IRS Releases New Guidance on Small Wind Turbine Projects

On January 13, 2015,, the Internal Revenue Service (IRS) released Notice 2015-4, which provides new guidance on the small wind energy project credit under Section 48 of the Internal Revenue Code (IRC). In particular, the guidance provides that small wind energy projects must meet certain performance and quality standards to qualify for the credit.  The official notice is scheduled to be published on January 26 in Internal Revenue Bulletin 2015-4.

Notice 2015-4 provides that Section 48-eligible property must use a wind turbine that has a nameplate capacity of not more than 100 kW and meets the performance and quality standards as set forth in either:

(1) American Wind Energy Association (AWEA) Small Wind Turbine Performance and Safety Standard 9.1-2009; or

(2) International Electrotechnical Commission (IEC) 61400-1, 61400-12, and 61400-11.

Small wind turbines must meet the AWEA or IEC standards that are in effect at the time of acquisition of the turbine.

The manufacturer of the turbine may provide a taxpayer with a certification that the manufacturer’s turbine meets one of the standards listed above, and taxpayers may rely on such certifications when claiming the credit under Section 48. However, manufacturers should be aware that issuing erroneous certifications or failing to satisfy certain documentation requirements could trigger penalties under IRC Section 7206 (fraud and making false statements) or IRC Section 6701 (aiding and abetting an understatement of tax liability).

Notice 2015-4 is effective for small wind energy property acquired or placed in service after January 26, 2015.

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