Mar, 16
2023
Business, Free News Articles, Legal and Law, Taxes and Accounting

Tax Court Case: Engineering Firm Overstated §179D Energy Efficient Commercial Building Property Deduction

COLUMBUS, Ohio -- In a recent case, Michael Johnson, et ux. v. Commissioner, the tax court denied the majority of a taxpayer's Energy Efficient Commercial Building Deduction under IRC §179D since it claimed a §179D Deduction exceeding the cost of the Energy Efficient Commercial Building Property (EECBP), says ICS Tax, LLC.

Background

The §179D Deduction is a federal tax incentive designed to promote taxpayers to construct energy efficient buildings as well as encourage building owners to make improvements to existing structures that reduce energy and power costs. At the time of the case, the §179D Deduction provided a maximum deduction of up to $1.80 per square foot of the building's floor area and applies to interior lighting systems, heating, cooling, ventilation, hot water systems or building envelope. A special rule under §179D provides that architects, engineers, contractors, environmental consultants or energy services providers may also be eligible for the incentive on public projects. However, the amount of the §179D Deduction is limited to cost of the EECBP.

For an updated summary of the heavily revised §179D rules, go to https://ICS-Tax.com/179D.

The Case

In this case, the taxpayer was an engineering firm in the business of installing heating, ventilation, and air conditioning (HVAC) systems. The taxpayer installed HVAC systems in a U.S. Dept. of Veterans Affairs (VA) hospital. This engineering firm had the §179D Deduction allocated to them such that they claimed a deduction of $1,073,237 for the 2013 taxable year, which was equal to the product of $1.80 and 596,243, the hospital's square footage. However, the cost of the EECBP was only $304,640. Hence, the tax court concluded that the §179D deduction was limited to the $304,640 cost of the EECBP.

Many professional service providers lack the expertise to properly analyze the complex tax rules and engineering requirements for the §179D Deduction. For a tax incentive requiring both a thorough knowledge of the tax code and engineering principles, it is essential to hire a fully qualified and experienced team that includes CPAs, attorneys, and professional engineers. It is also essential to thoroughly vet your §179D service provider, and at a minimum, perform an Internet search that can yield critical information.

Author: Alexander Bagne, JD, CPA, MBA, CCSP

ABOUT ICS TAX:

ICS Tax, LLC (ICS) is a consulting firm providing innovative tax planning strategies. ICS collaborates with taxpayers and their tax professionals to identify credits and incentives that reduce tax liabilities and increase profitability. ICS provides nationwide service through its offices throughout the country. Learn more: https://ics-tax.com/.

Related link: https://ics-tax.com/

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Jul, 27
2022
Business, Free News Articles, Taxes and Accounting

IRS Releases Updated Practice Unit for Auditing the 179D Energy Efficient Commercial Buildings Deduction

EGAN, Minn. -- The IRS Large Business and International (LB&I) Division released an updated Practice Unit for its agents to audit the 179D Energy Efficient Commercial Buildings Deduction (179D Deduction), ICS Tax, LLC announced today. It confirms that taxpayers can use the ASHRAE Standard 90.1-2007 rather than newer, more strict standards but also could be an indication that the IRS will have added scrutiny on 179D projects.

179D DEDUCTION BACKGROUND

The 179D Deduction was enacted to encourage taxpayers to make buildings more energy efficient. Installation of energy-efficient commercial building property (EECBP) occurs when constructing a new, or improving an existing, commercial or government-owned building.

179D allows a taxpayer who owns or leases a commercial building to deduct the cost or a portion of the cost to install EECBP. Additionally, if the EECBP is installed in a government-owned building, the deduction can be allocated to the person(s) primarily responsible for designing the EECBP ("the Designer" or "the Designers").

EECBP must be part of at least one of three systems:

1 -- Interior lighting systems;

2 -- Heating, cooling, ventilation, and hot-water systems; or

3 -- The building's envelope.

To claim the 179D Deduction, a taxpayer generally hires a third-party Professional Engineer to perform energy modeling using IRS-approved software to confirm that the building meets the 179D requirements. The engineer then prepares a Certificate of Compliance to support the 179D Deduction.

THE ASHRAE STANDARD

The Taxpayer Certainty and Disaster Relief Act of 2020 updated the energy efficiency standard for the 179D Deduction by providing that for EECBP placed in service after December 31, 2020. EECBP means property that is within the scope of "Reference Standard 90.1." Amended 179D(c)(2) provides that "Reference Standard 90.1" means "the most recent Standard 90.1 published by [ASHRAE] which has been affirmed by the Secretary [of the Treasury], after consultation with the Secretary of Energy, for purposes of this section not later than the date that is 2 years before the date that construction of such property begins."

