Grants 120 days to elect the investment tax credit for renewable facilities

Plain-English summary

A taxpayer intended to make the irrevocable section 48(a)(5) election to claim the investment tax credit instead of the section 45 production tax credit for renewable-energy facilities. Its internal tax accountant mistakenly believed Form 7004 and Form 1120 had already been electronically filed, so the return and election were late. The IRS treated the election deadline in Notice 2009-52 as a regulatory deadline eligible for section 301.9100 relief. Finding that the taxpayer acted reasonably and in good faith and that relief would not prejudice the government, it granted 120 days to make the election. The relief does not extend the return-filing deadline or decide whether the facilities or claimed credit otherwise satisfy sections 48 and 45.

Ruling snapshot

• Question: May the taxpayer make a late section 48(a)(5) election to claim the investment tax credit instead of the production tax credit?
• Outcome: Approved, with 120 days to elect
• Key authorities: IRC §§ 48(a)(5) and 45; Notice 2009-52; Treas. Reg. §§ 301.9100-1 through 301.9100-3

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 201841001 [Third Party Communication:
Release Date: 10/12/2018 Date of Communication: Month DD, YYYY]
Index Number: 9100.02-00, 9100.02-
03 Person To Contact:
----------------------, ID No. ------------
-------------------------------- Telephone Number:
------------------------------------------- --------------------
----------------------------------------- Refer Reply To:
----------------------------- CC:PSI:B06
PLR-100997-18
In Re: ------------------------------------ Date:
June 18, 2018

LEGEND

Taxpayer = -------------------------------------------------------------------

Taxable Year = ----------------------------------------------

a = ---------------

Dear -------------------------:

   This is in response to a letter dated December 14, 2017, submitted on behalf of

Taxpayer requesting extensions of time under §§ 301.9100-1 and 301.9100-3 of the
Procedure and Administration Regulations to make a late election under § 48(a)(5) of
the Internal Revenue Code (Code) to claim the investment tax credit determined under
§ 48 in lieu of the production tax credit under § 45 with respect to certain renewable
energy facilities for Taxable Year.

    According to the facts and information submitted, Taxpayer’s internal tax

accountant inadvertently failed to timely file Form 7004 and Form 1120 believing that
the forms had already been filed electronically. Consequently, Taxpayer failed to timely
make an election under § 48(a)(5) to claim the investment tax credit, in the amount of a,
in lieu of the production tax credit. At all times, it was Taxpayer’s intention and belief
that its Taxable Year Form 1120 and its election was timely filed in accordance with a
valid Form 7004 for Taxable Year.

  Taxpayer has represented that, in requesting an extension of time to make a

separate late election under § 48(a)(5) for Taxable Year, it acted reasonably and in
good faith and, further, there is no prejudice to the interest of the Government.

   Section 48(a)(5) provides, in part, that a taxpayer may irrevocably elect to claim

the investment tax credit determined under §48 in lieu of the production tax credit under
§ 45 with respect to certain renewable facilities.

    Section 48(a)(5))(A) provides that qualified property that is part of a qualified

investment credit facility shall be treated as energy property for purposes of § 48, and
that the energy percentage with respect to such property shall be 30 percent. Section
48(a)(5)(C) provides that taxpayers may elect to treat qualified facilities (within the
meaning of § 45) as qualified investment credit facilities. Section 48(a)(5)(B) provides
that no credit shall be allowed under § 45 for any taxable year with respect to any
qualified investment credit facility.

    Notice 2009-52, 2009-25 I.R.B. (1094), provides, in part, that an election to treat

a qualified facility as a qualified investment credit facility and claim the investment tax
credit determined under § 48 in lieu of the production tax credit under § 45 will be
effective if it is made in the manner and time set forth in the notice.

    Section 2.01 of Notice 2009-52 provides, in part, that to make the election with

respect to a qualified facility, a taxpayer must claim the energy credit with respect to
qualified property that is an integral part of the facility on a completed Form 3468 and
file such form with the taxpayer’s income tax return for the year in which the property is
placed in service.

     Section 2.03 of Notice 2009-52 provides that the election to claim the investment

tax credit determined under § 48 in lieu of the production tax credit under § 45 must be
made on a timely filed return (including extensions) for the taxable year in which the
facility that is to be treated as a qualified investment credit facility is placed in service.

  Section 301.9100-1(a) provides that the regulations under this section and

§§ 301.9100-2 and 301.9100-3 establish the standards the Commissioner will use to
determine whether to grant an extension of time to make a regulatory election. An
extension of time is available for elections that a taxpayer is otherwise eligible to make.
However, the granting of an extension of time is not a determination that the taxpayer is
otherwise eligible to make the election.

   Section 301.9100-1(b) provides that the term “regulatory election” includes an

election whose due date is prescribed by a notice published in the Internal Revenue
Bulletin.

   Section 301.9100-1(c) provides that the Commissioner may grant a reasonable

extension of time under the rules set forth in §§ 301.9100-2 and 301.9100-3 to make a
regulatory election, or a statutory election (but no more than six months except in the
case of taxpayer who is abroad), under all subtitles of the Code, except subtitles E, G,
H, and I.

   Section 301.9100-2 provides automatic extensions of time for making certain

elections. Section 301.9100-3 provides rules for requesting extensions of time for
regulatory elections that do not meet the requirements of § 301.9100-2.

    Section 301.9100-3 provides that requests for relief subject to this section will be

granted when the taxpayer provides evidence to establish to the satisfaction of the
Commissioner that the taxpayer acted reasonably and in good faith, and that granting
relief will not prejudice the interests of the Government.

   The § 48(a)(5) election is a regulatory election within the meaning of Regulation

§ 301.9100-1(b), because the due date for making the election is set forth in Notice
2009-52. The § 48(a)(5) election is not expressly excepted from 9100 Relief, and there
is no alternative late election relief procedure provided by a statute, regulation or other
published guidance.

    Based solely on the information submitted and representations made, we

conclude that the requirements of §§ 301.9100-1 and 301.9100-3 have been satisfied.
Accordingly, Taxpayer is granted an extension of time of 120 days from the date of this
letter to make an election under § 48(a)(5) for Taxable Year to elect to claim the
investment tax credit determined under §48 in lieu of the production tax credit under §
45 with respect to its renewable facilities.

  The election under § 48(a)(5) must comply with all of the requirements of Notice

2009-52.

  In making the elections, Taxpayer should also attach copies of this letter to the

amended returns for Taxable Year. We have enclosed copies of this letter for that
purpose.

  This letter ruling does not grant an extension of time for filing Taxpayer’s federal

income tax return for the Taxable Year.

   Except as specifically set forth above, we express no opinion concerning the

federal tax consequences of the facts described above. In particular, we express or
imply no opinion on whether Taxpayer satisfies the requirements of § 48(a)(5), or other
applicable portions of §§ 48 and 45 and whether the credit amount claimed is correct.

  This letter ruling is directed only to the taxpayer requesting it. Section 6110(k)(3)

provides that it may not be used or cited as precedent.

  The rulings contained in this letter are based upon information submitted and

representations made by Taxpayer and Taxpayer’s representatives and accompanied
by a penalty of perjury statement executed by an appropriate party. Although this office
has not verified any of the material submitted in support of the request for rulings, it is
subject to verification on examination.

                                      Sincerely,

                                      Peter C. Friedman
                                      Peter C Friedman
                                      Senior Technician Reviewer, Branch 6
                                      Office of Associate Chief Counsel
                                      (Passthroughs & Special Industries)

Enclosures (2)

   Copy of this letter
   Copy for § 6110 purposes

cc: