Senate Finance Committee Chairman Orrin Hatch (R-UT), in a letter to the Treasury and IRS, posed questions about cash grants made under the “Section 1603 program” (now expired but authorized under 2009 legislation to provide governmental grants as an incentive for certain energy projects).
In a March 15 letter to Treasury Secretary Jack Lew and IRS Commissioner John Koskinen, Chairman Hatch posed a number of questions, among those concerning:
Section 1603 of the “American Recovery and Reinvestment Act of 2009” authorized the Treasury Department to make grant payments to taxpayers who developed renewable energy projects. Hence, these were referred to as “Section 1603 program” grants.
Grant payments were available for: (1) projects placed in service in 2009, 2010, and 2011, and (2) projects placed into service after December 31, 2011—provided that construction began after 2008 and prior to January 1, 2012 and that the project was placed in service prior to 2014 (2013 for wind property and 2017 for energy credit property). In order to be eligible for a grant payment, taxpayers had to submit an online preliminary application to Treasury by the statutory deadline of midnight on Sunday, September 30, 2012.
Under guidance issued by the Treasury Department, there were two ways in which an applicant / taxpayer could satisfy the “begin construction” requirement:
For this purpose, a cost was “incurred” if it was incurred under the economic performance rules of section 461(h). Thus, for accrual method taxpayers, an analysis had to be performed as to whether costs that were paid prior to 2012 had also been “incurred” prior to that time.
© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.