The LB&I revised Practice Unit states "The Secretary of the Treasury has not yet affirmed a new version of Reference Standard 90.1 for use with the IRC 179D deduction.... The ASHRAE Standard 90.1-2007 is the most current affirmed version as of the publication date of this Practice Unit." This means that taxpayers looking to benefit from the 179D Deduction can still qualify under the older ASHRAE standard.

INCREASED 179D SCRUTINY

The IRS recently announced it is looking to hire more than 4,000 representatives. A notable division within the IRS is the Criminal Investigation division. It is the investigative and law enforcement arm of the IRS with expertise in tax fraud, investment fraud, corruption, and much more. Earlier this year, a national tax consulting firm heavily involved with the 179D Deduction was raided by the IRS Criminal Investigation division. While the reason for the raid is not yet publicly known, the raid, the revised Practice Unit and the additional hiring could indicate that the IRS will have higher scrutiny on the 179D Deduction.

About ICS Tax, LLC:

ICS Tax, LLC has the expertise to properly obtain 179D Deductions. We have Professional Engineers licensed in all states to perform energy modeling, building inspections, and preparing certificates of compliance. For designers of public buildings, we also have government relations experts to complete and obtain allocations from government agencies.

For more information, please visit us at https://ics-tax.com/.

RELATED LINKS:

https://www.irs.gov/pub/irs-utl/irc-179d-energy-efficient.pdf

https://ics-tax.com/services/179d/

https://www.energy.gov/eere/buildings/qualified-software-calculating-commercial-building-tax-deductions

Related link: https://ics-tax.com/

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Jun, 01
2022
Business, Free News Articles, Taxes and Accounting

The Importance of Integrity Within the Tax Consulting Industry

SAVAGE, Minn. -- Choosing a tax consulting firm as a trusted advisor is an exceptionally important decision for both businesses needing such services as well as accounting firms who refer them to their clients, says ICS Tax, LLC.

"The right firm can identify valuable credits and planning opportunities to reduce taxes as well as support their positions if audited. Recently, a national tax consulting firm was raided by the IRS Criminal Investigation agents specializing in tax violations and financial crimes. It is unfortunate to see that the IRS felt the need to take such drastic actions within our industry," said Alex Bagne, President of ICS Tax.

The right consultant can be your company's financial partner for life. Consider firms staffed with CPAs, attorneys, and licensed professionals as they can be your best choice. CPAs must follow the Code of Professional Conduct from the American Institute of Certified Public Accounting. Attorneys are governed by the state bar rules and statutes of professional conduct.

Certified Cost Segregation Professionals must abide by the code of ethics of American Society of Cost Segregation Professionals with integrity, honesty, and objectivity as their fundamental principles. Other licensed professionals, such as Professional Engineers and HERS Raters also must abide by codes of conduct.

At the very least when considering a tax consulting firm, first research them on the Internet. See if they have routinely lost tax court cases for overly aggressive positions, are frequently involved in employment lawsuits, or have been sued for racketeering, harassment, misconduct or other serious legal violations.

As tax consultants, ICS always looks after the public interest and honors their trust. The leaders at ICS include Certified Public Accountants, Attorneys, Certified Cost Segregation Professionals, HERS Raters, and Professional Engineers. We strongly advocate for our clients and provide comprehensive deliverables, including audit protection. ICS holds itself to the highest code of ethics established by both professional and industry standards.

ABOUT ICS TAX, LLC:

ICS Tax, LLC is a nationwide consulting firm providing innovative tax planning strategies. We collaborate with taxpayers and their advisors to identify credits and incentives that reduce tax liabilities and increase profitability. Visit https://ics-tax.com/ for more information regarding incentives such as the R&D credit, 179D deductions and many more.

Related link: https://ics-tax.com/

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Jan, 11
2022
Business, Free News Articles, Taxes and Accounting

IRS Mandates Additional Requirements for R&D Tax Credit Refund Claims

SAVAGE, Minn. -- In 2007, the IRS made the Research & Development (R&D) tax credit a Tier 1 issue, says ICS Tax, LLC (ICS). Tier 1 issues were those of high strategic importance that had a significant impact on one or more industries, essentially meaning that the IRS would audit taxpayers filing amended returns on such issues. To taxpayers' relief, the Tiered Issue Process was eliminated in 2012, effectively placing the R&D tax credit in the same audit pool as other issues.

