The notice provides welcome guidance but may place significant filing requirements on renewable energy projects.

On June 5, 2009, the Internal Revenue Service (IRS) issued guidance describing the procedures investors in certain renewable energy projects are required to follow to make an election to take the investment tax credit (ITC) in lieu of the production tax credit (PTC). As discussed in a previous McDermott Will & Emery On the Subject entitled “Energy Tax Provisions Included in American Recovery and Reinvestment Act of 2009 ,” the 2009 American Recovery and Reinvestment Act (Act) permits renewable energy project investors placing qualified facilities in service prior to 2013 (or, for wind facilities, prior to 2012) to elect to receive a one-time ITC in lieu of the PTC. The ITC is generally equal to 30 percent of a renewable energy project’s cost.

Notice 2009-52 provides that an election to treat a qualified facility pursuant to IRC § 48 as a qualified ITC facility must be made with respect to qualified property that is an integral part of the facility on a completed Form 3468. A separate election must be made for each qualified facility that is to be treated as a qualified ITC facility. The notice provides that taxpayers must attach a statement to the Form 3468 including the following information:

  • The name, address, taxpayer identification number and telephone number of the taxpayer
  • For each qualified investment credit facility:
    1. A detailed technical description of the facility, including generating capacity
    2. A detailed technical description of the energy property placed in service during the taxable year as an integral part of the facility, including a statement that the property is an integral part of such facility
    3. The date that the energy property was placed in service
    4. An accounting of the taxpayer's basis in the energy property
    5. A depreciation schedule reflecting the taxpayer's remaining basis in the energy property after the energy credit is claimed
  • A statement that the taxpayer has not and will not claim a Section 1603 Grant for property for which the taxpayer is claiming the energy credit
  • A declaration, applicable to the statement and any accompanying documents, signed by the taxpayer, or signed by a person currently authorized to bind the taxpayer in such matters, that the person signing has, under penalties of perjury, examined the statement, including accompanying documents, and that to the best of his or her knowledge and belief, the facts presented in support of the statement are true, correct and complete

The Form 3468 must be filed with the taxpayer’s timely income tax return for the year in which the property is placed in service.

Although the notice is also intended to describe the coordination of the PTC and ITC with the grants for specified energy property under §1603 of the Act, it provides little guidance on this topic, other than to restate that the PTC and ITC are not available to a taxpayer once the taxpayer has obtained a § 1603 grant. It is expected that the IRS will issue additional guidance on the grant program and information about the procedure for requesting a grant in the near future.

The notice potentially places significant filing requirements on certain renewable energy projects because it requires that an election be made separately for each qualified facility that is to be treated as an ITC facility. In the case of a wind project, for example, based on existing IRS authority, it is possible that the election would have to be made on a turbine by turbine basis. However, it is generally not clear what will constitute a "qualified facility" for purposes of this election.