Since the Tax Increase Prevention Act of 2014 was signed into Law at the end of 2014, companies are finding themselves against the wall trying to begin and complete 179D certifications before tax filing deadlines. Instead, many companies have decided to file extensions to complete correctly and receive the full benefits available by the 179D tax deduction. Unlike previous tax years, the whole year lapse of the expired 179D provision has caused a break in what is routinely an ongoing process between the taxpayers and 179D consulting firms. This break in typically current services has proven to create new opportunities for taxpayers. Because the 179D industry has been evolving so rapidly over the last few years, many are finding that it is far more competitive resulting in lower rates, more efficient processes, and greater 179D deductions.
In the first few years of its inception (2006), it would be safe to say that many, if not all, of the projects being certified for the 179D deduction, nationwide were for $0.60/SF lighting projects using the interim rule only. In contrast, in 2015, a few 179D firms no longer use the provisional rule method to qualify any projects as greater benefits can be achieved by using the permanent rule method for the $1.80/SF deduction. Additionally, many projects are now being certified by gathering technical data onsite, in cases where the taxpayers cannot provide a full set of construction documents for the energy model.
These drastic changes in industry norms have provided taxpayers with net benefits of up to 350% more than previous years. In order for a taxpayer who utilizes the 179D deduction to monetize the current opportunities created by the break in typically ongoing services, they would be required to reevaluate their current pricing, level of service, and level of tax benefit received. In many cases, usually by changing 179D providers altogether. Taxpayers have also been able to benefit additionally by reevaluating previous year certifications ensuring no dollars have been left on the table.
With the emergence of truly specialized 179D Consulting firms over the last few years, it is recommended that taxpayers who currently benefit from the 179D deduction take advantage of the “forced break” in services and to ensure they are maximizing their bottom line.