After the IRS was defeated on two refund claims stating that the taxpayers' claims lacked specificity and they had failed to state a claim, the courts held that the IRS could no longer assert their own forms (Form 6765) were insufficient to constitute a refund claim.

As a result of losing these claims, the IRS announced in a Chief Counsel memo released October 15, 2021 that taxpayers seeking refunds attributable to the R&D tax credit must meet the following five requirements:

* Identify all the business components to which the research credit claim related for that year.

* For each business component:

- Identify all research activities performed;

- Identify all individuals who performed each research activity; and

- Identify all the information each individual sought to discover.

* Provide the total qualified employee wage expenses, total qualified supply expenses, and total qualified contract research expenses for the claim year. This may be done using Form 6765, Credit for Increasing Research Activities.

The new rules go into effect on January 10, 2022. The IRS has stated there will be a transition period for a year and a grace period, giving taxpayers 45 days (expanded from 30 days on January 5th) to "perfect" a claim for refund before it comes mandatory for all refund claims.

What does "perfect" mean? If a claim for refund is determined to be deficient or if information provided was insufficient, the taxpayer will have 45 days to provide missing information. If the IRS does not receive the information requested, the entire refund claim will be rejected.

By issuing this new guidance, it has put R&D refund claims back into the forefront of IRS audit scrutiny akin to a Tier 1 issue, making R&D refund claims more burdensome for a taxpayer. The IRS new requirements further demonstrate the need to utilize a qualified R&D tax credit professional to properly document all refund claims.

Press Release Authors: Lacey J.S. Robb, JD, LLM; Contributing Author: Alexander Bagne, JD, CPA, MBA, CCSP.

About ICS Tax, LLC:

ICS Tax, LLC (ICS) is a consulting firm providing innovative tax planning strategies. ICS collaborates with taxpayers and their tax professionals to identify credits and incentives that reduce tax liabilities and increase profitability. ICS provides nationwide service through its offices throughout the country.

To learn more about the R&D tax credit as well as other valuable tax ideas visit https://ics-tax.com/.

CITATION:

https://www.irs.gov/pub/irs-lafa/20214101f.pdf

Related link: https://ics-tax.com/

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Aug, 26
2021
Business, Free News Articles, Taxes and Accounting

ICS Welcomes Adam Finesilver CPA to the New Alabama Office

MONTGOMERY, Ala. -- ICS Tax, LLC is excited to announce its Southeast regional expansion with a new office in Montgomery, Alabama. ICS welcomes Adam Finesilver, CPA as its Regional Director. Adam brings over 13 years of experience providing tax advisory services to clients in real estate, financial and professional services industries. He graduated Summa Cum Laude, earned a Master of Accountancy, and has devoted his time to public accounting since 2007.

Adam said he "is thrilled to join ICS Tax to better serve his clients with tax saving opportunities such as cost segregation, 45L credits and R&D tax credits." In his role, he will be collaborating with taxpayers and tax professionals to identify credits, deductions, and incentives that can significantly reduce tax liabilities and increase profitability.

Montgomery, Alabama has been home to Adam for the past twenty years, where he resides with his wife and three young children. He has given back to his community by serving on the Montgomery Chamber of Commerce and as ambassador for the Alabama Society of Certified Public Accountants (ASCPA).

The new ICS Tax, Montgomery Alabama office is fully supported by a team of nationwide engineers and tax consultants. Adam is poised and ready to lower your tax liabilities!

ABOUT ICS TAX, LLC:

ICS Tax, LLC (ICS) is a consulting firm providing innovative tax planning strategies and specializes in both the 45L and 179D tax incentives. ICS collaborates with taxpayers and their tax professionals to identify credits and incentives that reduce tax liabilities and increase profitability. ICS provides nationwide service through its offices located throughout the country.

Learn more at https://ics-tax.com/.

Related link: https://ics-tax.com/

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Jun, 25
2021
Business, Free News Articles, Taxes and Accounting

Travis Mlodzik Elected President of the American Society of Cost Segregation Professionals

SAVAGE, Minn. -- Travis Mlodzik, Central Practice Leader for ICS Tax, LLC has been elected President of the American Society of Cost Segregation Professionals (ASCSP). Cost Segregation is a tremendously valuable tax planning strategy for real estate investors. The ASCSP provides education, credentialing, and a code of ethics for its members while representing the very best professionals in the cost segregation industry.

