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Bill Would Allow Tax Exemptions on State, Local Government Contributions to Partnerships

WASHINGTON– June 24, 2016

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A bill introduced this week would amend the federal tax code to allow income tax exemptions on capital contributions from state and local governments to partnerships and limited liability companies treated as partnerships. The Preserving Investment in Needy Neighborhoods (PINN) Act, sponsored by Reps. Pat Tiberi, R-Ohio, Peter Roskam, R-Ill., and Danny Davis, D-Ill., would put partnerships and LLCs on the same ground as corporations by making grants and other government-provided capital exempt from tax.

For more information, tune in to the June 28 episode of Tax Credit Tuesday.

House GOP Tax Reform Task Force Releases Report

WASHINGTON– June 24, 2016

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The House Republicans Tax Reform Task Force today released a blueprint and two-page summary calling for three individual tax brackets and the reduction of individual and business tax rates. The blueprint made no mention of the low-income housing tax credit (LIHTC), new markets tax credit (NMTC), historic tax credit (HTC) and the renewable energy investment tax credit (ITC) and production tax credit (PTC), but said that it “generally will eliminate special-interest deductions and credits in favor of providing lower tax rates.” The House Ways and Means Committee is expected to turn the blueprint into legislative language before Jan. 20, 2017, when the next president is inaugurated.

Tune in to the June 28 episode of Tax Credit Tuesday for more information.

IRS Updates Beginning of Construction Guidance for ITC, PTC

WASHINGTON– May 18, 2016

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The Internal Revenue Service (IRS) today released an update to Notice 2016-31, which was originally released May 5 to clarify guidance on the begin-construction date for the renewable energy investment tax credit (ITC) and production tax credit (PTC). The update modifies the deadline for the continuity safe harbor in Section 3, corrects a math error in the example Section 6.02(1) and states that the guidance is effective for projects that are placed in service after Jan. 2, 2013

IRS Notice Clarifies PTC Issues

WASHINGTON– May 5, 2016

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The Internal Revenue Service (IRS) issued a notice today that updates previous guidance on the begin-construction date and when a facility must be placed in service to claim the renewable energy production tax credit (PTC) following the passage of the Protecting Americans from Tax Hikes (PATH) Act of 2015. The notice extends and clarifies that a facility satisfies the continuity safe harbor if it is placed in service no more than four calendar years after the calendar year during which construction began. Notice 2016-31 also clarifies that the five percent safe harbor can be applied for retrofitted facilities only to expenditures related to new property used to retrofit.

PLR Discusses Circumstances Affecting Placement in Service

WASHINGTON– March 14, 2016

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The Internal Revenue Service (IRS) last week published a private letter ruling 201611011, which discusses how certain circumstances affect the timing of when renewable energy projects can be placed in service for purposes of Internal Revenue Code Sections 38, 46, 48, 167 and 168.

IRS Seeks Comments on New Partnership Audit Provisions

WASHINGTON– March 4, 2016

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The Internal Revenue Service (IRS) today released Notice 2016-23, requesting comments on the new partnership audit regime enacted in the Bipartisan Budget Act of 2015.The new regime for auditing all partnerships will be effective for tax years beginning after Dec. 31, 2017. Some partnerships may elect into the regime prior to that date. The provisions are intended to make the IRS partnership audit process more efficient by eliminating multi-tier audits and determinations at the partner level. Comments on the new rules are due April 15.

To learn more about the implications of the new provisions on tax credit partnerships read the Notes from Novogradac blog, and purchase a recording of the Novogradac New Rules for IRS Audits of Partnerships Webinar.

 

Administration Releases FY 2017 Budget

WASHINGTON– Feb. 9, 2016

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President Barack Obama today released his $4.2 trillion fiscal year (FY) 2017 budget, the final budget request of his presidency. For the U.S. Department of Housing and Urban Development (HUD), the budget requests $48.9 billion in gross discretionary funding, a 15 percent increase over FY 2016. The budget also calls for a new $11 billion in mandatory spending over the next 10 years for programs to house homeless families, including $8.8 billion for housing choice vouchers and $2.2 billion for short-term assistance.

The budget proposes changes to reform and expand the Low-Income Housing Tax Credit (LIHTC) program, including allowing states to convert up to 18 percent of each state’s private-activity bond volume cap into additional LIHTC authority; allowing the income-average rule for LIHTC eligibility; adding to the selection criteria for LIHTC allocation the preservation of federally assisted affordable housing; making affirmatively furthering fair housing an explicit preference in qualified allocation plans (QAPs); allowing HUD to designate as a qualified census tract (QCT) any census tract that meets certain criteria for the prevalence of poverty or low-income households; and adding protection for victims of domestic violence as a mandatory provision of the long-term-use agreement. The proposal would also modify and permanently extend the new markets tax credit (NMTC) at $5 billion and the renewable energy investment tax credit (ITC) and production tax credit (PTC).

