Today, the IRS issued Notice 2013-29, which provides guidance to determine when construction has begun on a qualified facility eligible to receive the section 45 renewable electricity production tax credit or the section 48 energy investment tax credit (in lieu of the section 45 credit). Construction of such a facility must begin before January 1, 2014.

  • The notice provides two alternative methods for establishing that construction of a qualified facility has begun – (i) starting physical work of a significant nature, or (ii) meeting a prescribed safe harbor.
  • The notice specifies that construction of a facility begins when physical work of a significant nature begins. Both work performed by the taxpayer and work performed for the taxpayer by other persons under a binding written contract are generally taken into account.
    • On-site and off-site work may be taken into account; however, physical work of a significant nature does not include preliminary activities. Only physical work of a significant nature on tangible personal property and other tangible property used as an integral part of the activity performed by the facility is considered.
    • The IRS may determine that construction has not begun if a taxpayer fails to maintain a continuous program of construction, as determined by the relevant facts and circumstances (disregarding certain disruptions beyond the taxpayer’s control).
  • Under the safe harbor provided in the notice, construction is considered to have begun if (i) a taxpayer pays or incurs 5 percent or more of the total cost of the facility before January 1, 2014, and (ii) thereafter, the taxpayer makes continuous efforts to advance toward completion of the facility, as evidenced by the relevant facts and circumstances.
    • If the cost of a facility exceeds its anticipated total cost and the amount a taxpayer paid or incurred with respect to the facility before January 1, 2014 is less than five percent of the total cost of the facility at the time the facility is placed in service, then the taxpayer will generally not satisfy the safe harbor with respect to the facility.
    • However, if a facility is a single project comprised of multiple facilities (as defined in the notice), the safe harbor will be satisfied with respect to a portion of the individual facilities comprising the single project, as long as the total aggregate cost of those individual facilities is not more than twenty times greater than the amount the taxpayer paid or incurred before January 1, 2014.

The notice can be accessed via: Notice 2013-29.pdf

IRS REMINDS TAXPAYERS EXTENSIONS AVAILABLE: The IRS reminded taxpayers that extensions are available to those who need more time to complete their returns. However, the IRS stated that an extension is not an extension of time to pay. The IRS also said that taxpayers who have trouble paying what they owe may qualify for payment plans and other relief.

The IRS stated, “[T]axpayers will avoid stiff penalties if they file either a regular income tax return or a request for a tax-filing extension by this year’s April 15 deadline. Taxpayers should file, even if they can’t pay the full amount due.”

The IRS said that there are additonal options:

“People who haven’t finished filling out their return can get an automatic six-month extension. The fastest and easiest way to get the extra time is through the Free File link on In a matter of minutes, anyone, regardless of income, can use this free service to electronically request an automatic tax-filing extension on Form 4868. Filing this form gives taxpayers until Oct. 15 to file a return. To get the extension, taxpayers must estimate their tax liability on this form and should also pay any amount due. By properly filing this form, a taxpayer will avoid the late-filing penalty, normally five percent per month based on the unpaid balance, that applies to returns filed after the deadline. In addition, any payment made with an extension request will reduce or eliminate interest and late-payment penalties that apply to payments made after April 15. The current interest rate is three percent per year, compounded daily, and the late-payment penalty is normally 0.5 percent per month. Besides Free File, taxpayers can choose to request an extension through a paid tax preparer, using tax-preparation software or by filing a paper Form 4868, available on”

Most people can set up a payment agreement with the IRS online in a matter of minutes. Those who owe $50,000 or less in combined tax, penalties, and interest can use the Online Payment Agreement to set up a monthly payment agreement for up to 72 months.

Some struggling taxpayers may qualify for an offer-in-compromise. This is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. The IRS looks at the taxpayer’s income and assets to make a determination regarding the taxpayer’s ability to pay. To help determine eligibility, use the Offer in Compromise Pre-Qualifier, a free online tool available on