As noted in our prior article, New Twist to the Renewable PTC Extension: Defining "Under Construction," published March 12, 2013, the American Taxpayer Relief Act of 2012 ("ATRA") extends the Production Tax Credit ("PTC") and Investment Tax Credit ("ITC") for certain renewable facilities if construction of the facility begins prior to January 1, 2014, but did not define the "begin construction" requirement.
On April 15, 2013, the IRS provided guidance on this requirement; as expected, it is patterned after the previously issued Section 1603 guidance, with some additional and significant clarifications. Consistent with prior guidance, the “begin construction” requirement is met if by January 1, 2014: (i) physical work of a significant nature has commenced; or (ii) more than five percent (5%) of the total project cost of the facility are incurred prior to January 1, 2014. However, the IRS guidance clarifies that, thereafter, a “continuous program of construction” or “continuous efforts” must also be maintained in the manner described below.
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ABOUT THE AUTHOR
Rebecca B. DeCook