Further analysis will be available on the Notes from Novogradac blog.

 

IRS Seeks Comments on Notice Related to Electing ITC in Lieu of PTC

WASHINGTON– Jan. 5, 2016

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In tomorrow’s Federal Register, the Internal Revenue Service (IRS) will invite comments on Notice 2009-52, which describes the procedures required to elect the renewable energy investment tax credit (ITC) in lieu of the production tax credit (PTC). The election was created by the American Recovery and Reinvestment Act. No changes to the notice are being proposed. Comments are due March 7.

 

President Signs FY2016 Omnibus, Tax Extenders Legislation

WASHINGTON– Dec. 18, 2015

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President Barack Obama today signed the $1.1 trillion Consolidated Appropriations Act of 2016 and the tax-extending, $680 billion, Protecting Americans From Tax Hikes (PATH) Act of 2015. The bills include provisions to permanently extend the minimum 9 percent low-income housing tax credit (LIHTC), extend the new markets tax credit (NMTC) for five years at $3.5 billion annually through 2019, and extend and gradually phase down the renewable energy investment tax credit (ITC) and production tax credit (PTC) through 2021.
For more detailed information on the bills, see the Notes from Novogradac blog.

 

Congress Unveils FY2016 Omnibus Spending Bill, Extenders Legislation

WASHINGTON– Dec. 16, 2015

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The House Appropriations Committee today released the $1.1 trillion Consolidated Appropriations Act of 2016. The fiscal year (FY) 2016 omnibus spending bill provides $38.6 billion net spending for the U.S. Department of Housing and Urban Development (HUD), including:

  • $950 million for the HOME Investment Partnerships program,
  • $19.6 billion for the Housing Choice Voucher program,
  • $10.6 billion for renewal of project-based rental assistance contracts and
  • $2.3 billion for homeless assistance grants, among numerous other programs.

The spending bill also extends the renewable energy production tax credit (PTC) for wind energy through 2016 at prior levels, phasing them out after 2019. The legislation extends the temporary 30 percent solar ITC and the temporary credit for solar residential energy through 2019, then phases the 30 percent investment tax credit (ITC) out after 2021. The House will likely vote on the bill Friday.

In other news, House and Senate leadership yesterday announced the Protecting Americans from Tax Hikes (PATH) Act of 2015, a $650 billion extenders bill that extends or makes permanent several temporary tax provisions. The bill:

  • makes permanent the minimum 9 percent low-income housing tax credit (LIHTC) applicable percentage or rate for federally unsubsidized developments,
  • extends the new markets tax credit (NMTC) for five years at $3.5 billion annually through 2019,
  • and makes permanent the military housing allowance exclusion for LIHTC income qualification for personnel stationed at or near certain military bases.

The House will consider it on Thursday. The Senate could consider it shortly thereafter on Friday, but if some Senators decide to slow consideration, it could take until Dec. 22 for final passage. The president is expected to sign it. More information about the extenders bill can be found in the section-by-section summary here and on the Notes from Novogradac blog. More information on the omnibus will also be available on the Notes from the Novogradac blog.

Chairman Brady Releases Tax Extenders Proposal

WASHINGTON – Dec. 8, 2015

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House Ways and Means Committee Chairman Kevin Brady, R-Texas, yesterday proposed an amendment to the Senate amendment to H.R. 34 that would extend through 2016 several temporary tax provisions that expired at the end of calendar year 2014, also known as the “tax extenders.”

 The bill would:

  • extend the 9 percent minimum credit rate for low-income housing tax credit (LIHTC) allocations made for non-federally subsidized new buildings before 2017;
  • extend through the end of 2016 the military housing allowance exclusion for determining LIHTC tenant eligibility;
  • authorize the new markets tax credit (NMTC) at $3.5 billion annually for 2015 and 2016;
  • extend and modify bonus depreciation for property acquired and placed in service during 2015 or 2016;
  • extend the energy-efficient credit for new homes through 2016;
  • extend the energy-efficient commercial buildings deduction through 2016;
  • and extend the renewable energy production tax credit (PTC) for wind and certain other energy facilities that commence construction by the end of 2016.

The legislation includes technical changes to the partnership audit provision of the Bipartisan Budget Act of 2015, additional tax policy changes and reforms to the IRS. A section-by-section summary can be found here.

Learn more about the extenders proposal on the Notes from Novogradac blog.

