Pennsylvania Urges Businesses To Claim Green Tax Credits

by Leroy Baker, Tax-News.com, New York

10 August 2009

Businesses in Pennsylvania are being urged by the state government to pursue renewable energy projects that qualify for federal tax credits.

In an announcement issued on August 7, Department of Environmental Protection Secretary John Hanger encouraged businesses in the state to apply for a direct tax refund from the federal government.

“Companies want to develop renewable energy projects, but may lack the necessary funding,” he observed. “The cash payments will make funds available that can be used immediately to invest in such projects, which will create jobs.”

Hanger said that Pennsylvania has a number of programs designed to encourage and assist green energy production, including a tax credit program for renewable energy production. “The federal program is yet another tool that can be used as a potential source of capital that can help move stalled projects forward and drive us down the road toward energy independence,” he explained.

About USD3bn in funding for the immediate federal tax credit program is being made available through the American Recovery and Reinvestment Act (ARRA). A company that creates and places in service a renewable energy facility beginning January 1, 2009 can receive an immediate cash payment to cover a portion of the project’s cost.

Previously a company would receive a tax credit, but under the new program they would generate an immediate cash payment to cover the eligible costs in lieu of future tax credits.

By receiving payments for property under section 1603 of ARRA, applicants are electing to forego tax credits under sections 48 and 45 of the Internal Revenue Code with respect to such property for the taxable year in which the payment is made or any subsequent taxable year. Applicants must agree to the terms and conditions applicable to the section 1603 program.

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