The IRS has extended the guidance deadlines (Notice 2015-25) for establishing that construction has begun on a facility eligible for the renewable electricity production tax credit (PTC) under Section 45 or the energy investment tax credit (ITC) under Section 48.
The Tax Increase and Prevention Act of 2014 pushed back the expiration dates for the PTC and ITC by one year. Under the law, construction must now have begun on a qualified project before Jan. 1, 2015, to be eligible for the PTC. Taxpayers may also elect to take the 30% ITC in lieu of the PTC on these projects.
Under guidance issued in Notice 2013-29, Notice 2013-60 and Notice 2014-46, the IRS provided that taxpayers can establish that construction has begun by either satisfying a test showing "physical work of a significant nature" has begun or by incurring 5% or more of the total cost of the facility under a safe harbor.
Under either method, taxpayers must also make continual progress toward completion once construction has begun. Notice 2015-25 does not alter the guidance issued in previous notices on any of these tests, except to push back the dates by one year. Accordingly, if a facility is placed in service before Jan. 1, 2017, it will be considered to have satisfied the tests for establishing that a taxpayer has made continual progress toward completion after beginning construction.
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