Residential Energy-Efficient Property Credit Rules Issued

By Alistair M. Nevius, J.D.

The IRS has provided guidance to manufacturers and consumers on satisfying the requirements of the residential energy-efficient property credit (Notice 2009-41). The notice outlines procedures manufacturers must follow to certify that property satisfies the credit’s conditions. Taxpayers receive guidance on when they may rely on a manufacturer’s certification.

Sec. 25D allows taxpayers a tax credit when they purchase certain qualified solar electric property, solar water heating property, fuel cell property, small wind energy property, and/or geothermal heat pump property. The property must be used in a residence located in the United States.

In order to claim the credit, the notice says taxpayers may rely on the manufacturer’s certification that the property meets the requirements of Sec. 25D. Taxpayers do not have to attach the certification to their return but must retain it as part of their records.

The notice provides manufacturers with specific requirements that their certifications must meet. The manufacturer’s certification can be included with the property packaging or be made available in printable form on the manufacturer’s website. The manufacturer must declare, under penalty of perjury, that the facts presented in the certification are true and must maintain documentation establishing that the property meets the Sec. 25D requirements.

If the IRS discovers that a manufacturer’s certification is wrong, it can withdraw the manufacturer’s right to issue certifications and will publish an announcement of that withdrawal. Taxpayers can rely on erroneous certifications for any products purchased before the announcement was published but cannot rely on any certifications for that manufacturer’s products for property purchased after the announcement was published.

The IRS says it plans to publish regulations incorporating the rules set forth in Notice 2009-41. Taxpayers may rely on the notice for tax years beginning after December 31, 2008. Currently, the residential energy-efficient property credit applies only to property placed in service before January 1, 2017.

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