ARRA

In Notice 2010-91, the Internal Revenue Service (IRS) provided interim guidance on the application of the withholding requirements under Section 3402(t) of the Internal Revenue Code (Code) to payments made by payment cards, such as credit, debit and gift cards.  Code Section 3402(t) was added by the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) to provide that the United States government, every state and political subdivision thereof, and every instrumentality of the foregoing making any payment to a person providing property or services must deduct and withhold from such payment a tax equal to three percent of the payment.  TIPRA contains exceptions for several types of payments, such as wages, retirement benefits and retirement plan contributions, and also exempts payments made by state or local government if that entity makes annual payments of less than $100 million.  Under TIPRA, Code Section 3402(t) originally applied to payments made after Dec. 31, 2010, but with the enactment of the American Recovery and Reinvestment Act of 2009, the effective date was amended so that the withholding requirements apply only to payments made after Dec. 31, 2011.

The following post was authored by Paul Jones.

The American Recovery and Reinvestment Act (Act) established a new 30 percent investment tax credit for clean technology and advanced energy manufacturers.  On August 13, 2009, the U.S. Treasury Department and the U.S. Department of Energy (DOE) announced that the application period for companies to apply for $2.3 billion in tax credits opens on August 14, 2009.  Applicants must file the preliminary application by September 16, 2009, followed by final applications by October 16, 2009.

According to the announcement, the Internal Revenue Service (IRS) will certify or reject applications by January 15, 2010, and notify the certified projects with the approved amount of their tax credit.  Award recipients can expect to receive acceptance agreements from the IRS by April 16, 2010.

So, what types of businesses might be eligible for this credit?  Essentially, manufacturers of clean technology (including wind turbine gears, carbon sequestration property, solar panels, energy storage systems, etc.).

Read the entire alert regarding the tax credit for advanced energy manufacturers.

Blog was written by Paul Jones, partner in the Tax Practice Group and member of the Firm's Green Industries Initiative.

Nearly five months after the enactment of the American Recovery and Reinvestment Act, the U.S. Department of the Treasury and the U.S. Department of Energy (DOE) today announced a multi-billion dollar program for the development of renewable energy projects.  The Act extended and modified tax credits for renewable energy projects in a manner intended to make such projects more financially feasible during the current economic downturn.  The Act authorized the Treasury to make direct payments to companies that create and place in service renewable energy facilities beginning January 1, 2009.

Under the new program, businesses may elect to forgo renewable energy tax credits in return for an immediate reimbursement of a portion of qualified expenses.  The cash in lieu of credit program is intended to provide immediate stimulus in local economies, and guidance is now available for businesses to elect direct payments in lieu of tax credits in support of renewable energy facilities.  According to their press release, the Treasury and DOE estimate that the cash in lieu of credit program will support 5,000 bio-mass, solar, wind, and other types of renewable energy production facilities.  While applications are not yet being accepted, businesses interested in applying for the new program should start preparing now to seek the cash grants.

Businesses considering the election of cash in lieu of credits should carefully consider not only the requirements of the program, but also the tax consequences of the election as it may impact the overall economics of the project.

Some Notices Must Be Given By April 18, 2009

On March 19, 2009, the U.S. Department of Labor issued four new model COBRA notices to implement the COBRA subsidy provisions of the American Recovery and Reinvestment Act of 2009.  These notices must be provided by employers who sponsor group health plans to individuals who become eligible for COBRA between September 1, 2008 and December 31, 2009.  At least one of the notices must be provided by April 18, 2009 (see below).  The notices may be used by any public or private employer that is subject to COBRA (whether through ERISA, the Internal Revenue Code or the Public Health Service Act).

Read the entire alert on COBRA Notices for Subsidy.

President Obama set out his priorities regarding his vision of a clean energy future. In a press release prior to meetings with "clean energy entrepreneurs and leaders of the research community" the president stated that it was time to make investments in cutting-edge research that will establish the foundation for America's future economic prosperity. The press release included the follwoing:

FACT SHEET: INVESTING IN OUR CLEAN ENERGY FUTURE

Today, President Obama will meet with clean energy entrepreneurs and leaders of the research community to discuss his strategy for building a clean energy economy and creating the industries and jobs of the future.

