Tax Credit in Your Biogas Projects Before the End of the Year. October 18 th, 2013

Similar documents
Preserving the Investment Tax Credit prior to year-end

AD Tax Credits, Section 1603 Grant

Reinventing Biogas Financing Successful and Innovative Strategies to Finance Biogas Projects. January 28 th, :00 am-12:30 pm ET

Articles. Thomas Popplewell (Co-Author) April 17, ***Update effective May 13, 2013***

Beginning of Construction for Purposes of the Renewable Electricity Production Tax Credit and Energy Investment Tax Credit

IRS Guidance on When Construction Begins for Purposes of Production Tax Credit and Investment Tax Credit

GASB Changes on the Horizon

REI NETWORK WEBINAR: A HIGHLIGHT OF TOOLS AND RESOURCES FROM CFED'S TAXPAYER OPPORTUNITY NETWORK. December 2, :00 4:00 pm EDT

Start-Of-Construction Update Should Benefit Clean Energy

New PTC beginning of construction guidance

Opportunity Zones. How to capitalize the funds and get OZ equity into a project

Beginning of Construction Rules for PTC (and ITC in Lieu of PTC) Brian Americus Gary Hecimovich Deloitte Tax LLP

Using Partnership Flips to Finance Renewable Energy Projects: Evaluating Tax Risks, Navigating IRS Safe Harbors

Structuring Equity Compensation for Partnerships and LLCs Navigating Capital and Profits Interests Plus Section 409A and Tax Consequences

A Live 110-Minute Teleconference/Webinar with Interactive Q&A

Structuring Equity Compensation for Partnerships and LLCs Navigating Capital and Profits Interests Plus Section 409A and Tax Consequences

Proposed CalPERS Changes in Risk Pooling for Small Public Agencies. Webinar: April 30, 2014

Reinventing Biogas Financing Part III: Strategies to Attract Capital to Agricultural Projects. June 17 th, :00 3:30 PM ET

SSAP No. 101: Issues to consider

Using Partnership Flips to Finance Renewable Energy Projects: Evaluating Tax Risks, Navigating IRS Safe Harbors

Tax Incentives for Renewable Energy Investments Under the American Recovery and Reinvestment Act of 2009 ( ARRA )

Ohio Tax. Workshop NN. Opportunities & Pitfalls Sourcing of Service/Sales of Non-Tangible Personal Property in Multistate Arena

AN INTRODUCTION TO RENEWABLE ENERGY

Health care reform update

Beginning of Construction for PTC and ITC in Lieu of PTC

NEW MARKETS TAX CREDITS AND OTHER FEDERAL INCENTIVES FOR NEW PROJECTS

ERISA Pre-Approved and Customized Benefit Plans: Overhauled IRS Procedures and Determination Letter Process

Speakers. October 17, 2013 For Audio Participation: Call-In Number: Participant Passcode:

New Markets Tax Credits. How to close a gap in a project s financing and add a layer of tax credit equity to the capital stack

Summary: October 18, 2016

Financing Renewable Energy

Are You Ready? Navigating the New IRS Process and Competency Exams

EB-5 Investment Immigration to the United States

IN-DEPTH TAX PLANNING FOR RENEWABLE ENERGY PROJECTS

United States District Court for the Southern District of Ohio NOTICE OF CLASS ACTION SETTLEMENT

Legal Quick Hit: Master Limited Partnerships and Renewable Energy The Next Big Thing?

The GASB s New Financial Reporting Model

Private Water and Sewer Companies

Energy Solutions with Powerful Results. Energy Industry Team

Structuring 340B Contract Pharmacy Arrangements: Meeting Legal and Regulatory Requirements

Helping you make sense of tax withholding rules for your IRA

Instructor information

Cash Balance Plans Maximizing Retirement Assets and Minimizing Your Tax Burden

and Clean Technology Advisory: IRS Guidance on Electing Investment Credit in Lieu of Production Tax Credit

Washington Tax Brief January 24, 2018

State income tax exposure for fund managers

Renewable Energy Asia 5 June 2013 Bangkok, Thailand

Opportunity Zones Tax incentives for investing in low-income communities

RENEWABLE ENERGY- START TO FINISH

Energy Tax Provisions in the American Recovery and Reinvestment Act of 2009

AFFORDABLE CARE ACT (ACA) INFORMATION REPORTING AND COMPLIANCE

VILLAGE OF DOWNERS GROVE Report for the Village Council Meeting

Using Inverted Leases to Finance Renewable Energy Projects

Construction auditing: Post-Construction

Webinar: Tax Equity Structuring New Trends, Challenges, and Advice

Year End. Guide. At Your Service

2018 and Onward: The Impact of the House-Senate Compromise Tax Plan on the Renewable Energy Market

