New Requirements for 2012 Hawaii Solar/PV Installations to Avoid 2013 Tax Treatment

by Richard Paul McClellan III, JD Supra, 11/19/2012

2012 Residential Renewable Energy Systems Will Be Subject to 2013 Tax Credit Announcements Unless Specific Requirements Are Met.

Consumers, Contractors, And Tax Practitioners Should Be Familiar With Ramifications of Announcement 2012-14 On 2012-"Installed" Systems.

The Hawaii Department of Taxation issued temporary administrative rules regarding renewable energy (usually: solar photovoltaic) systems in early November 2012. Initially, the rules were focused on systems installed after January 1, 2013. (I refer to those as “2013 Systems.”) There have been numerous news reports regarding these announcements.

On November 16, 2012, the Department issued a further announcement, No. 2012-14, relating to 2012 Systems. According to the 2012-14 Notice, 2012 Systems have to pass an augmented and increased standard to be considered “placed in service.” Basically, 2012 Systems are not grandfathered into the 2012 credit regime unless inspection requests are received in 2012 and the system ultimately passes those timely-requested inspection(s).

Failure to meet the requirements of Announcement 2012-14 could have significant financial consequences as solar industry advocates claim the difference between the 2012 credit regime and the 2013 credit regime will be a 50% reduction in credits, on average.

Tax practitioners should be aware of potential pitfalls for their clients arising out of the recent announcement. Improperly claimed credits could be disallowed and, depending on the passage of time, an amended claim in a future year could be foreclosed by provisions of Hawaii law. See, HRS 235-12.5(f)["claims for credit shall be filed...before the end of the twelfth month following the close of the taxable year for which the credit may be claimed" or are waived.]

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