News Media Quote David Burton Extensively on IRS’s Production Tax Credit Guidance

The IRS’s new guidance clarifying the rules for wind projects to qualify for the production tax credit (PTC) is the subject of several articles in which Akin Gump tax partner David Burton is quoted. The notice from the IRS is meant to resolve any uncertainty pertaining to whether certain wind projects started construction in 2013, as is necessary to be eligible for the PTC.

Burton tells Tax Notes the new guidance “is generally consistent with the industry’s requests for clarifications; however it adds unanticipated complexity with respect to the transfer of grandfathered projects.” In a surprise move, the IRS also included guidance that many were not expecting, providing rules, according to Burton, “with respect to projects that fall short of meeting the safe harbor of spending 5 percent of their total cost in 2013.”

Still, in an article in SNL Financial, Burton says the wind industry “got what it asked for” in the physical work clarification and “is in no position to complain.” The guidance, he says, “will get things going.” The clarification in question refers to the IRS saying it will now evaluate projects based on the nature of work developers completed before the end of 2013, rather than the amount of work or its cost.

North American Windpower also covered the news from the IRS, with Burton commenting on what may have been the agency’s inadvertent introduction of further complexity with respect to ownership transfers. He says he was “surprised that the IRS did not permit a simple transfer of turbines or other grandfathered equipment to an unrelated party.” Current rules stipulate that project transfers must be to a party that is at least 20 percent related or must include contracts or land for the project.

Burton also discussed grandfathered projects with IJ Global, noting the requirements are “an additional wrinkle that the industry didn’t ask for.” He adds, however, that the restrictions should be workable and will probably not impede many transactions.

Overall, as Burton tells Clean Energy Pipeline, the new guidance is “generally good news” for the U.S. wind energy and renewables industry and he does not expect anything further to be issued. “The government has fatigued over issuing guidance,” he says. “It will not be issuing new guidance. Industry needs to work with [the latest] guidance.”