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IRS CLARIFIES ‘BINDING WRITTEN CONTRACT’ GUIDANCE FOR PTC AND ITC

Thursday, April 25, 2013 - 7:00AM

The Internal Revenue Service (IRS) today updated Notice 2013-29 to clarify guidance it had issued on April 15 regarding facilities eligible for the renewable energy production tax credit (PTC) or investment tax credit (ITC). A provision under Section 4.03 previously stated that a manufacturing, construction or production contract is only binding if it is enforceable under local law against the taxpayer or predecessor and does not limit damages to a specified amount. The revised version says that a contractual provision that limits damages to an amount equal to at least 5 percent of the total contract price will not be treated as limiting damages to a specified amount.

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