IRS offers COVID-19 tax relief for renewable energy projects

By Erin Voegele | May 28, 2020

The U.S. Treasury Department and Internal Revenue Service on May 27 issued a notice providing tax relief for renewable energy projects that have been delayed due to market impacts caused by the COVID-19 pandemic.  

“Because COVID-19 has caused industry-wide delays in the supply chain for components needed to complete renewable energy projects otherwise eligible for important tax credits the IRS has issued Notice 2020-41 to provide tax relief to affected taxpayers,” the agency said in a press release.

Notice 2020-41 modifies prior IRS notices addressing the beginning of construction requirement for both the section 45 and section 48 tax credits. “In response to the [COVID-19] pandemic, this notice provides that the continuity safe harbor provided and extended by the prior IRS notices is further extended for projects that began construction in either 2016 or 2017,” the IRS said in the notice, noting it also provides a three-and-a-half month safe harbor for services or property paid for by the taxpayer on or after Sept. 16, 2019 and received by Oct. 15, 2020.

The notice applies to renewable energy projects that are under development to produce electricity from sources such as biomass, landfill, trash, wind, geothermal and hydropower, and use technologies such as solar panels, fuel cells, microturbines, and combined-heat-and-power (CHP) systems.

The IRS said the notice 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.”

A full copy of the guidance can be downloaded from the IRS website.