US Senate to Discuss a Bill to Extend and Expand the Energy Tax Deduction for Commercial Buildings

WEST PALM BEACH, FL, July 30, 2012 (Press-News.org) In a recently released draft of a bill that may be proposed as early as the U.S. Senate's next term, Senators Jeff Bingaman(D-NM) and Olympia Snowe (R-ME) are working on what appear to be aggressive improvements to the Energy Policy Act of 2005, which provides tax benefits for the installation of energy efficient commercial building improvements. The Act is also known as EPACT or 179D.

Currently, EPACT allows a tax deduction of up to $1.80 per sq. foot under section 179D of the tax code for commercial buildings with energy efficient installations and upgrades to HVAC, lighting or building envelope. Under this new proposed bill, which would include amendments to Section 179D and the addition of a Section 179F, new tax deductions would be implemented that may be extremely beneficial to commercial property owners.

Proposed changes include:

- Extending the expiration date of the tax benefit from December 31, 2013 to December 31, 2016.

- Increasing the maximum amount of the deduction from $1.80 to $3.00 per square foot.

- Allowing deductions to be allocated to other parties not only when the property is owned by a government, but also not-for-profit and privately-owned commercial properties.

- Allowing an allocation of the deduction not only to designers of energy efficient improvements but also building tenants, financiers, professional engineers, licensed contractors, energy services companies or other building professionals.

- Permitting a partial allowance for some energy efficient upgrades, with an increase from $1.00 to $3.00 and $2.20 to $3.00, for the relevant energy efficient part of the upgrade.

- Permitting exterior lighting systems, including lighting for parking lots, spaces or garages of a building to qualify that did not previously qualify.

- Allowances that may make this a favorable tax strategy and incentive for real estate investment trusts (REITs).

- The introduction of a new section, 179F, which provides for the deduction for retrofits of existing commercial and multi-family buildings. Highlights include:

- Each certified retrofit provides for an allowable deduction equal to or lesser of the sum of the design deduction and the realized deduction or 50 percent of the total cost to develop and implement the certified retrofit plan.

- Deductions range from $1.00 per square foot of 20 to 24 percent retrofit energy savings to $4.00 for 50 percent or more.

- Commercial Historic buildings listed on the National Register of Historic Places increase by 20 percent.

Along with the proposed new and increased benefits, the bill proposes a higher benchmark of energy efficiency than the original 2005 Act. According to John Cummings, Executive Strategic Officer of Engineered Tax Services, an engineering firm that specializes in assisting the CPA community make the most of energy-focused tax benefits, these proposed changes could have a very positive effect. "By extending and expanding the tax benefits for businesses that choose more energy-efficient building products and services, the bill would help these businesses to not only save some money that can be directly reinvested back into their business, it would also encourage the proliferation of more environmentally-conscious building in general," says Cummings. "I think that's something we can all agree is a good thing."

For a complete copy of the proposed bill, contact Julio Gonzalez, CEO of Engineered Tax Services, at jgonzalez@engineeredtaxservices.com.

About Engineered Tax Services
Engineered Tax Services (ETS) is the only qualified professional engineering firm that has its own licensed engineers, including LEED Accredited Professionals, as well as tax experts, from CPAs to a former senior IRS executive, on staff. ETS marries the science of engineering with the principles of tax and accounting to arrive at financial solutions that result in increased cash flow, minimized tax payments and maximum return on investment and energy. These IRS-sanctioned services include Energy Tax Credits, Energy Policy Act Certifications (179D Studies), Cost Segregation Studies, Research and Development Studies, Repair and Maintenance Studies, Historic Tax Credits Studies, Engineering Insurance Appraisals, Energy and Carbon Audits. For more information visit http://engineeredtaxservices.com.