IRS Issues Additional Guidance With Respect To 2013 Beginning Of Construction Rules For Wind And Other Renewable Projects

The Internal Revenue Service (Service) issued Notice 2014-46 (Notice) on August 8, 2014, to provide further guidance on meeting the beginning of construction requirements for wind and other qualified facilities (biomass, geothermal, landfill gas, trash, hydropower, and marine and hydrokinetic facilities).  The Notice addresses the requirements of the physical work test and the transfer of a facility after construction has begun, as well as the five percent safe harbor.

Background

Section 407 of the American Taxpayer Relief Act of 2012 extended until January 1, 2014, the production tax credit (PTC) and the investment tax credit (ITC) for electricity produced from qualified facilities.  Congress also liberalized the timing requirement for a qualified facility so that a taxpayer may meet the January 1, 2014, deadline by "beginning construction" on the facility by such date.  Previously, a taxpayer could only meet the deadline by placing the facility in service.