Extending the four-year window

Extending the four-year window

August 08, 2019 | By Keith Martin in Washington, DC

The four-year window to finish some renewable energy projects to qualify for federal tax credits will be extended in one situation, the IRS said.

The IRS made the announcement in July in Notice 2019-43.

The extension will apply in cases where the US Department of Defense raises national security concerns about a project that require getting “new or additional permits or licenses.” In that case, the four years will be extended by the number of days it takes to get the new or additional permits or licenses.

The period of time added to the four years starts when the DoD first notifies the project owners in writing of a problem and ends when the new permits or licenses are issued and the period for administrative or judicial review has run.

No more than another four years in total may be added.

Defense officials asked the IRS to make this special exception. The principle does not apply more broadly.

An example in the notice suggests the request was prompted by a project whose intertie to connect to the grid will run adjacent to a US military base or other defense installation.  DoD “raised concerns with the permitting authorities regarding the location of the proposed transmission line.”

Renewable energy projects face deadlines to be under construction to qualify for tax credits. It is not enough to start construction in time; there must also be continuous work on the project after the year construction starts. The IRS does not require proof of continuous work for any project that is completed within four years after the year construction started. Solar projects face an absolute deadline to finish by the end of 2023. There is no absolute deadline for other projects.