Treasury is working on an April request by bipartisan leaders of the Senate Finance Committee to extend current safe-harbor rules and give projects developed using production tax credits and the energy investment tax credits an extra year to reach completion, Committee Chairman Chuck Grassley, R-Iowa, said.
Treasury "plans to modify the relevant rules in the near future," Frederick W. Vaughn, principal deputy assistant secretary for Office of Legislative Affairs, said in the letter to Grassley, Finance Committee ranking minority member Sen. Ron Wyden, D-Ore., and other Senate lawmakers.
Lawmakers want the rules changed so that renewable energy projects that began construction in 2016 and 2017 can be completed in five years, rather than the four years under current Treasury regulations. These projects, many facing setbacks due to disrupted supply chains, construction delays and missed permitting timelines, need more time to qualify for production tax credits and investment tax credits.
"Projects that have been waylaid by the economic disruptions of this [coronavirus] pandemic can now proceed with more certainty," Grassley said in a statement. "That means more certainty for American businesses and families at a time when stability is in short supply."
Under current IRS rules, taxpayers can claim a production tax credit for electricity or an investment tax credit for qualifying energy property if construction begins and significant physical work is started. Projects can also qualify by meeting a safe harbor that requires incurring 5% or more of the total cost of a project.
Taxpayers can also qualify by continuously working on the project and placing it in service within four years, according to the IRS rules, which are intended to provide flexibility and prevent disputes related to financing, permitting, and construction of energy facilities.
In April, the lawmakers asked for changes to the rules because the pandemic is causing projects disruptions and the federal government must "take whatever reasonable steps possible to allay unforeseen burdens on American families and businesses."
--Editing by Neil Cohen.
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