President Obama Signs Consolidated Appropriations Act

Renewable Energy Industry Seeks Additional Energy Credit Clarifications

On December 18, 2015, President Barack Obama signed into law the Consolidated Appropriations Act, 2016 (H.R. 2029) (the Act). The Act includes multi-year extensions of the Production Tax Credit (the PTC) under Internal Revenue Code (IRC) Section 45 and the Investment Tax Credit (the ITC) under IRC Section 48 for wind and solar projects—both of which are gradually phased out. The Act, however, did not extend the ITC for other types of renewable energy property, including fuel cell power plants, stationary microturbine power plants, small wind energy property, combined heat and power system property, and geothermal heat pump property. Read further discussion of the Act’s extension of renewable energy tax incentives.

Congressional leaders have indicated that this omission was an oversight. On December 18, Senate Minority Leader Harry Reid (D-NV) acknowledged the mistake, noting that the Act:

[I]nadvertently only extends the credit for solar energy technologies, rather than all of the technologies currently eligible to receive the credit.  The intention of the agreement that I reached with the majority leader was to extend the section 48 Investment Tax Credit for all of the eligible technologies for 5 years and to treat each technology eligible for a 30 percent credit the same with respect to a phase down in the years 2020 and 2021. The permanent 10 percent credit for eligible technologies under section 48 will remain in place. The majority leader and I hope to address this early next year.

161 Cong. Rec. S8850 (daily ed., Dec. 18, 2016). House Minority Leader Nancy Pelosi (D-CA) made a similar comment in a press conference following the vote.

Currently the renewable energy industry is seeking to correct the mistake and to extend the credits to all presently creditable renewable activities. As developments occur, we will update this blog.

McDermott Will & Emery

Heather Cooper
Heather Cooper works on federal income tax matters, with a focus on energy tax issues. She represents clients in restructurings, mergers and acquisitions, and other transactional energy related matters. Heather's national practice includes advising on all aspects of renewable energy transactions such as solar and wind projects. She provides advice on tax equity structures, refinancings, acquisitions and dispositions, restructurings and workouts. Read Heather Cooper's full bio.

Kevin Spencer
Kevin Spencer focuses his practice on tax controversy issues. Kevin represents clients in complicated tax disputes in court and before the Internal Revenue Service (IRS) at the IRS Appeals and Examination divisions. In addition to his tax controversy practice, Kevin has broad experience advising clients on various tax issues, including tax accounting, employment and reasonable compensation, civil and criminal tax penalties, IRS procedures, reportable transactions and tax shelters, renewable energy, state and local tax, and private client matters. After earning his Master of Tax degree, Kevin had the privilege to clerk for the Honorable Robert P. Ruwe on the US Tax Court. Read Kevin Spencer's full bio.

Philip Tingle
Philip (Phil) Tingle represents energy companies such as utilities, independent power producers and financial institutions on a wide range of energy tax-related matters. He is the global head of the Firm's Energy Advisory Practice Group. Phil provides advice regarding all aspects of renewable-energy projects, including tax equity structures, refinancings, acquisitions and dispositions, restructurings and workouts. He has extensive experience with the production tax credit and with the application of renewable credits to new technologies. Moreover, he works with the investment tax credit for numerous kinds of solar projects. Read Philip Tingle's full bio.




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