Obama Signs Two-Year Budget Legislation

WASHINGTON – Nov. 2, 2015

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President Barack Obama today signed the Bipartisan Budget Act of 2015. The legislation suspends the debt limit through March 2017 and lifts spending limits through September 2017. The deal raises sequestration caps and increases discretionary spending by about $50 billion in fiscal year (FY) 2016 and $30 billion in FY 2017, split evenly between defense and domestic spending. Congress passed the legislation last week with votes of 64-35 in the Senate and 266-167 in the House.

Read about the bill’s implications for tax credit partnerships on the Notes from Novogradac blog.

 

 

IRS, Treasury Seek Comments on Energy Property Definitions

WASHINGTON – Oct. 2, 2015

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The Department of the Treasury and the Internal Revenue Service (IRS) today invited comments on how to define certain types of properties that qualify for the renewable energy investment tax credit (ITC). The IRS and Treasury Department anticipate issuing regulations that include the definition of various types of property. Comments must be received by Feb. 16, 2016.

For more information, tune in to the Oct. 13 Tax Credit Tuesday podcast.

 

Congress Passes Stopgap Spending Bill

WASHINGTON – Sept. 30, 2015

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Congress today passed a stopgap spending bill that will keep the federal government funded through Dec. 11. The Senate passed the bill this morning with a vote of 78-20 and the House later approved it 277-151.  President Barack Obama is expected to sign the bill today. To avoid a government shutdown, a stopgap spending bill needs to be passed before the start of the 2016 fiscal year (FY) Thursday.

Bill Introduced to Temporarily Extend, Then Replace ITC, PTC

WASHINGTON – Sept. 22, 2015

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Sens. Harry Reid, D-Nev., Chuck Schumer, D-N.Y., and Ron Wyden, D-Ore., today introduced the American Energy Innovation Act. Among other things, the bill would extend the current renewable energy investment tax credit (ITC) and production tax credit (PTC) through Dec. 31, 2017. The current credits would then be replaced with a new, technology-neutral 30 percent ITC and PTC at 2.3 cents per KWh that would phase out when reduced greenhouse gas emission targets are achieved. The bill would also revise the energy efficient homes incentives for new and existing buildings, including Sections 45L and 179D, to provide performance-based incentives based on energy savings. A section-by-section description and tax summary are available.

IRS Releases 2015-2016 Priority Guidance Plan

NORWICH, Conn. – July 31, 2015

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The Internal Revenue Service (IRS) today released its 2015-2016 Priority Guidance Plan and fourth-quarter update to the 2014-2015 guidance plan. The 2015-2016 Priority Guidance Plan contains 277 projects, 40 projects fewer than the original version of last year’s document. The IRS said that some items that were removed may be considered for inclusion in a future plan. Compared to a previous version, Treasury removed the following priorities: update Rev. Proc. 2007-54, which provides relief under Section 42 in the case of a presidentially declared disaster; provide guidance concerning the exception under Section 42(d)(6) for any federally or state-assisted building; and clarify Notice 2013-26 and Notice 2013-60 regarding how to establish the beginning of construction of a facility under Section 45(d), as modified by the American Taxpayer Relief Act of 2012. Treasury added a priority to modify Notice 2015-4 by providing a revised effective date of the performance and quality standards for certain small wind energy property under Section 48.

Tune in to the Aug. 4 Tax Credit Tuesday podcast for more information.

Senate Finance Committee Announces Tax Extenders Markup

WASHINGTON – July 17, 2015

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Senate Finance Committee Chairman Orrin Hatch, R-Utah, and Ranking Member Ron Wyden, D-Ore., today announced that the committee will mark up a tax extenders bill Tuesday. The chairman's mark of the bill included extending the following provisions through the end of 2016: the minimum applicable percent of the 9 percent low-income housing tax credit (LIHTC) (for allocations made before Jan. 1, 2017); the new markets tax credit (NMTC) at $3.5 billion annually; the Section 45L energy efficient home credit; the Section 179D energy-efficient commercial buildings deduction; and the ability to claim the renewable energy investment tax credit (ITC) in lieu of the production tax credit (PTC). A minimum 4 percent applicable percentage for LIHTCs used to finance the acquisition of property is not included, but could be added in a modified chairman's mark expected for release Tuesday. Estimated revenue effects of the chairman's mark can be found here and a summary of the provisions can be found here.

Tune in to the July 21 Tax Credit Tuesday podcast for more information.

IRS Issues Update on Qualifying Date for Energy Properties

NORWALK, Conn. – July 14, 2015

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The Treasury Department and the Internal Revenue Service (IRS) on Monday published Notice 2015-51 to provide performance and quality standards that small wind energy property must meet to qualify for the renewable energy investment tax credit (ITC) or production tax credit (PTC). The notice modifies Notice 2015-4 by providing a revised effective date for certain small wind energy property that meets performance and quality standards.

Tune in to the July 21 episode of the Tax Credit Tuesday podcast for more information on the notice.

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