IRS announces $150M Tax Credit Under Section 48C Phase II for Taxpayers with Qualifying Advanced Energy Projects

The IRS Released Notice 2013-12 on February 7 announcing Phase II of the qualifying advanced energy project program under Section 48C.  The credit was created as part of the  American Recovery and Reinvestment Act of 2009.  The credit is for qualified tangible personal property placed in service at manufacturing facilities that are “qualifying advanced energy projects.” The federal credit is equal to 30 percent of qualified property placed in service. A qualifying advanced energy project is a project that re-equips, expands or establishes a manufacturing facility for the production of property that is used in the production of certain renewable energy, advanced battery technology, property used in electric grids to support and store renewable energy, and certain other property used in green technologies.

Phase I was administered under Notice 2009-72 which required taxpayers to receive a certification from the IRS that they have a qualifying advanced energy project before they claim the credit on their respective federal tax return.  The government awarded $2.3 billion in January 2010 under the program.  Section 48C(d)(4) of the statue required the Treasury to review the allocation of the credits no later than the date that is 4 years after the date of enactment of Section 48C.  The IRS had completed its required review and determine that the government will re-allocate $150 million in Phase II.  The amount of the qualified investment that is eligible for the credit with respect to any project is limited to $100 million with the maximum amount of credits allocated per project at $30 million.  Applications have to be in by July 23, 2013 under the terms of Notice 2013-12.  We would advise eligible taxpayers to start preparing for the application process early, since a finite amount of funds are available for disbursement and applications for those funds likely will be competitive.

Todd B. Reinstein, Esq.

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