Section 48C was enacted as a provision of the American Recovery and Reinvestment Act of 2009, to provide an “advance energy project” tax credit of 30% of an investment in domestic, clean energy and energy-efficiency manufacturing facilities.
According to a related Treasury Department release (February 7, 2013), the program supports investment in facilities that manufacture a range of clean energy products, from renewable energy equipment to energy-efficiency products to advanced energy storage and carbon capture technology. A full list of eligible projects is included in an Energy Department fact sheet.
The tax credit is competitively allocated and awarded to projects that have been certified by the IRS in consultation with the Energy Department. Section 48C(d)(3) provides a list of required selection criteria: commercial viability, domestic job creation, technological innovation, speed to project completion, levelized cost of generated or stored energy, and potential for reducing air pollution and greenhouse gas emissions. Today’s Treasury release lists additional factors considered including diversity of geography, technology, project size, and regional economic development.
The tax credit can only be claimed in the tax year in which the certified qualifying project is placed in service. Section 48C(d) (2)(C) requires awardees to place-in-service their qualifying project within three-years of being certified, to receive the credit. If awardees fail to place-in-service their qualifying project by the end of the three-year period, their certification is automatically invalidated, and the credit can no longer be claimed.
The initial round (Phase I) provided $2.3 billion in credits to 183 projects across the country. Section 48C(d)(4) mandated a review of the credits provided under Phase I. The IRS recently completed this review and determined that $150 million of Phase I credits were not used by the respective awardees. Section 48C(d)(4) authorizes the reallocation and award of these unused credits.
Today’s notice announces a second round of the 48C program (Phase II), under which $150 million in tax credits are being made available because they were not used by the previous awardees under Phase I.
Notice 2013-12 [PDF 408 KB]—
- Reports the results of the statutorily mandated review of Phase I
- Establishes a second round (Phase II) of the qualifying advanced energy project program to distribute the section 48C credits that are available for re-allocation
- Sets an April 9, 2013 deadline for submission of a concept paper for Energy Department consideration
- Sets a July 23, 2013 deadline for submission of section 48C certification applications (if invited to apply by the Energy Department)
- States that by November 15, 2013, the IRS will provide acceptance or rejection letters to those taxpayers that timely submitted their concept paper and section 48C certification application; if accepted, the letter will state the amount of the credit allocated to the project
- Provides that the amount of the qualified investment eligible for the credit with respect to any project is limited to $100 million—accordingly, the maximum amount of credit allocated per project will be $30 million
For more information, contact a tax professional with KPMG’s Washington National Tax practice: