On Feb. 9, President Trump signed into law the Bipartisan Budget Act of 2018. This piece of legislation is most notable for funding the U.S. government, but the Budget Act also provides valuable tax extenders for various orphaned technologies that saw their eligibility for renewable energy investment tax credits and production tax credits (ITC and PTC) expire, or be drastically reduced, at the end of 2016.
Technologies that received a one-year PTC extension and will need to demonstrate their construction began before Jan. 1, 2018, include the following:
- Closed-loop biomass
- Open-loop biomass
- Geothermal (10 percent permanent ITC qualification still applies)
- Landfill gas
- Trash facilities
- Small hydro
The ability to elect the 30 percent ITC in lieu of the PTC for these technologies was extended, but once again, only if construction began before the end of 2017.
The Budget Act also extended the ITC for the following technologies:
- Fuel cell
- Small wind
- Fiber optic
- Combined heat and power
- Micro turbine
- Geothermal heat pump
These projects will need to demonstrate that construction began before Jan. 1, 2022. Also, fuel cell, small wind and fiber optic received a phase-out similar to the ITC for solar projects. This will reduce their ITC qualification from 30 percent if construction begins before Jan. 1, 2020, to 26 percent when construction begins during 2020, to 22 percent if construction begins during 2021 and to zero ITC (no longer qualifying) if construction begins after 2021. Also, there is an additional requirement that fuel cell, small wind and fiber optic projects be placed in service before the end of 2023; otherwise, they will not qualify for ITC.
It is unlikely that further changes to the ITC and PTC will occur this year, but do expect the IRS to issue guidance regarding beginning of construction for solar projects.
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McGuireWoods’ ITC team has represented complainants and respondents in more than 70 matters before the ITC, a key forum for global, high-stakes intellectual property and unfair competition disputes related to U.S.-imported goods. We navigate worldwide discovery and expedited schedules as well as obtain ITC exclusion orders and help Customs enforce them. We also act for importers to ensure Customs does not seize or block their non-infringing products based on broad ITC orders.