IRS releases additional "start of construction" guidance for PTC/ITC

IRS releases additional “start of construction” guidance for PTC/ITC

Two weeks ago we shared with you insights from a key Treasury Department official who spoke at AWEA’s Wind Energy Finance & Investment Seminar in New York about qualifying wind energy projects as under construction by the end of this year to qualify for the Production Tax Credit (PTC) or the Investment Tax Credit (ITC). 

Late Friday, Sept. 20, the IRS issued Notice 2013-60, a short guidance document that supplements its previous Notice 2013-29 and provides important clarifications on a few key issues:                                    

The notice provides a “continuous construction/continuous efforts” safe harbor, whereby a project placed in service by January 1, 2016, will be deemed to have satisfied the CC/CE requirement (see page 4). This removes the ambiguity about what activities specifically qualify toward CC/CE and what documentation is expected to demonstrate it. Eligibility of projects placed in service after that date will be decided by the relevant facts and circumstances of the individual project. A project will still have to satisfy the physical construction or 5% safe harbor requirements by the end of this year.

The notice also clarifies that transfer of ownership of a facility after construction has begun is allowed, and "will not prevent a facility from qualifying for the PTC or ITC.” (See page 5)

Finally, the guidance clarifies thatthe master contract language applies to the safe harbor and not just the physical construction eligibility option. (Also see page 5)

For audio of IRS official Christopher Kelley’s remarks earlier this month in New York, listen here.