Changes in Tax Codes...
IRS Issues New Guidance for Small Wind Turbines to Qualify for 30% Tax Credit

The U.S. Internal Revenue Service has issued Notice 2015-4 providing new performance and quality standards that require certification of small wind turbines — defined as having a nameplate capacity of up to 100 kW — in order to qualify for the 30 percent federal Investment Tax Credit (ITC).

Certification requirements are helping government agencies ensure that public funds spent on distributed wind installations are spent on safe, quality systems, a means of consumer protection against untested technologies, unverified claims about turbine performance, and equipment failures.

Effective for small wind turbines acquired or placed in service after January 26, 2015, the guidance requires that qualifying small wind manufacturers provide certification to either: (1) American Wind Energy Association Small Wind Turbine Performance and Safety Standard 9.1-2009 (AWEA); or (2) International Electrotechnical Commission 61400-1, 61400-12, and 61400-11 (IEC). The certification must be issued by an eligible certifier, defined as a third party that is accredited by the American Association for Laboratory Accreditation or other similar accreditation body. Documentation establishing that the turbine meets the new requirements must be provided to taxpayers in order to claim the credit. SWCC certifications help manufacturers meet these new requirements.

The addition of performance and quality assurance requirements at the Federal level indicates that certification is now a trusted and useful tool in protecting consumers and helping to ensure the successful implementation of distributed wind projects in the U.S. This step is a positive move that fits into the overall strategy the distributed wind industry as a whole has been pursuing for many years to strengthen the sector's credibility and reliability.

Many suppliers of distributed wind turbines have been actively pursuing certification since 2010. More than a dozen models have completed the process and several others are actively under way. These companies are well positioned to comply with the new IRS requirements. The Interstate Renewable Energy Council maintains a list of ratings of fully certified turbines for the U.S. market.

Notice 2015-4 is posted at: http://www.irs.gov/pub/irs-drop/n-15-04.pdf. The notice reminds manufacturers that an erroneous certification may result in penalties: (a) Under section 7206 for fraud and making false statements; and (b) Under section 6701 for aiding and abetting an understatement of tax liability ($1,000 per return on which a credit is claimed in reliance on the certification). To help manufacturers and taxpayers understand the new IRS requirements, SWCC will develop and publish a set of FAQs on its website.

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