The American Recovery and Reinvestment Act (ARRA) and his FY10 budget dramatically increase investment in cutting-edge research, the development and deployment of clean energy technologies, and incentives for private sector research and development (R&D).  These investments will establish the foundation for America’s future economic prosperity, reduce our dependence on foreign oil, and help combat climate change.

The ARRA includes $39 billion in energy investments at the Department of Energy and $20 billion in tax incentives for clean energy, including:

• The creation of an advanced research agency for energy, modeled after the Defense Advanced Research Projects Agency which developed the Internet.
• Support for Energy Frontier Research Centers, which could lead to breakthroughs in energy storage, super-efficient engines, and solar cells as cheap as paint.
• Supporting U.S. manufacturing of advanced batteries needed for plug-in hybrids, renewable energy backup, and other applications.
• $1.2 billon for research infrastructure for the Department of Energy’s national labs, which is being announced by Secretary of Energy Steven Chu today at Brookhaven National Laboratory. 

The  president’s 10-year budget also proposes almost $75 billion to make the Research and Experimentation Tax Credit permanent, stimulating private-sector investment in R&D and keeping the U.S. economy at the cutting-edge of 21st century technologies:

• Studies have shown that every dollar of tax benefit stimulates as much as an additional dollar of private R&D spending in the short term and two dollars in the long term.  Every one dollar of R&D adds two dollars of benefit to our economy and society as a whole.
• Two-thirds of benefits of the credit are attributable to salaries of U.S. workers performing U.S.-based research, and the credit stimulates R&D spending by more than 11,000 small, medium and large firms.
• The credit has been extended 13 times with some extensions lasting just six months, and has also been allowed to lapse for almost a year - undermining its effectiveness because companies can't count on it. 

Several of the technologies in the program today will be on display, highlighting the importance of R&D investment in building a clean energy economy, including:

• Orion Energy "Apollo Light Pipe:" The Apollo Light Pipe collects and focuses sunlight, bringing natural light indoors without consuming electricity and replacing traditional lighting for large portions of the day.  Coca-Cola and Sysco have installed this system, saving enough energy to power over 500 homes for a year.
• Solyndra Solar Panel: Solyndra is the first recipient of the DOE Loan Guarantee recovery program, announced last week.  Their solar panel is a unique cylindrical design that maximizes direct sunlight and absorption. 

The program will highlight success stories from R&D investments in the lab to job creation. Paul Holland, the vice chairman of the board and lead investor for Serious Materials, will introduce the president and share the story of Serious Materials, the leading energy-saving building materials company in the U.S.

• Serious Materials has four plants in California, Colorado, Pennsylvania, and plans to reopen the old Republic Windows plant in Chicago this Spring.
• Earlier this month, Serious Materials re-opened a previously shuttered plant in Pennsylvania, and is hiring back over 100 union workers in the next couple of months.
• Serious Materials’ products exceed current Energy Star standards by up to 400 percent and can reduce heating and cooling energy costs by up to 50 percent.  Five percent of U.S. energy use is lapsed through inefficient window glass.

President Obama set out his priorities regarding his vision of a clean energy future. In a press release prior to meetings with "clean energy entrepreneurs and leaders of the research community" the president stated that it was time to make investments in cutting-edge research that will establish the foundation for America's future economic prosperity. The press release included the follwoing:

FACT SHEET: INVESTING IN OUR CLEAN ENERGY FUTURE

Today, President Obama will meet with clean energy entrepreneurs and leaders of the research community to discuss his strategy for building a clean energy economy and creating the industries and jobs of the future.

The American Recovery and Reinvestment Act (ARRA) and his FY10 budget dramatically increase investment in cutting-edge research, the development and deployment of clean energy technologies, and incentives for private sector research and development (R&D).  These investments will establish the foundation for America’s future economic prosperity, reduce our dependence on foreign oil, and help combat climate change.

The ARRA includes $39 billion in energy investments at the Department of Energy and $20 billion in tax incentives for clean energy, including:

• The creation of an advanced research agency for energy, modeled after the Defense Advanced Research Projects Agency which developed the Internet.
• Support for Energy Frontier Research Centers, which could lead to breakthroughs in energy storage, super-efficient engines, and solar cells as cheap as paint.
• Supporting U.S. manufacturing of advanced batteries needed for plug-in hybrids, renewable energy backup, and other applications.
• $1.2 billon for research infrastructure for the Department of Energy’s national labs, which is being announced by Secretary of Energy Steven Chu today at Brookhaven National Laboratory. 

