The IRS has provided tax relief to taxpayers that develop renewable energy projects that produce electricity from sources such as wind, biomass, geothermal, landfill gas, trash, and hydropower, and use technologies such as solar panels, fuel cells, microturbines, and combined heat and power systems. The guidance provides an extension to the safe harbors and addresses the beginning of construction requirement for both the production tax credit for renewable energy facilities and the investment tax credit for energy property. COVID-19 has caused industry-wide delays in the supply chain for components needed to complete renewable energy projects.
Extension of safe harbors. For qualified facility or energy property projects that began construction in 2016 or 2017, an extra year is added to the four-year “continuity safe harbor” provided in existing guidance, such that if these projects are placed in service in five years construction will be deemed continuous. The guidance also provides a 3½ month safe harbor for services or property paid for by the taxpayer on or after September 16, 2019, and received by October 15, 2020.
By extending the continuity safe harbor and providing a 3½ month safe harbor, the guidance will provide flexibility for taxpayers to satisfy the beginning of construction requirements and limit the impact of COVID-19 related delays on the ability to claim tax credits.
Please contact us for assistance on the impact of the relief granted on the extended safe harbors and review your eligibility to claim the energy production or investment tax credits.
Venkat Iyer. CPA(USA). CPA(Canada). MBA
Venkat holds a CPA credential both in the USA and Canada, and he is very proficient in tax and compliance requirements in both countries. He is a Seasoned Business Adviser with 18+ years of extensive experience in diversified industries and accounting firms.He is also very prominent in implementing Lean Principles and Strong Financial Foundations for Hotels and Restaurants. He believes the key to any business success is knowing their indicators and their impact. He has been helping businesses with predictive analytics, transforming data from their enterprise's system for delivering meaningful insights.He is also a Business Automation Expert helping streamline the workflows from marketing to management to ensure optimal business performance.