On July 1, 2021, the US Internal Revenue Service released Revenue Ruling 2021-13 (the “Ruling”), which provides additional guidance on the definition of “carbon capture equipment” for purposes of the carbon capture tax credit under Section 45Q of the Internal Revenue Code of 1986, as amended. The Ruling also clarifies that a taxpayer need not own every piece of equipment within a single process train in order to claim the tax credit so long as the taxpayer owns at least one component. In addition, the Ruling provides helpful guidance on determining the placed-in-service date of the single process train for purposes of Section 45Q. Continue Reading IRS Ruling Provides Guidance on Carbon Capture Equipment and Section 45Q Credit

On June 29, 2021, the US Internal Revenue Service (the “IRS”) released Notice 2021-41, extending and enhancing previous relief given by the IRS pursuant to Notice 2020-41 on the start-of-construction rules for the production tax credit and energy investment tax credit. The new notice extends the continuity safe harbor for projects that began construction in calendar years 2016 through 2020 and relaxes the continuity requirement for projects that do not satisfy the continuity safe harbor.

Continue Reading IRS Extends Start-of-Construction Relief for Renewables in Light of Continuing Effects of COVID-19

Section 30D of the US Internal Revenue Code (“IRC”) provides business and individual taxpayers that purchase new qualified plug-in electric drive motor vehicles (“EVs”), including passenger vehicles and light trucks, with a nonrefundable tax credit. Section 30C of the IRC provides a nonrefundable investment tax credit equal to 30 percent of the cost of alternative fuel vehicle refueling property, which includes EV charging stations and hydrogen refueling stations. There are currently three primary proposals under discussion in Washington that could materially change these federal income tax credits. This Legal Update compares key aspects of these proposals. The three proposals are the Biden Administration FY 2022 Budget, the GREEN Act and the Clean Energy for America Act.

Continue Reading Electric Vehicle and Charging Station Tax Credits: Assessing Proposed Changes

On May 24, 2021, the US Internal Revenue Service (IRS) released Notice 2021-32, which provides the inflation-adjustment factors and reference prices for the calculation of renewable electricity production tax credits (PTCs) under Internal Revenue Code (IRC) section 45 for calendar year 2021.

The notice provides that the PTC for electricity produced from wind, as well as closed-loop biomass and geothermal energy, remained unchanged from 2020 at 2.5 cents per kWh for 2021. The notice also includes the PTC amounts for electricity produced from other qualified energy resources. Specifically, the PTC for electricity produced from open-loop biomass, landfill gas, trash, qualified hydropower, and marine and hydrokinetic resources also remained unchanged at 1.3 cents per kWh for 2021. However, the PTC for refined coal increased from $7.301 per ton for 2020 to $7.384 for 2021.

IRC section 45 provides the PTC for any taxable year in the amount of 1.5 cents per kWh of electricity produced by a taxpayer from a qualified facility using wind or closed-loop biomass and sold to an unrelated person during the 10-year period beginning on the date on which the facility is originally placed in service. The credit amount is reduced by one-half for electricity produced from a qualified facility using open-loop biomass, landfill gas, trash, qualified hydropower, and marine and hydrokinetic resources.

IRC section 45 also provides the PTC in the amount of $4.375 per ton of qualified refined coal produced by a taxpayer from a qualified facility and sold to an unrelated person during the 10-year period beginning on the date in which the facility is originally placed in service.

IRC section 45 provides that the 1.5 cent amount and $4.375 amount are to be adjusted annually for inflation.