for Alternative Energy Tax Incentives in 2016

Jan 21 2016

Congress has some unfinished business on alternative energy policy, which may provide unusual legislative opportunities in an election year. While tax credits for wind and solar power received long-term extensions in the year-end omnibus legislation enacted at the end of 2015, other types of alternative energy were left out — reports have suggested unintentionally — spurring some in Congress to seek a remedy in 2016. Additionally, the Department of the Treasury (“Treasury”) and the Internal Revenue Service (IRS) initiated a rulemaking process to further define and clarify the types of property qualifying for the investment tax credit (ITC) under section 48 of the Tax Code. These developments, along with ongoing congressional interest in comprehensive energy policy legislation, could make 2016 a pivotal year for stakeholders in the alternative energy industry.

Read the full alert on K&L Gates HUB

North Carolina General Assembly Active on Renewable Energy Issues in 2015 Long Session

May 13 2015

Two bills with significant renewable energy provisions were among those that survived the North Carolina General Assembly’s self-imposed “crossover” deadline of April 30, 2015. Most substantive bills must pass at least one house of the legislature before the crossover deadline in order to remain eligible for consideration in the 2015-16 legislative biennium. However, some bills and portions of bills that do not make crossover can still be included in the budget or as amendments to bills that did beat the deadline.

The two energy bills that made it through crossover provide for (i) a very limited extension of North Carolina’s renewable energy tax credit, and (ii) a reduction of the only mandatory renewable energy portfolio standard in the southeast. The bill providing for a limited extension of the state renewable energy tax credit was signed into law by Governor Pat McCrory and went into effect immediately. The portfolio standard reduction has passed the House and is being debated in the Senate as of this writing. Both bills are described in this alert.

To read the full alert, click here.

IRS Releases New Guidance on Small Wind Turbine Projects

Jan 15 2015

On January 13, 2015,, the Internal Revenue Service (IRS) released Notice 2015-4, which provides new guidance on the small wind energy project credit under Section 48 of the Internal Revenue Code (IRC). In particular, the guidance provides that small wind energy projects must meet certain performance and quality standards to qualify for the credit. The official notice is scheduled to be published on January 26 in Internal Revenue Bulletin 2015-4.

Notice 2015-4 provides that Section 48-eligible property must use a wind turbine that has a nameplate capacity of not more than 100 kW and meets the performance and quality standards as set forth in either:

(1) American Wind Energy Association (AWEA) Small Wind Turbine Performance and Safety Standard 9.1-2009; or

(2) International Electrotechnical Commission (IEC) 61400-1, 61400-12, and 61400-11.

Small wind turbines must meet the AWEA or IEC standards that are in effect at the time of acquisition of the turbine.

The manufacturer of the turbine may provide a taxpayer with a certification that the manufacturer’s turbine meets one of the standards listed above, and taxpayers may rely on such certifications when claiming the credit under Section 48. However, manufacturers should be aware that issuing erroneous certifications or failing to satisfy certain documentation requirements could trigger penalties under IRC Section 7206 (fraud and making false statements) or IRC Section 6701 (aiding and abetting an understatement of tax liability).

Notice 2015-4 is effective for small wind energy property acquired or placed in service after January 26, 2015.

House Tax Extenders Package Would Renew the Wind PTC and Other Energy Provisions

Dec 03 2014

Congress is poised to enact a one-year retroactive tax extenders package that would renew a variety of tax incentives—including the production tax credit (PTC) for wind—through the end of 2014. On Wednesday, December 3, the House passed the Tax Increase Prevention Act of 2014 (H.R. 5771) by a vote of 378-46, sending the bill to the Senate for its consideration before the end of the Lame Duck session. Read More

Renewable Energy Tax Incentives At Risk in Lame Duck

Nov 11 2014

Tax incentives for renewable energy could be at serious risk in Congress’ upcoming lame duck session. Reports indicate that Senator Pat Toomey (R-PA) and other conservatives plan to try to block renewable incentives from being included in a year-end “tax extenders” package. Read More

Blumenauer Introduces Energy Tax Extenders Bill, Includes a Sought-After Amendment for Solar

Sep 24 2014

On Thursday, September 18, Rep. Earl Blumenauer (D-OR) led a group of 18 House Democrats in introducing the Bridge to a Clean Energy Future Act of 2014 (H.R. 5559). The bill would extend several energy tax incentives—many of which Congress allowed to expire at the end of 2013—through the end of 2015. The bill would also extend the production tax credit (PTC), as well as the election to receive an investment tax credit (ITC) in lieu of the PTC, for facilities producing energy from renewable resources through the end of 2016. Read More

IRS Attempts to Clear the Air with Additional Guidance on Renewable Energy Tax Credits

Aug 14 2014

On August 8, 2014, the IRS issued Notice 2014-46, which provides guidance on several issues relating to the implementation of recent changes to the renewable electricity production tax credit (PTC) under Section 45 of the Tax Code and the energy investment tax credit (ITC) in lieu of the PTC under Section 48. In particular, the Notice addresses the manner in which taxpayers can satisfy the “physical work” test and the effect of various types of transfers of ownership after the construction of a facility has begun. In addition, the Notice modifies the 5% safe harbor test included in previous notices. In light of the issuance of the Notice, the IRS says it will not issue private letter rulings on the topics addressed in the Notice.

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