YEAR END TAX BULLETIN

Executive Compensation: Tax and Other Considerations for Restricted Stock Awards

Creative Financing & Funding for WTE Projects

Structuring Employee Severance Arrangements: Revisiting Code Section 409A and its Impact on Deferred Compensation

Clean Renewable Energy Bonds (CREBs) August 14, 2007

ENERGY FINANCE- UNLOCKING INNOVATION

2017 Deloitte Renewable Energy Seminar Innovating for tomorrow November 13-15, 2017

The National Multistate Tax Symposium West Move forward with confidence State implications of tax reform. April 30 May 2, 2018

Webinar with Software Providers: June 20, 2018

Cost Pools, Indirect Rates & Allocation Plans: Demystified

Financial Policies & Procedures for Non-Profit Organizations

Summary: September 20, 2016

Corporate Governance of Subsidiaries: Board Roles and Responsibilities, Interplay With Parent Board, Liability Risks

Penalties! Penalties! The IRS is now Sending ACA Penalty Notices. Brenda JM Sabin, CBP, SPHR, SHRM-SCP, CHRS

FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS REPORT GAINESVILLE REGIONAL UTILITIES GAINESVILLE, FLORIDA SEPTEMBER 30, 2018 AND 2017

2014 USF Contributions

Q&A on ACA Tracking and Reporting 12/29/2015

SSAP 101: Advanced topics

INTERNAL REVENUE SERVICE. Tax Exempt and Government Entities (TE/GE) Operating Division. Federal, State and Local Governments

Tax Strategies for Real Estate LLC and LP Agreements: Capital Commitments, Tax Allocations, Distributions, and More

IRC Section 338(h)(10) Election

Agenda Conference Call Finance and Audit Committee

Scott J. Bakal, Partner, Neal Gerber & Eisenberg, Chicago Robert C. Stevenson, Attorney, Skadden Arps Slate Meagher & Flom, Washington, D.C.

Greenhouse Gas Offset Credit RFO Participants Webinar

Environmental Audits: Privilege, Voluntary Disclosure and Other Legal Issues

2009 ANNUAL MEETING AND EDUCATION CONFERENCE American College of Investment Counsel New York, NY

WELCOME TO OUR WEBINAR International Arbitration Clauses for Franchise Agreements

Structuring Public-Private Partnership Agreements: Leveraging the New EJCDC Standard P3 Contract Form

PLAN TERMINATION ISSUES

Citibank Custom Reporting System (CCRS) Single Hierarchy Query

Thanks for Joining Us!

SECTION 503 COMPLIANCE: WHAT CREDIT UNIONS SHOULD KNOW

FEDERAL INCENTIVES. Green Incentives and Credits for Businesses

GUIDANCE STATEMENT ON BROADLY DISTRIBUTED POOLED FUNDS WEBINAR

Mississippi Valley Chapter

Presenters. James Jaramillo. Rose Ann Abraham, CPA. Todd Solomon, JD. Partner, McDermott Will & Emery LLP. Partner, Baker Tilly Virchow Krause, LLP

Amending (Again) Clients Wrap Plans for the ACA. August 2015

VILLAGE OF GREENDALE WISCONSIN REQUEST FOR PROPOSALS FOR PROFESSIONAL AUDITING SERVICES

Employee benefit plan large filers: Meeting your compliance and fiduciary requirements. April 20, 2016

FINANCIAL POLICIES. John Rader, Senior Manager Baker Tilly Virchow Krause, LLP

Why Offshore Wind in the Southeast?

Builder's Risk Insurance for Construction Projects: Legal Issues Evaluating Scope of Coverage and Resolving Coverage Disputes

Washington Tax Brief June 6, 2018

Transcription:

Preserving the Use of the Investment Tax Credit in Your Biogas Projects Before the End of the Year October 18 th, 2013 11:30am 12:10pm 12 10 ET

Quick knotes Two Audio Options: Streaming Audio and Dial In. 1. Streaming Audio/Computer Speakers (Default) 2. Dial In: Use the Audio Panel (right side of screen) to see dial in instructions. Call in separately from your telephone. Ask questions using the Questions Panel on the right side of your screen. The recording of the webinar and the slides will be available after the event. Registrants will be notified by email.

