Sen. Grassley: Senators Urge Regulatory Relief for Energy Tax Credits in Light of Pandemic Setbacks – InsuranceNewsNet

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April 24, 2020 Newswires No comments
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Sen. Grassley: Senators Urge Regulatory Relief for Energy Tax Credits in Light of Pandemic Setbacks

Targeted News Service

WASHINGTON, April 24 -- Sen. Chuck Grassley, R-Iowa, chairman of the Senate Finance Committee, issued the following news:

A bipartisan group of senators is urging the Treasury Department to extend the safe harbor provisions for both the energy production tax credit and the energy investment tax credit to accommodate the significant development slowdowns resulting from the COVID-19 public health crisis.

"As the ongoing COVID-19 crisis continues to claim lives and cause economic disruption and uncertainty, it is vital that the government take whatever reasonable steps possible to allay unforeseen burdens on American families and businesses," the senators wrote.

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Senate Finance Committee Chairman Chuck Grassley (R-Iowa), Ranking Member Ron Wyden (D-Ore.), Sens. John Thune (R-S.D.), Maria Cantwell (D-Wash.), and Senate Energy and Natural Resources Committee Chairman Lisa Murkowski (R-Alaska) and Ranking Member Joe Manchin (D-W.Va.) pushed for this policy adjustment in a letter to Treasury Secretary Steven Mnuchin.

Specifically, the senators are seeking an extension of the "continuity safe harbor" from four years to five years for projects that began construction in 2016 or 2017 under both tax credits. This will provide relief to projects that are near completion, but due to unavoidable setbacks related to the ongoing pandemic are at risk of losing their tax credit eligibility. This will provide the needed certainty for businesses to move forward.

Full text of the letter follows or can be found HERE (https://www.finance.senate.gov/download/grassley-wyden-thune-cantwell-murkowski-manchin-to-treasury_-energy-tax-credits-continuity-safe-harbor).

April 23, 2020

The Honorable Steven T. Mnuchin

Secretary of the Treasury

U.S. Department of the Treasury

1500 Pennsylvania Avenue NW

Washington, DC 20220

Secretary Mnuchin,

As the ongoing COVID-19 crisis continues to claim lives and cause economic disruption and uncertainty, it is vital that the government take whatever reasonable steps possible to allay unforeseen burdens on American families and businesses. In that spirit, we urge you to extend the continuity safe harbor, provided under existing Treasury Department guidance, for both the production tax credit (PTC) and energy investment tax credit (ITC), from four years to five years for projects that started construction in 2016 or 2017. This modest adjustment to the PTC and ITC guidance would help preserve tens of thousands of jobs and billions of dollars in investments and provide some certainty in these challenging times.

Under current law, taxpayers seeking to claim a PTC for electricity produced from qualifying facilities or an ITC for qualifying energy property must generally begin construction of the qualifying facility or property by specified dates. Under current Internal Revenue Service (IRS) guidance, a taxpayer is treated as having begun construction by starting physical work of a significant nature or, alternatively, by satisfying safe harbor requirements by incurring 5 percent or more of the total cost of the facility or property. The taxpayer must then demonstrate continuous efforts to complete construction and can be deemed to satisfy this requirement if the facility or property is placed in service within four years ("continuity safe harbor"). These safe harbors provide certainty and flexibility to taxpayers, and prevent costly and unnecessary disputes over the various facts and circumstances related to the financing, permitting, and construction of energy facilities.

In addition to its severe toll on human lives, the COVID-19 crisis has disrupted supply chains, construction operations, and permitting timelines, delaying projects otherwise on track to be in operation by the end of 2020. While existing IRS guidance provides certain exceptions for specified setbacks in construction, these exceptions do not anticipate nor fully capture the wide ranging interruptions now faced by developers. Providing a temporary extension of the continuity safe harbor of five years, in lieu of the current four, would address the unforeseen interruptions developers are experiencing due to COVID-19 and provide the certainty businesses need to move forward with existing projects.

As Congress and the Administration continue to work to provide relief and assistance to Americans grappling with fallout of COVID-19, this simple modification would provide significant benefits to an important and growing sector of the American economy.

We appreciate your time and attention to this important matter and look forward to your prompt response.

Sincerely,

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