IRS issues guidance on Section 45, Section 48 tax credits

By Erin Voegele | March 18, 2015

On March 11, the Internal Revenue Service published guidance pertaining to the Section 45 Production Tax Credit and Section 48 Investment Tax Credit.

Within the notice, the IRS explains that legislation signed into law in late 2014 extended by one year the date by which construction of a qualified renewable energy facility must begin in order to qualify for the PTC or the ITC in lieu of the PTC. Qualified facilities that began construction before Jan. 1, 2015 are currently eligible for the credits.

“This notice updates the guidance provided in Notice 2013-29, 2013-1 C.B. 1085, Notice 2013-60, 2013-2 C.B. 431, and Notice 2014-46, 2014-36 I.R.B. 520 (collectively “the prior IRS notices”) consistent with this statutory extension,” said the IRS in the March 11 notice.

The notice also explains that prior IRS guidance has indicated that a taxpayer must establish the beginning of construction by either starting physical work of a significant nature or paying or incurring 5 percent or more of the total cost of the facility. Both methods require that the taxpayer make continuous progress towards completion once construction has begun. Prior guidance specified that if the facility was placed in service before Jan. 1, 2016, the facility would be considered to satisfy the continuous construction test. That placed in service date has now been extended to Jan. 1, 2017.

A full copy of the notice can be downloaded from the IRS website