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Qualified Energy Conservation Bonds (QECBs) (Federal)
EZFeed/Relevant Yes  +
Incentive/Active true  +
Incentive/Amt Varies  +
Incentive/ApplDsc Local Government  + , State Government  + , Tribal Government  +
Incentive/Auth2Code 26 USC § 54D  +
Incentive/Auth2DtEff 2008-10-03  +
Incentive/Auth2DtEnact 10/03/2008 (subsequently amended)  +
Incentive/Auth2Link http://www.dsireusa.org/documents/Incentives/US51Fb.htm  +
Incentive/Auth3Code IRS Notice 2009-29  +
Incentive/Auth3DtEff 2009-04-07  +
Incentive/Auth3Link http://www.irs.gov/pub/irs-drop/n-09-29.pdf  +
Incentive/Auth4Code 26 USC § 6431  +
Incentive/Auth4DtEff 03/18/2010 (for QECBs)  +
Incentive/Auth4DtEnact 02/17/2009 (subsequently amended)  +
Incentive/Auth4Link http://www.dsireusa.org/documents/Incentives/US51Fc.htm  +
Incentive/Auth5Code IRS Notice 2010-35  +
Incentive/Auth5DtEff 2010-04-26  +
Incentive/Auth5Link http://www.irs.gov/pub/irs-drop/n-10-35.pdf  +
Incentive/Auth6Code IRS Notice 2012-44  +
Incentive/Auth6DtEff 2012-07-09  +
Incentive/Auth6Link http://www.irs.gov/irb/2012-28_IRB/ar11.html  +
Incentive/AuthCode 26 USC § 54A  +
Incentive/AuthDtEff 2008-10-03  +
Incentive/AuthDtEnact 10/03/2008 (subsequently amended)  +
Incentive/AuthLink http://www.dsireusa.org/documents/Incentives/US51F.htm  +
Incentive/ContAddr 1111 Constitution Avenue, N.W.  +
Incentive/ContDept U.S. Internal Revenue Service  +
Incentive/ContName Public Information - IRS  +
Incentive/ContPhone (800) 829-1040  +
Incentive/ContPlace Washington, District of Columbia  +
Incentive/ContWebsite http://www.irs.gov  +
Incentive/ContZip 20224  +
Incentive/EnergyCat Energy Efficiency Incentive Programs  + , Renewable Energy Incentive Programs  +
Incentive/ImplSector Federal  +
Incentive/Name Qualified Energy Conservation Bonds (QECBs)  +
Incentive/ProgAdmin U.S. Internal Revenue Service  +
Incentive/Summary The ''Energy Improvement and Extension Act
The ''Energy Improvement and Extension Act of 2008'', enacted in October 2008, authorized the issuance of Qualified Energy Conservation Bonds (QECBs) that may be used by state, local and tribal governments to finance certain types of energy projects. QECBs are qualified tax credit bonds, and in this respect are similar to new [http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US45F&re=0&ee=1 Clean Renewable Energy Bonds] or CREBs. The October 2008 enabling legislation set a limit of $800 million on the volume of energy conservation tax credit bonds that may be issued by state and local governments. ''The American Recovery and Reinvestment Act of 2009'', enacted in February 2009, expanded the allowable bond volume to $3.2 billion. In April 2009, the IRS issued Notice 2009-29 providing interim guidance on how the program will operate and how the bond volume will be allocated. Subsequently, H.R. 2847 enacted in March 2010 introduced an option allowing issuers of QECBs and New CREBs to recoup part of the interest they pay on a qualified bond through a direct subsidy from the Department of Treasury. Guidance from the IRS on this option was issued in April 2010 under Notice 2010-35.<br> <br> With tax credit bonds, generally the borrower who issues the bond pays back only the principal of the bond, and the bondholder receives federal tax credits in lieu of the traditional bond interest. The tax credit may be taken quarterly to offset the tax liability of the bondholder. The tax credit rate is set daily by the U.S. Treasury Department; however, energy conservation bondholders will receive only 70% of the full rate set by the Treasury Department under 26 USC § 54A. QECB rates are available [https://www.treasurydirect.gov/govt/rates/irs/rates_qtcb.htm here]. Credits exceeding a bondholder's tax liability may be carried forward to the succeeding tax year, but cannot be refunded. Energy conservation bonds differ from traditional tax-exempt bonds in that the tax credits issued through the program are treated as taxable income for the bondholder.<br> <br> For QECBs issued after March 18, 2010, the bond issuer may make an irrevocable election to receive a direct payment from the Department of Treasury equivalent to the amount of the non-refundable tax credit described above, which would otherwise accrue to the bondholder. The direct payment comes in the form of a refundable tax credit to the issuer in lieu of a tax credit to the bondholder. This option was formerly limited to Build America Bonds (see 26 USC § 6431, H.R. 2847 and IRS Notice 2010-35 for details). The advantage of either option is that it creates a lower effective interest rate for the issuer because the federal government subsidizes a portion of the interest costs.<br> <br> In contrast to CREBs, QECBs are not subject to a U.S. Department of Treasury application and approval process. Bond volume is instead allocated to each state based on the state's percentage of the U.S. population as of July 1, 2008. Each state is then required to allocate a portion of its allocation to "large local governments" within the state based on the local government's percentage of the state's population. Large local governments are defined as municipalities and counties with populations of 100,000 or more. Large local governments may reallocate their designated portion back to the state if they choose to do so. IRS Notice 2009-29 contains a list of the QECB allocations for each state and U.S. territory. Implementing allocations and reallocations most often, but not always, takes place through [http://www.naseo.org/members-states State Energy Offices]. As of this writing some states have yet to assign implementation responsibilities to a specific state agency.<br> <br> The definition of "qualified energy conservation projects" is fairly broad and contains elements relating to energy efficiency capital expenditures in public buildings that reduce energy consumption by at least 20%; green community programs (including loans and grants to implement such programs); renewable energy production; various research and development applications; mass commuting facilities that reduce energy consumption; several types of energy related demonstration projects; and public energy efficiency education campaigns. In July 2012 the IRS issued Notice 2012-44 clarifying the meaning of "capital expenditures" and "green community program", and providing guidance on meeting the 20% energy consumption reduction requirement for energy -efficiency related capital expenditures in publicly-owned buildings (see 26 USC § 54D and IRS Notice 2012-44 for additional details). Renewable energy facilities that are eligible for CREBs are also eligible for QECBs.<br> <br> For more information on QECBs, contact Timothy Jones, David White, or Zoran Stojanovich of the IRS Office of Associate Chief Counsel at (202) 622-3980.
Associate Chief Counsel at (202) 622-3980.  +
Incentive/TechDsc Anaerobic Digestion + , Biomass + , Geothermal Electric + , Hydroelectric energy + , Landfill Gas + , Municipal Solid Waste + , Ocean Thermal + , Photovoltaics + , Solar Thermal Electric + , Tidal Energy + , Wave Energy + , Wind +
Incentive/TechDscOther Yes; specific technologies not identified  +
Incentive/Type Federal Loan Program +
OpenEI/PageDescription Qualified Energy Conservation Bonds (QECBs): energy incentive program.  +
OpenEI/PageKeyword Energy Incentives  + , United States  + , Federal Loan Program  + , U.S. Internal Revenue Service  +
Place United States: Energy Resources +
Categories Financial Incentive Programs , Incentive with Contacts , Incentive with Authorities , Pages with reference errors
Modification date
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23:41:21, 12 February 2015  +
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