International Automated Systems (fka IAUS)

[scion]

Tax credit requirements for solar generation are very specific — only recently did the Internal Revenue Service give guidance to an individual allowing for the credit to be used for purchasing ownership in a community solar project. There are specific requirements a taxpayer must meet in order to lawfully claim such benefits, the Justice Department said.

IRS ruling could have significant impact for community solar projects

From the September 8, 2015 issue of Public Power Daily
Originally published September 4, 2015
By Paul Ciampoli
News Director
http://www.publicpower.org/Media/daily/ArticleDetail.cfm?ItemNumber=44450

The Internal Revenue Service recently allowed an individual participant in a community solar garden to make use of the 30 percent federal residential income tax credit, according to a Sept. 1 news release from the Clean Energy States Alliance.

If applied across the board, the IRS decision could have significant impact on the growth of community solar projects by allowing residential customers to use the tax credit, often called the residential ITC or 25D credit, the organization said.

The alliance said that the issue of whether a residential owner of solar panels installed in an off-site, community-shared, solar array qualifies for the residential ITC has been an area of legal uncertainty, "creating some confusion in the marketplace."

Working with stakeholders in Massachusetts and Vermont, and with attorneys in the Boston office of law firm Foley Hoag, the alliance, a national nonprofit coalition of public agencies and organizations working on clean energy issues, arranged for the submission of a "Private Letter Ruling" request to the IRS to help clarify this issue.

The alliance said that while the IRS’s recent ruling is only legally applicable to the individual taxpayer in question — a solar panel owner in Boardman Hill Solar Farm, a member-managed 150-kW off-site solar array in Vermont — "the ruling will be taken as a positive development by community-shared solar participants and project developers." The IRS ruling was released in August. Community-shared solar allows electric customers to buy an interest in an offsite solar array and to receive credit on their electricity bills for their ownership interest.

“This new Private Letter Ruling represents the first instance in which the IRS has publicly weighed in on the applicability of the residential ITC to an owner of solar panels in a shared, offsite array,” said Warren Leon, the executive director of CESA. “The ruling suggests that the IRS may be receptive to claims for the residential ITC when a project mirrors the structure used in this case.”

“Under the specific facts presented in this private letter ruling, the IRS has agreed with the individual taxpayer that his or her purchase of solar electric property that is part of a net-metered offsite solar installation with panels owned by multiple individuals qualifies for the [residential ITC],” said Nicola Lemay, a Foley Hoag partner and one of two attorneys at the law firm who provided the legal work leading to the issuance of the private letter ruling request.

“Although, by law, this letter ruling cannot be used or cited as precedent by other taxpayers, several cases acknowledge that a private letter ruling can be used as ‘persuasive authority’ or an ‘instructive tool,’” Lemay said in the news release. “In general, letter rulings like this one may also be used by the IRS in its own interpretations, including by IRS employees who might consider it in issuing letter rulings to similarly situated taxpayers.”

Foley Hoag attorney Adam Wade said the letter ruling fills an important gap. "It adds a previously unavailable written resource to the growing body of authority which can be used by courts, IRS personnel, and practitioners in structuring community shared solar projects,” said Wade. “Pairing the 25D credit with the lower installed cost and economies of scale of mid-scale and larger-scale distributed solar holds tremendous potential in enabling direct ownership of community-shared systems by groups of individuals in utility territories with supportive net metering and bill-crediting programs.”

Public power utilities have been at the forefront of community solar efforts nationwide. Read more about public power and community solar in the July-August 2015 issue of Public Power magazine.

http://www.publicpower.org/Media/daily/ArticleDetail.cfm?ItemNumber=44450