More Than $2 Billion in Tax Credits Available for Advanced Energy Manufacturers

The American Recovery and Reinvestment Act (Act) established a new 30 percent investment tax credit for clean technology and advanced energy manufacturers. On August 13, 2009, the U.S. Treasury Department and the U.S. Department of Energy (DOE) announced that the application period for companies to apply for $2.3 billion in tax credits opens on August 14, 2009. Applicants must file the preliminary application by September 16, 2009, followed by final applications by October 16, 2009.

According to the announcement, the Internal Revenue Service (IRS) will certify or reject applications by January 15, 2010, and notify the certified projects with the approved amount of their tax credit. Award recipients can expect to receive acceptance agreements from the IRS by April 16, 2010.

So, what types of businesses might be eligible for this credit? Essentially, manufacturers of clean technology (including wind turbine gears, carbon sequestration property, solar panels, energy storage systems, etc.). Specifically, the term "qualifying advanced energy project" means a project which re-equips, expands or establishes a manufacturing facility for the production of:

· Property designed to be used to produce energy from the sun, wind, geothermal deposits or other renewable resources;

· Fuel cells, microturbines or an energy storage system for use with electric or hybrid-electric motor vehicles;

· Electric grids to support the transmission of intermittent sources of renewable energy, including storage of such energy;

· Property designed to capture and sequester carbon dioxide emissions;

· Property designed to refine or blend renewable fuels or to produce energy conservation technologies (including energy-conserving lighting technologies and smart grid technologies);

· New qualified plug-in electric drive motor vehicles, qualified plug-in electric vehicles or components which are designed specifically for use with such vehicles, including electric motors, generators and power control units; or

· Other advanced energy property designed to reduce greenhouse gas emissions as may be determined by the secretary of treasury.

There are limitations, such as what types of property and costs qualify for the credit, but with a limited allocation of $2.3 billion nationwide, it will be important to act swiftly once details of the program are announced. Ice Miller's Tax Practice Group is positioned to assist taxpayer's with this process, including analysis of qualifying projects as well as application for the credits with the Treasury Department. For more information about this program or other tax provisions in the Act, please contact Paul Jones, partner in the Tax Practice Group and a member of the Firm's Green Industries Initiative.

This publication is intended for general information purposes only and does not and is not intended to constitute legal or tax advice. The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.