When discussing what joining the ASCSP has meant, Travis stated it's "one of the best decisions I have made for both my professional and personal growth. The ASCSP has highly respected individuals from this niche industry within its membership and being able to network and learn from them has only made the industry stronger and more prominent."

On his personal growth, Travis says, "Since joining the ASCSP, I have gained confidence in my skill set, tax knowledge, communication skills and presenting how Cost Segregation can benefit taxpayers."

Travis adds, "I am truly humbled and honored to be recognized and elected by my peers for the Presidency of the ASCSP."

Since 2012, Travis has been an active member in the ASCSP and earned his Certified Member credentials in 2014. Travis currently chairs the Membership Committee, co-chairs the Education Committee, and assists the Conference Committee. In addition to committee responsibilities, Travis has served on the Board of Directors since 2015, holding elected positions of Director and most recently of Treasurer.

Travis earned a B.A.S. Construction Management degree from the University of Minnesota, Twin Cities and has over 15 years of experience and proven knowledge of construction, cost segregation, tax law, depreciation, and fixed assets. Travis resides in Apple Valley, Minnesota with his wife and two daughters. In his free time, Travis enjoys woodworking, hunting, fishing, and taking his daughters to Karate.

ABOUT ICS TAX, LLC

ICS Tax, LLC (ICS) is a consulting firm providing innovative tax planning strategies to real estate investors. ICS collaborates with taxpayers and their tax professionals to identify credits and incentives that reduce tax liabilities and increase profitability. ICS provides nationwide service through its offices located throughout the country.

Learn more at https://ics-tax.com/

Related link: https://ics-tax.com/

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Apr, 13
2021
Business, Free News Articles, Real Estate, Taxes and Accounting

Proposed Legislation Would Make the 45L and 179D Energy Efficiency Tax Incentives More Lucrative

BLAINE, Minn. -- The 'Growing Renewable Energy and Efficiency Now' (GREEN) Act aims to extend and boost tax incentives for energy efficiency and renewable energy. According to Alex Bagne, the President of ICS Tax, LLC, "If passed, the GREEN Act would make both the 45L Energy Efficient Home Credit (45L Credit) and the 179D Energy Efficient Commercial Building Deduction (179D Deduction) more advantageous while furthering the green missions of these incentives."

THE 45L ENERGY EFFICIENT HOME CREDIT

Currently, the 45L Credit allows eligible developers to claim a $2,000 tax credit for each newly constructed or substantially reconstructed qualifying residence. It applies to single family homes, apartments, condominiums, assisted living homes, student housing, and other types of residences. The residences must be three stories above grade in height or less. The 45L Credit requires a HERS Rater, a credentialed professional who tests residential energy efficiency, to inspect the home, perform energy modeling and prepare certificates of compliance. The 45L Credit is set to expire at the end of 2021.

The GREEN Act would increase the 45L Credit from $2,000 to $2,500 per residential unit. It also seeks to extend the incentive to 2026, as it is set to expire in 2021. The energy efficiency standards would increase, going from a 50% to 60% savings over the IRS baseline.

"Many homebuilders are unaware that their homes as built qualify for this incentive," says Travis Cansler, a 45L specialist at ICS.

Steve Samos, a HERS Rater and the Director of Inspections for ICS, adds "For homes that do not pass, builders can often make design changes to get them to qualify where the additional costs are more than offset by the credit."

THE 179D ENERGY EFFICIENT COMMERCIAL BUILDING DEDUCTION

The 179D Deduction, often referred to as the EPAct Deduction, is a Federal tax incentive promoting energy efficient buildings for both new and existing structures. Further, architects, engineers, contractors, and other building design professionals may also be eligible for the incentive on public projects. Commercial building owners can take a Federal tax deduction of up to $1.80 per square foot of the building's floor area if they install certain property (e.g., efficient lights or HVAC systems, added wall or roof insulation, etc.) that reduces energy and power costs. The 179D Deduction, which applies to both new construction and renovations, was recently made permanent by the 'Consolidated Appropriations Act, 2021.' However, that Act significantly increased the energy efficiency standards needed to qualify.

