The qualifying advanced energy project credit program (the
"Program") was established in 2009 by the Treasury
Department ("Treasury"), the Internal Revenue Service
(the "IRS") and the Department of Energy (the
"DOE") following the enactment of Section 48C of
the Internal Revenue Code (the "Code"), part of the
American Recovery and Reinvestment Tax Act of 2009. The
initial phase of the Program ("Phase I") was designed to
facilitate the allocation, on a competitive basis, of $2.3 billion
in credits to taxpayers that invested in the re-equipment,
expansion or establishment of domestic manufacturing facilities
producing certain clean, renewable or efficient energy products,
which investment was certified by Treasury (each, a
"qualifying advanced energy project"). Treasury, in
accordance with the terms of Code Section 48C(d)(4), recently
conducted a review of the credits allocated under Phase I and
announced on February 7, 2013, that approximately $150 million in
credits is available for reallocation under a second phase of the
Program ("Phase II").
Notice 2013-12 provides the parameters of
Phase II of the Program. As with Phase I, the IRS will consider a
project under Phase II only if the DOE provides a recommendation
and ranking for the project. The DOE will provide a recommendation
and ranking only if it determines that the project has a reasonable
expectation of commercial viability and merits a recommendation
based on the project's potential for domestic job creation and
for reducing air pollution and greenhouse gas emissions, its
technological innovation, the cost of any generated or stored
energy, and the projected time to project completion. In Phase II,
the DOE has said that it will also consider diversity of geography,
technology, project size and regional economic development.
Therefore, for each project it sponsors, a taxpayer must submit:
(1) a concept paper for DOE consideration (the "Concept
Paper"); and (2), if invited by the DOE, (x) an application
for recommendation by the DOE and (y) an application for
certification under Code Section 48C(d)(2) by the IRS (the
submissions described at (2), together, the
"Applications"). All submissions must be made through the
eXCHANGE website, an online application portal
used by the DOE.
The application period for Phase II certification began on
February 7, 2013. Concept Papers must be submitted to the DOE by
April 9, 2013. The Applications, if invited by the DOE, must be
submitted by July 23, 2013. All timely submitted applications will
be evaluated and ranked regardless of when in the application
period they are submitted and the DOE will provide its
recommendations to the IRS by October 11, 2013. The IRS will accept
or reject a taxpayer's application for certification by
November 15, 2013 and will notify taxpayers, by letter, of its
decision. In Phase II, the amount of the qualified investment that
is eligible for the credit with respect to any project is limited
to $100 million. Accordingly, the maximum amount of credits
allocated per project will be $30 million. The IRS' acceptance
letter will state the amount of the credit allocated to a
particular project. Once a credit has been allocated to the
taxpayer, the taxpayer must execute an agreement with the IRS and,
thereafter, satisfy certain certification requirements within one
year of the IRS' acceptance of the application in order to
obtain IRS certification.
For additional details regarding Phase II of the Program,
including a discussion relating to the process of applying for DOE
recommendation and the instructions for filing a Concept Paper or
Application, refer to Notice 2013-12
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
