US Treasury Releases ARRA Guidelines on Grants in Lieu of Tax Credits


In a move that will surely provide an additional boost for the alternative energy industry, and perhaps T. Boone Pickens‘ plan, the US Department of Treasury has finally released guidelines for claiming the grants instead of the federal tax credit. Applications will be submitted online. However, the Treasury will not be accepting applications at this time.

The American Recovery and Reinvestment Act passed in February allowed for business taxpayers to apply for direct payments instead of claiming a tax credit on their income tax return. This applied to the credit under Internal Revenue Code (“IRC”) Section 45 (Energy Produced for Certain Renewable Resources) and IRC Section 48 (Energy Credit). Property that applies to this includes geothermal, biomass, micro wind turbines, and solar amongst others.

While the guidelines and terms and conditions are too numerous to mention, here are a few highlights:

The grants apply to property which is “placed in service” during 2009 and 2010. The grant is also available to property, which is placed in service after 2010 where construction began in 2009 of 2010 so long as the application is submitted before October 1, 2011.

Once the completed application is submitted to the IRS, the IRS will make a payment to qualified applicants within 60 days. However, the IRS will only make a final determination and payment if the property is placed into service. You can send an application in early, but you will have to provide supplemental information to the Treasury within 90 days after the property was placed into service.

Lessees of qualified property can also claim the grant, however the lessor must expressly disclaim any rights to the grant and the applicable federal tax credits.

Supporting documentation such as final engineering design documents stamped by a licensed professional engineer and other specified documentation is required. If the cost basis of the property exceeds $500,000, an independent accountant’s certification attesting the accuracy of all costs claimed as part of the basis must be submitted.

REIT’s are eligible to receive the grants as long as they meet other requirements set forth by the Department of Treasury.

In addition to the application procedures, those who ultimately qualify and obtain the grant monies must file an annual project performance report.

The full terms and conditions, guidance, and sample application are available at the Department of Treasury.

[photo credit: flickr]

About Author

Walter’s contributions to CleanTechies over the past 4 years have been instrumental in growing the publications social media channels via his ongoing editorial and data driven strategies. He is the founder and managing director of Sunflower Tax, a renewable energy tax and finance consultancy based in San Diego, California. Active in the San Diego clean technology community, participating in events sponsored by CleanTech San Diego, EcoTopics, and Cleantech Open San Diego, Walter has also been a presenter at numerous California Center for Sustainability (CCSE) programs. He currently serves as an adjunct professor at the University of San Diego School of Law where he teaches a course on energy taxation and policy.

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