For the 179D Deduction, the GREEN Act would raise the maximum amount of the deduction from $1.80 to $3.00 per square foot for improvements made after December 31, 2021. It would also lower the threshold needed to qualify for the maximum deduction. The current standard compares the building to the ASHRAE standard that was in existence 2 years prior to the start of construction and requires a hypothetical 50% reduction in energy and power costs. The GREEN Act would lower those standards to 30%.

"By making these changes, the 179D Deduction will be more beneficial and further incentivize green building design," says Jillian Jones, a 179D Deduction specialist at ICS Tax.

ABOUT ICS TAX, LLC:

ICS Tax, LLC (ICS) is a consulting firm providing innovative tax planning strategies and specializes in both the 45L and 179D tax incentives. ICS collaborates with taxpayers and their tax professionals to identify credits and incentives that reduce tax liabilities and increase profitability. ICS provides nationwide service through its offices located throughout the country.

Learn more at https://ics-tax.com/.

IMAGE link for media: https://www.Send2Press.com/300dpi/21-0413-ics-tax-green-300dpi.jpg

MEDIA CONTACT:
Alexander Bagne
ICS Tax
alexb@ics-tax.com
216-870-0742

Related link: https://ics-tax.com/

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Mar, 10
2021
Business, Free News Articles, Taxes and Accounting

Brew Up Tax Savings with the R&D Tax Credit

BOSTON, Mass. -- While the trendy term "Microbrewery" may have been the proper terminology for new craft beer breweries and startups, they no longer remain "micro" in revenue, says ICS Tax, LLC (ICS). Growth in the craft beer industry in the U.S. has steadily grown to almost $30 billion.

While brewing up signature styles of beer is key to their creators' minds, the Research & Development (R&D) Tax Credit can save the craft brewing industry significant tax dollars and make brewers say, "Hop Hop Hooray."

The R&D Tax Credit has been an underutilized dollar-for-dollar cash savings in the brewery and beverage industry altogether. With the R&D tax credit being made permanent and the qualifications of R&D more expansive, the credit has become more valuable and lucrative for a small brewery or startup. A misnomer is that a company must be successful or is developing something new for the "world," whereas the activity only needs to be new or improved to the brewery itself.

The R&D Tax Credit can turn skunky brews into sweet aromatic tax savings.

"Ask yourself, while you may be known for your signature pale ale, have you been working on brewing up the latest lager to captivate the increasing market? Have you adapted your formulas for changing connoisseurs?" says Lacey Robb, the R&D credit practice leader at ICS.

She adds, "It is uncommon that your brewery has not made any improvements to the product, technology, or internal processes to grow and maintain success. Internal process improvements are often overlooked and provide valuable savings to the industry."

The benefits that the R&D Tax Credit can provide the brewing industry will not leave you with a hangover, but hopped up for exciting permanent tax savings.

A few examples of activities that would qualify for the R&D Tax Credit are:

* Developing new bottle conditioning

* Generating new or improved manufacturing processes to improve manufacturing flexibility and agility

* Establishing new or improved hopping techniques and styles

* Creating or improving filtration methodologies or wastewater methods

* Developing new or improved product formulations or recipes (e.g., dry hopping)

* Conducting tests of product ingredient mixtures for desired flavor or aroma profiles

* Developing new or improved quality assurance testing processes

* Producing prototype product samples for testing and validation of new recipe formulations

* Testing prototype samples for analytical and microbiological qualities.

While all the above sounds too good to be true, many breweries may be thinking, "how does this help us when due to the pandemic, we do not have a profit?" The R&D credit was enhanced for small business startups in 2016 and can be applied against your quarterly federal payroll tax instead of your income tax.

Do not let this opportunity go stale. Now may be the time more than ever to explore this power tax savings. To learn more about the R&D tax credit, visit https://ics-tax.com/services/research-development-tax-credits/.

ABOUT LACEY ROBB:

Lacey Robb is Principal for ICS Tax, LLC. She is an attorney with an LLM in Taxation and has helped numerous taxpayers in a variety of industries take the R&D tax credit. She can be reached by phone at 310-968-0970 or by email at laceyr@ics-tax.com.

ABOUT ICS TAX, LLC (ICS):

ICS Tax, LLC (ICS) is a consulting firm providing innovative tax planning strategies. ICS collaborates with taxpayers and their tax professionals to identify credits and incentives that reduce tax liabilities and increase profitability. ICS provides nationwide service through its offices located throughout the country.

Learn more at https://ics-tax.com/.

Related link: https://ics-tax.com/

This news story was published by the Neotrope® News Network - all rights reserved.