David Burton and Richard Page Pen Article for Solar Industry on Changing Vermont Tax Law

Solar Industry Magazine has published the article “Vermont’s Valuation Policies For Solar Energy Plants Could Be A Model For Other U.S. States,” written by Akin Gump tax partner David Burton and associate Richard Page, on Vermont’s online financial model for taxpayers to use in valuing solar energy plants subject to property taxes. The authors consider that, by “providing this valuation model, Vermont is in the vanguard of state-level solar energy tax policy.”

The authors note that, among the changes to Vermont’s tax law included in the state-issued 2015 Fact Sheet, taxpayers should be aware of the following:

Solar energy property: “Vermont now requires solar energy plants in the state with a capacity of 50 kW or more to pay an annual Uniform Capacity Tax of $4/kW of plant capacity… Plants meeting or exceeding the 50 kW threshold are exempt from the state’s education property tax. Plants that fall below the 50 kW threshold and that are either (a) employing a net-metering system or are (b) off grid and providing energy to one property are now exempt from the following:

  • The Uniform Capacity Tax;
  • The state’s education property tax; and
  • Municipal property taxes.”

Valuation model: “Solar energy plants that are not exempt from both municipal property taxes and the state’s education property tax must be valued using a discounted cashflow (DCF) method… Taxpayers must use the online solar energy plant valuation model that has been approved by Vermont… A critical factor in the DCF method is the discount rate. The online valuation model permits a user to enter its own discount rate because the model’s use is not limited to property tax valuations.”

Additionally, Burton and Page noted that they are impressed with these changes as they encourage investment in solar energy equipment in the state, adding, “In fact, we are so impressed with Vermont’s approach to solar energy property valuations that we encourage other tax authorities to consider whether an online model would be feasible for them to deploy. Such an online model would provide greater certainty to taxpayers and reduce the time and expense of tax disputes.”

To read the full article, please click here.