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IRS Notice Extends Continuity Safe Harbor for ITC, PTC Projects Launched Between 2016 and 2020
The Internal Revenue Service (IRS) posted a notice Tuesday clarifying the beginning-of-construction requirement for both the renewable energy production tax credit (PTC) and investment tax credit (ITC) for energy properties in response to delays caused by the COVID-19 global pandemic. In an effort to assure that renewable energy endeavors can safely meet the continuity safe harbor requirements, Notice 2021-41 extends the safe harbor deadline for property that began construction in 2016 through 2020. Initiatives launched under the physical work test or the 5% safe harbor between 2016 and 2019 can satisfy requirements if they are placed in service by the end of a calendar year that is no more than six calendar years after the calendar year in which construction began; projects that began construction in 2020 must be placed in service within five years to satisfy the requirement. If continuity safe harbor does not apply, the continuity requirement is satisfied if the taxpayer demonstrates either the continuous construction or the continuous efforts tests, regardless of the method that the taxpayer used to begin construction.
Learn more about renewable energy tax credits from experts Nov. 4-5 at the Novogradac 2021 Financing Renewable Energy Tax Credits Fall Conference at the Park Hyatt Washington, D.C., and online.