Originally published October 15, 2010
Keywords: new application, Section 1603, tax credits, renewable energy property
The US Treasury Department (Treasury) and the National Renewable Energy Laboratory recently updated the application used to apply for grants in lieu of tax credits (Grants) under Section 1603 of the American Recovery and Reinvestment Act of 2009. Section 1603 established a program whereby an eligible person could, in lieu of claiming the production tax credit under Internal Revenue Code Section 45 or the investment tax credit under Internal Revenue Code Section 48, apply to Treasury for a Grant to reimburse the applicant for a portion of the cost of certain renewable energy projects.
Prior to the update to the application, applicants were required to submit a single, comprehensive form regardless of whether the project had been placed in service or was under construction. As updated, the application now consists of two separate forms: (i) a "Placed in Service" Application and (ii) a "Begun Construction" Application.
An applicant who placed a project in service during 2009 or 2010 (and who has not previously submitted the old application) must submit a "Placed in Service" Application and the signed Terms and Conditions before October 1, 2011.
An applicant who has begun construction of a project during 2009 or 2010 and who will place such project in service after 2010 must submit a "Begun Construction" Application before October 1, 2011 to demonstrate that construction began on the project during 2009 or 2010. In addition, within 90 days after the project is placed in service, the applicant must submit a "Placed in Service" Application together with the signed Terms and Conditions to update the "Begun Construction" Application that was previously submitted. The "Placed in Service" Application must indicate the identification number that was assigned to the "Begun Construction" Application. Thus, if an applicant is relying on the commencement of construction rules to qualify a project that is placed in service after 2010, the applicant must file both the "Begun Construction" Application and the "Placed in Service" Application, even if the "Placed in Service" Application is submitted before October 1, 2011.
The new, two-form application process will better accommodate projects where it is necessary for two different persons to file the applications. For example, in a sale-leaseback transaction where the purchaser-lessor is claiming the Grant, the developer could file the "Begun Construction" Application after construction commenced and before October 1, 2011, and the purchaser-lessor could file the "Placed in Service" Application after the sale and leaseback occur (provided they occur within three months of the original placed in service date).
When the construction period for a project is unusually long, the "Begun Construction" Application requires an explanation about the construction time that was not required in the old application. In addition, Section 6B of the "Begun Construction" Application now specifies, with greater detail than the Program Guidance, the types of supporting documentation that can be used to establish that a project satisfies the requirement regarding the commencement of construction.
As before, applicants can register and submit online applications at the following website: https://treas1603.nrel.gov/. As of the date of this update, the new application had not yet been posted at the Treasury's public website for the Grant program, which can be found here: http://www.ustreas.gov/recovery/1603.shtml.
For general information on the Program Guidance and documentation requirement for the Grants program, see the following Legal Updates:
"US Treasury Department Issues Guidance on Energy Grants In Lieu of Tax Credits" available at: http://www.mayerbrown.com/publications/article.asp?id=7230&nid=6
"US Treasury Revises Cash Grant Program Guidance" available at: http://www.mayerbrown.com/publications/article.asp?id=8723&nid=6
For more information on the prior application, see our Legal Update "US Treasury Accepting Applications for Energy Grants In Lieu of Tax Credits" available at: http://www.mayerbrown.com/publications/article.asp?id=7341&nid=6
For information regarding what constitutes the commencement of construction, see our Legal Update "US Treasury Issues Additional Guidance on Beginning of Construction for Section 1603 Cash Grant Program" available at: http://www.mayerbrown.com/publications/article.asp?id=9249&nid=6
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