On December 17, 2019, the United States House of Representatives voted to pass a $1.4 trillion spending package as an amendment to the Further Consolidated Appropriations Act, 2020 (H.R. 1865). The Taxpayer Certainty and Disaster Relief Act of 2019 amendment, which included several energy-related tax provisions and extensions, was added to the end of the bill and unveiled just days before Congress was set to adjourn for the year. The Senate approved the Act two days later by a vote of 71-21, following months of debate on key spending issues. President Donald Trump ultimately signed the bill into law on December 20, narrowly avoiding another year-end government shutdown.
Each year, Congress must reconsider and clear a series of temporary tax code provisions, or “tax extenders,” before individuals may file for such claims. The addition of the Taxpayer Certainty and Disaster Relief Act of 2019 intends to amend the tax provisions listed in the Internal Revenue Code of 1986 (IRC), providing extensions and incentives for various tax provisions that either recently expired or are expected to phase out at the end of 2019. The majority of tax provisions addressed in the amendment were extended for another year, with the exception of biodiesel and railroad maintenance credits, which were extended through the end of 2022.
Subtitle C of the amendment, titled “Incentives for Energy Production, Efficiency, and Green Economy Jobs,” outlines a series of energy-related tax provisions focusing primarily on renewable diesel, energy efficient properties, and alternative energy resources. Congress retroactively reinstated most of the provisions in this section, extending many credits that expired in December of 2018 until December 31, 2020:
Subtitle C—Incentives for Energy Production, Efficiency, and Green Economy Jobs
(Extended through December 31, 2020 unless otherwise noted)
Sec. 121. Biodiesel and renewable diesel (extended through December 31, 2022)
Sec. 122. Second-generation biofuel producer credit.
Sec. 123. Nonbusiness energy property.
Sec. 124. Qualified fuel cell motor vehicles.
Sec. 125. Alternative fuel refueling property credit.
Sec. 126. 2-wheeled plug-in electric vehicle credit.
Sec. 127. Credit for electricity produced from certain renewable resources.
Sec. 128. Production credit for Indian coal facilities.
Sec. 129. Energy efficient homes credit.
Sec. 130. Special allowance for second-generation biofuel plant property.
Sec. 131. Energy efficient commercial buildings deduction.
Sec. 132. Special rule for sales or dispositions to implement FERC or State electric restructuring policy for qualified electric utilities.
Sec. 133. Extension and clarification of excise tax credits relating to alternative fuels.
Sec. 134. Oil spill liability trust fund rate.
The passage of the Act and amendment will extend the $1.00 per gallon Biodiesel Mixture Credit noted in IRC Section 6426(c) to December 31, 2020, as well as grant one-year extensions on many energy efficient tax incentives involving home and commercial buildings and alternative fuel sources.
The Act also contains a one-year extension on Production Tax Credit (PTC) for wind and other energy technologies. According to the established PTC, industries can receive credit for each kilowatt-hour of energy generated in qualified renewable energy facilities. While the PTC expired for all non-wind operations at the end of 2017, current provisions provide wind facilities with a reduced credit of 40% through the end of 2019. Under the extension, Congress will continue to provide a 40% credit for all wind projects begun in 2019, and increase credit rates to 60% for all projects undertaken in 2020 and brought online by 2024.
The tax extenders cover a wide array of energy-related fields, but notably do not include extensions for battery storage operations. The residential solar Investment Tax Credit (ITC), a popular provision that has supported homeowners and businesses with the transition to solar energy in recent years, was not considered for an extension in the spending package. In 2020, the solar ITC federal tax subsidy will begin phasing out, with residential solar subsidies dropping to 22% in 2021 and zero in the years after.
Although the last-minute deal fell short of some solar and wind energy industries’ hopes, the extenders will offer others the chance to earn credit on a variety of energy operations in 2020. The largescale spending bill will benefit many energy-related companies as they head into the New Year, and allow some taxpayers to retroactively claim breaks on certain projects in past years.