Tax News

CCH (cch.taxgroup.com) reports:

  The IRS has updated interim guidance on the process that manufacturers must use to certify property for the nonbusiness energy credit under
Code Sec. 25C, and the conditions under which homeowners may rely on the certification to claim the credit. The guidance applies to qualified property placed in service after December 31, 2008.

  The nonbusiness energy property credit was available for eligible qualified energy efficiency improvements and qualified energy property placed in service in 2006 and 2007. However, the American Recovery and Reinvestment Act of 2009 (P.L. 111-5) extended the credit for qualified improvements and property placed in service in 2009 and 2010. The maximum credit allowed depends on the year the property is placed in service. In addition, there are specific limitations on the amount of credit allowed for certain items of property.

  A qualified energy efficiency improvement is any building envelope component of nonbusiness property that satisfies certain energy efficiency standards. This includes insulation materials, exterior windows and skylights, exterior doors, and any metal roof with appropriate pigmented coatings, or any asphalt roof with appropriate pigmented coatings or cooling granules in 2009 only. Residential energy property expenditures are expenditures made for qualified energy property that meets prescribed performance and quality, such as furnaces, boilers, heat pump water systems, central air conditioners, water heaters, and beginning in 2009, stoves using biomass fuel.

  To qualify for the credit, property must generally meet or exceed standards established by the 2000 International Energy Conservation Code (IECC) and supplements. However, additional standards apply to qualified property placed in service after 2008. For example, for buildings envelope components such as insulation materials or systems, the property must be specifically and primarily designed to reduce heat loss or gain of a home. In addition, it must meet the prescriptive criteria for such material or system established by the 2009 IECC. Other envelope components, such as exterior windows or doors, and storm windows or doors, must meet certain U factors and prescriptive criteria established by the IECC.

  Similarly, for expenditures for qualified energy property the property must meet specific energy efficiency requirements. However, for purposes of claiming the credit with respect to such property (other than a furnace with an advanced main air circulating fact), the credit is allowed only for amounts paid to purchase the property and labor costs for on-site installation.

  Manufacturers may certify eligible property as either an eligible building envelope component or qualified energy property by providing the purchaser with a certification statement that satisfies the enumerated requirements for the applicable classification. A manufacturer that certifies an item as an eligible building component or qualified energy property must retain documentation that the item satisfies the applicable requirements.

  A purchaser may rely on the manufacturer's certification that a product is qualified energy property. However, a taxpayer may rely on a manufacturer's certification that a component is an eligible building envelope component only if the component is installed in a manner consistent with the item's certification. A taxpayer is not required to attach the certification statement to the return on which the credit is claimed.

 
Notice 2006-26, I.R.B. 2006-11, 622, is superseded.

Notice 2009-53, 2009FED ¶46,390

Other References:

 
Code Sec. 25C

  CCH Reference - 2009FED ¶3843.10

  Tax Research Consultant

  CCH Reference - TRC INDIV: 57,800