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/

This news story was published by the Neotrope® News Network - all rights reserved. ID:NEO2022

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/.

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

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

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