Safe Harbor for Renewable Energy Projects; The Internal Revenue Service (IRS) and the U.S. Department of the Treasury announced relief for those taxpayers who are involved in developing renewable energy projects in any part of the United States. As per the details of safe harbor for renewable energy projects, taxpayers developing renewable energy projects and producing electricity from sources such as wind, geothermal, biomass, landfill gas, trash, hydropower, etc can get relief from the government. Not only this, those taxpayers can also avail safe harbor who are using technologies such as solar panels, microturbines, fuel cells, as well as combined heat and power systems.
Safe Harbor for Renewable Energy Projects
The Internal Revenue Service (IRS) fully understands that Coronavirus (COVID-19) pandemic has affected almost every sector of the industry. Not only this, the supply chain for important components has also been delayed that are required for the completion of renewable energy projects. Therefore, the IRS has issued Notice 2020-41 (Extension of Continuity Safe Harbor to Address Delays Related to COVID-19) to provide tax relief to affected taxpayers in the form of important tax credits.
In the four year “Continuity Safe Harbor” provided in the existing guidance, the IRS Notice 2020-41 adds an extra year to it in case of certain projects that began construction in 2016 or 2017. Construction will be considered ‘continuous’, if these projects are placed in service in five years.
Along with it, the IRS Notice 2020-41 also provides safe harbor for renewable energy projects to those taxpayers who started construction by incurring 5 percent of project costs, and made payments for services or property and practically expected to get such services or property within 3½ months. Under economic performance rules, these taxpayers are deemed incurred. The Notice further specifies that if the taxpayers receive such services or property by October 15, 2020, their anticipations are considered reasonable at the time of the 2019 payment.
The IRS Notice 2020-41 extends the Continuity Safe Harbor and provides a 3½ Month Safe Harbor in order to facilitate taxpayers. Not only this, safe harbor for renewable energy projects satisfies the commencement of construction requirements in addition to limiting the impact of COVID-19-related delays on the ability to claim tax credits.
Apart from other Coronavirus Tax Credits for Businesses, the IRS has also provided safe harbor on carbon capture credits in USA. You can call us now to get further assistance regarding tax relief for businesses affected by the COVID-19 pandemic as well as safe harbor for renewable energy projects.