The  president’s 10-year budget also proposes almost $75 billion to make the Research and Experimentation Tax Credit permanent, stimulating private-sector investment in R&D and keeping the U.S. economy at the cutting-edge of 21st century technologies:

• Studies have shown that every dollar of tax benefit stimulates as much as an additional dollar of private R&D spending in the short term and two dollars in the long term.  Every one dollar of R&D adds two dollars of benefit to our economy and society as a whole.
• Two-thirds of benefits of the credit are attributable to salaries of U.S. workers performing U.S.-based research, and the credit stimulates R&D spending by more than 11,000 small, medium and large firms.
• The credit has been extended 13 times with some extensions lasting just six months, and has also been allowed to lapse for almost a year - undermining its effectiveness because companies can't count on it. 

Several of the technologies in the program today will be on display, highlighting the importance of R&D investment in building a clean energy economy, including:

• Orion Energy "Apollo Light Pipe:" The Apollo Light Pipe collects and focuses sunlight, bringing natural light indoors without consuming electricity and replacing traditional lighting for large portions of the day.  Coca-Cola and Sysco have installed this system, saving enough energy to power over 500 homes for a year.
• Solyndra Solar Panel: Solyndra is the first recipient of the DOE Loan Guarantee recovery program, announced last week.  Their solar panel is a unique cylindrical design that maximizes direct sunlight and absorption. 

The program will highlight success stories from R&D investments in the lab to job creation. Paul Holland, the vice chairman of the board and lead investor for Serious Materials, will introduce the president and share the story of Serious Materials, the leading energy-saving building materials company in the U.S.

• Serious Materials has four plants in California, Colorado, Pennsylvania, and plans to reopen the old Republic Windows plant in Chicago this Spring.
• Earlier this month, Serious Materials re-opened a previously shuttered plant in Pennsylvania, and is hiring back over 100 union workers in the next couple of months.
• Serious Materials’ products exceed current Energy Star standards by up to 400 percent and can reduce heating and cooling energy costs by up to 50 percent.  Five percent of U.S. energy use is lapsed through inefficient window glass.

The IRS issued Publication 15-T, regarding the new withholding tables designed to accelerate the benefit of the "Making Work Pay" tax credit passed under the American Recovery and Reinvestment Act of 2009, effective February 17, 2009.  The Publication formalized the IRS position that the new withholding tables are to apply to pensions in addition to wages.  Governmental plans should be aware of the impact of the new tables on two separate groups: (1) employees receiving wages under the plan's payroll, and (2) retirees and/or their beneficiaries receiving monthly benefit payments from the plan.  The IRS asks that the new tables be implemented as soon as possible but no later than April 1, 2009.

Last week, the IRS issued Publication 15-T, regarding the new withholding tables designed to accelerate the benefit of the "Making Work Pay" tax credit passed under the American Recovery and Reinvestment Act of 2009, effective February 17, 2009.  The Publication formalized the IRS position that the new withholding tables are to apply to pensions in addition to wages.  Governmental plans should be aware of the impact of the new tables on two separate groups: (1) employees receiving wages under the plan's payroll, and (2) retirees and/or their beneficiaries receiving monthly benefit payments from the plan.  The IRS asks that the new tables be implemented as soon as possible but no later than April 1, 2009.

For more information about Publication 15-T, please contact Mary Beth Braitman, Terry A.M. Mumford, Albert Lee, Katrina Clingerman, Lisa Erb Harrison or your Ice Miller LLP employee benefits attorney.

Blog written by Paul Jones.

Tax Provisions in the American Recovery and Reinvestment Act Provide Relief to Taxpayers and Promote Clean Technology and Renewable Energy
As expected, the United States Congress passed, and last week the President signed into law, sweeping economic recovery legislation that expands existing, and establishes new, tax incentive programs to promote clean technology, renewable energy and green jobs.  The legislation also provides businesses tax relief in certain areas.

Read the entire alert about the American Recovery and Reinvestment Act.