The Internal Revenue Service has issued Notice 2020-41, which will provide wind power developers with an extra year on top of the existing four-year “continuity safe harbor” for certain projects that began construction in 2016 or 2017.
With Notice 2020-41, if these projects are placed into service in five years, construction will be deemed “continuous,” and the project will still qualify for the production tax credit (PTC).
The IRS recognized that COVID-19 caused industry-wide delays in the supply chain for components needed to complete projects that were otherwise eligible for the PTC.
“This will relieve a traffic jam that had been expected as wind developers rush to finish some 15,000 megawatts of projects facing an end-of-2020 deadline,” law firm Norton Rose Fulbright noted in a bulletin to stakeholders.
Earlier this month, the Treasury Department confirmed that IRS guidance would be forthcoming after a group of senators, led by Senate Finance Committee Chairman Chuck Grassley, appealed to the Treasury for an extension of safe-harbor provisions.
“One additional year of safe harbor for 2016 and 2017 projects provides the flexibility the industry needs to prevent the immediate harms from COVID-19 disruptions, without costing the federal government any additional money,” said AWEA CEO Tom Kiernan, in a statement.