With keeping in view the disruptions caused by the Coronavirus pandemic, the IRS has extended the Continuity Safe Harbor applicable to renewable energy production tax credit (PTC) and investment tax credit (ITC). This gives renewable energy developers more time to complete their projects.
The IRS notice also provides a 3½ Month Safe Harbor for services or property paid for by the taxpayer on or after September 16, 2019, and received by October 15, 2020. JDSUPRA elaborates:
- “First, the ‘Continuity Safe Harbor’ is extended from four years to five years for projects that began construction in 2016 or 2017. Developers that put the project in service by the end of the fifth calendar year after the year construction began will be deemed to meet the continuous construction requirement.
- Second, relief is provided for developers that intend to meet the beginning construction requirement by incurring 5% of project costs, i.e., by making payments for services or property they reasonably expected to receive within 3½ months (a/k/a the 3½ Month Rule). Developers that pay for services or property on or after September 16, 2019 and actually receive the services or property by October 15, 2020, will be deemed to satisfy the 3½ Month Rule.
This relief is available to developers of wind, solar, biomass, geothermal, landfill gas, trash, hydropower, fuel cells, microturbines, and combined heat and power systems.”
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