The American Public Power Association recently submitted comments to the Department of Treasury and Internal Revenue Service in response to a proposed rule easing restrictions related to partnership ownership of tax credit property for purposes of elective payment tax credits.
The Notice of Proposed Rulemaking amends an earlier proposed rule allowing co-owners of tax credit property to claim elective payment if they had opted out of partnership treatment under the tax code or owned the facility as tenants in common.
APPA supported the initial proposed rule, but Treasury announced in March that it was further amending the rule to allow entities claiming elective payment to own their share of the project through a pass-through entity and to ease a restriction on joint marketing of offtake from co-owned facilities.
APPA supported the “Notice of Proposed Rulemaking, Section 6417 Elective Payment of Applicable Credits” because it “felt that it appropriately accommodated active co-ownership of credit property,” it said.
“We now understand some applicable entities may – for various reasons – need to own credit property via a passthrough entity. We do not object to accommodations to allow for such needs,” APPA said in the comments.
It is concerned that the proposed rule’s easing of joint marketing requirements would allow applicable entities to claim elective payment for projects in which they are merely passive investor in contravention of congressional intent, which was for elective payment to encourage active ownership of credit property.
“However, we have heard from some public power utilities and other applicable entity stakeholders that they may need flexibility in joint marketing of co-owned facilities, particularly as relates to ancillary services and renewable energy credits.”
Therefore, APPA supports the current proposed rule, “but would strongly argue against loosening these rules any further.”
Further loosening of these rules “is unnecessary and not only contrary to congressional intent but may also be contrary to the interests of applicable entities seeking to be an active owner of such facilities.”
APPA said “it would support expanding the Proposed Rules’ regime to other credits eligible for elective payment.”
