Hatch presses on tax basis issues
Treasury and the IRS continue taking flak from Senator Orrin Hatch (R-Utah), chairman of the Senate tax-writing committee, about the Treasury cash grant program and tax basis issues for solar projects.
Hatch sent follow-up letters to the US Treasury secretary, the IRS commissioner and the Treasury inspector general for general tax administration on June 9 after the Treasury responded on May 11 to earlier letters he sent in March.
In the latest letters, Hatch asked the Treasury secretary, among other things, to do the following.
The Treasury said the section 1603 review team “evaluates a project’s claimed basis by comparing the basis against certain market-based benchmarks,” Hatch said. He wants “the benchmarks used since this review method was established” and “what system characteristics the team considers in evaluating an applicant’s claimed basis against these benchmark prices.”
Treasury said in its May 11 response that of 104,733 cash grants paid to date, 29,249 were for less than the amounts requested. That is 28%.
Hatch wants Treasury to tell him what actions Treasury is taking to authenticate claims in the annual performance reports that grant recipients are required to file for the first five years after a project is put in service. Grant recipients must report if the projects have been sold and how well they are still performing.
Treasury said that 177 grant recipients had not submitted annual reports for 981 projects by the end of March this year. Hatch wants a list of the grant recipients, projects, grant amounts and status of collection proceedings. Treasury sends a reminder by email 30 days before the report is due. Failure to file an annual report leads to recapture of the cash grant paid on the project.
The Senator asked the following of the IRS.
He wants to know the IRS “process for reviewing claims regarding fair market value” by taxpayers claiming investment tax credits and “whether the agency is considering changes to how it evaluates FMV.”
He wants “a list of all instances when the IRS sought to recapture an energy credit of $10 million or more claimed for an energy property since 2010,” including taxpayer and project names, the amount it attempted to recapture and how much it ended up recapturing.
He also wants to know whether the IRS plans to “determine whether taxpayers [who were paid reduced grants] are also overstating the costs [of] solar properties for which an energy credit was claimed.”
Finally, he asked the Treasury inspector general to determine whether companies that had their grants reduced have been claiming investment tax credits on the basis that was disallowed and, in each case, whether the IRS has taken any action.