Promoting the use of Biogas and Anaerobic Digestion O 180+ Members from the U.S., Germany, Italy, Canada, UK O All Industry Sectors Represented Key Industry Goals: O Promote biogas markets, kt technologies and infrastructure t O Achieve policy parity O Promote as a best practice for environmental stewardship and greenhouse gas reduction

Changing the Biogas Industry through: o Legislative and Regulatory Affairs o Federal: Biogas Tax Credit; Clean Energy Standard; NAT GAS Act; Farm Bill o States: California, Iowa, Massachusetts, Indiana, more o Sharing Expertise o Specialized Working Groups o Education and Outreach o Briefings, presentations, and webinars for customers, policy makers, and the general public o Large Industry Network 170+ company members o Entire supply chain of production, processing and use Join Today! Email Josh Lieberman at jlieberman@ttcorp.comcom or call 202 640 6595 6595

Preserving the Investment Tax Credit prior to year-end October 18, 2013 Baker Tilly refers to Baker Tilly Virchow Krause, LLP, an independently owned and managed member of Baker Tilly International.

Baker Tilly Presenters Michael Land Director - Baker Tilly Capital michael.land@bakertilly.com Cory Wendt Senior Manager - Energy and Utilities cory.wendt@bakertilly.com 6

Agenda > Introduction > Recent IRS notices regarding Begun Construction - What are the rules? - What do they mean to a project owner? - How vendors can support meeting Begun Construction > Funding parties view of ITC planning > Questions and Answers 7

Baker Tilly at a Glance Baker Tilly is the 8 th largest accounting network worldwide > Top 20 largest firms in the U.S. consisting of more than 1,600 professionals > Established in 1931 > Offices throughout the Midwest and East Coast Chicago Detroit Minneapolis New York Washington DC Wisconsin 8

Diverse Clients Served We serve our clients through our industry teams Utilities > Nationwide energy practice: More than 40 years experience and over 300 energy and utility clients nationwide - electric, water, waste water, storm water, and gas utilities Renewable Energy > Dedicated Renewable Energy Group: Focused on development and financial solutions to get projects to the finish line in a way that maximizes client value and minimizes risk. We work with more than 40 active projects representing 1,500 MW. Manufacturers and Food & Beverage > Seventy-five years serving manufacturers: We serve more than 2,300 manufacturers and wholesale/distributors with over 230 in the Food and Beverage industry. State and Local Government > Work closely with municipalities and other non profits: Experience with municipal/government leaders allows us to understand diverse perspectives. We work with more than 150 higher education and research institutions across the United States. 9

BT Experience Since 2008, Baker Tilly has been involved with over $1.96 billion of renewable energy projects that are either operating or under construction > Over 15 biogas projects (food processors and agricultural feedstock) and $220 million of funding Our role: > Accessing Federal Incentives (ITC, PTC, 1603 grants, NMTC s) > Development Support Feedstock agreements, PPA s, heat sale agreements, etc. EPC, O&M and Technology procurement agreements > Financial Advisory and Funding Procurement 10

Energy Legislative Updates Biogas projects typically fall under the open loop biomass or trash facilities definition. Applies only to projects that use the biogas to produce electricity. ARRA passed in February, 2009: > Investment Tax Credit ( ITC ) equal to 30% of eligible project costs > Production Tax Credit equal to $.0115/kwh produced for 10 years - Indexed to inflation - 2 X more for closed loop biomass facilities > Required to be placed in service by December 31, 2013 American Taxpayer Relief Act of 2012 > ITC/PTC deadline extended - Deleted 12/31/13 placed in service requirement (no credit termination date) - Added 12/31/13 begun construction deadline > These changes do not apply to the 1603 grant program 11

Begun Construction What is Begun Construction > IRS has provided two notices during 2013-2013-29 (April) - 2013-60 (September) > Two tests, only have to meet one - Physical work of a significant nature (PWSN) - Safe Harbor equal to 5% of ITC eligible costs > Major change from 1603 guidance is continuous efforts requirement under the safe harbor test - Adds level of subjectivity to safe harbor test - Notice 2013-60 clarified this requirement by providing if a facility is placed in service by December 31, 2015 the continuous efforts requirement is deemed to be met. 12

Begun Construction Physical Work of a Significant Nature Rules > Binding written contract (if work done by someone other than taxpayer) - Binding if it is enforceable in the state where the facility is to be located and the contract doesn t limit damages to less than 5% of the contract price - Master contract can be assigned to multiple facilities by the taxpayer - Physical work can be on-site or off-site - Manufacturer must have reasonable method for tracking equipment produced for a project - Doesn t include work to produce equipment that is in inventory > Does not include preliminary activities (planning, financing, permits, clearing the site, etc.) > Must be a continuous program of construction - Allowable disruptions include force majeure, licensing and permitting delays, financing delay of less than 6 months, and others - Notice 2013-60 clarified this requirement by providing if a facility is placed in service by December 31, 2015 the continuous construction requirement is deemed to be met. 13

