Are You Continuing Construction? IRS Issues Fourth Renewable Energy Tax Credit Beginning of Construction Notice (JD Supra)
On March 11, 2015, the U.S. Internal Revenue Service (IRS) issued Notice 2015-25, which provides further guidance to assist renewable energy facility developers and investors in evaluating whether such facilities satisfied the beginning of construction requirement for the renewable energy section 45 production tax credit (PTC) and the section 48 investment tax credit (ITC) in lieu of PTC. The beginning of construction requirement applies to wind, landfill gas, hydropower, geothermal and certain other renewable energy facilities, but not to solar energy facilities.
This latest guidance provides some additional certainty for renewable energy project developers and investors regarding tax credit eligibility by extending the continuous construction and continuous efforts safe harbor by one year: if a taxpayer begins construction on a qualified facility prior to January 1, 2015, and places the facility in service before January 1, 2017, the facility will be treated as satisfying the continuous construction/continuous efforts requirements “regardless of the amount of physical work performed or the amount of costs paid or incurred with respect to the facility after December 31, 2014 and before January 1, 2017.” Qualified facilities not placed in service before January 1, 2017, remain subject to a “facts and circumstances” analysis in regard to the continuous construction/continuous efforts requirements.
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