Begun Construction Safe Harbor Rules > Taxpayer must pay or incur 5% of the eligible costs of the facility by December 31 2013 - Incur applies to accrual basis taxpayers (most), and requires that the product or service be provided to the taxpayer within 3 ½ months of payment (or that the taxpayer reasonably expects to have it provided within 3 ½ months) - Costs incurred by a vendor, pursuant to a binding written contract with the taxpayer may be treated as incurred by the taxpayer for purposes of this requirement - Does include preliminary activities (planning, financing, permits, clearing the site, etc.) to the extent they are allocated to cost basis of qualifying property - No exclusion of equipment from inventory > Taxpayer must make continuous efforts toward construction - Definition of continuous efforts is broader than for PWSN, includes planning, financing, making additional payments. - Allowable disruptions include force majeure, licensing and permitting delays, financing delay of less than 6 months, and others (same as PWSN) - Notice 2013-60 clarified this requirement by providing if a facility is placed in service by December 31, 2015 the continuous efforts requirement is deemed to be met. 14

Further IRS Guidance Transfer Rules > Notice 2013-60 states that as long as a facility has met the Begun Construction test via either the PWSN or Safe Harbor test, the owner of the facility when it is placed in service may claim the PTC or ITC > Doesn t require the taxpayer to be the owner at the time the facility begun construction - This is a significant change from prior guidance under the 1603 program whereby the transfer of ownership needed to be to a related party 15

Owner Perspective Plan and take action prior to December 31, 2013 > If you are confident you can place the project in service by December 31, 2015 then most of the subjectivity is gone from both tests - Still some subjectivity regarding what constitutes starting physical work activities under PWSN > If project timeline extends beyond December 31, 2015, then strong preference for meeting Safe Harbor - Take title to qualifying equipment prior to December 31, 2013 if possible. - If not possible, make sure purchase documents clearly l show reasonable expectation of delivery within 3 ½ months of payment Clearly l document actions that t have met Begun Construction ti > There is no pre-application to show that you ve met the Begun Construction test. Important to have actions clearly documented to support claiming the ITC after the facility is placed in service. > Makes sense to document continuous efforts in case the placed in service date slips past the December 31, 2013 deadline 16

What can Vendors do to support meeting Begun Construction? Support owner s need for correct documentation > Make sure contracts are binding > Demonstrate manufacturing activities for equipment began after the execution of the contract with the owner but before December 31, 2013 and are not items typically held in inventory (PWSN) > Include language demonstrating reasonable expectation of having equipment or service provided within 3 ½ months of payment (for Safe Harbor) > Create a process during construction to document activities that are relevant to continuous efforts 17

Funding Party Perspective Meeting Begun Construction tests are binary : you either get the ITC or you don t depending on meeting this test, no in between. So take the time to make your actions as compliant with the rules as possible. Depend on objective rules as much as possible 18

Questions & Answers Connect with us: Mike Land, Director 608 240 2580 michael.land@bakertilly.com Cory Wendt, Senior Manager 608 240 2635 cory.wendt@bakertilly.com 19

Disclosure Pursuant to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, nothing contained in this communication was intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose. No one, without our express prior written permission, may use or refer to any tax advice in this communication in promoting, marketing, or recommending a partnership or other entity, investment t plan, or arrangement to any other party. Baker Tilly refers to Baker Tilly Virchow Krause, LLP, an independently owned and managed member of Baker Tilly International. The information provided here is of a general nature and is not intended to address specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. 2013 Baker Tilly Virchow Krause, LLP 20

Q&A Ask questions using the Questions Panel on the right side of your screen. All questions and comments will be recorded and incorporated inthe webinar summaryreport report. Also, please a few moments to answer the survey questions. This Webinar will be available by Monday, June 24

Upcoming Events Wbi Webinars: Innovation Spotlight: New Feedstocks for Biogas Production Tuesday, November 12 th : 12:00pm 1:00pm Speakers: Tom Ferencevic, Yield Energy How to Avoid Digester Failures, Operating Errors And Find Financial Success Wednesday, December 4 th ; 12:00pm 1:00pm Speakers: John Fisher, SEH Inc. ABC Workshop: How to Avoid Digester Failures, Operating Errors And Find Financial Success October 20 th : 12:30pm 5:30pm REFOR13: Columbus, OH, Regency Hyatt BioCycle srefor13 The Official Conference of the American Biogas Council October 20 23, 2013 Columbus, OH, Hyatt Regency For more information, visit https://www.americanbiogascouncil.org/media_events.asp or call (202)640 6595 22

More Information Don t forget to fill out our survey! Sign up to receive ABC news on our website, www.americanbiogascouncil.org. Consider Joining i ABC Receive regulatory and policy intelligence Connect with other biogas and anaerobic digestion leaders Support the industry ss growth and outreach

Thank You Wayne Davis, ABC Chairman wdavis@harvestpower.com (781) 314 9504 Patrick Serfass, ABC Executive Director pserfass@ttcorp com pserfass@ttcorp.com (202) 640 6595