On January 19, 2017, the Internal Revenue Service (IRS) issued Rev. Proc. 2017-19, 2016-6 I.R.B. (the Rev. Proc.), providing a safe harbor under which it will not challenge the tax treatment of an Energy Savings Performance Contract Energy Savings Agreement (ESPC ESA) as a service contract under Section 7701(e)(3). While the application of the guidance is limited to the ESPC ESA context, the Rev. Proc. nonetheless provides potential insight into the IRS’s views of other power purchase agreements for the purchase of renewable energy generally.
IRS Issues Guidance on Tax Treatment of Energy Savings Performance Contracts
By McDermott Will & Emery, Bradford E. LaBonte, Heather Cooper and Philip Tingle on February 2, 2017
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McDermott Will & Emery
Bradford E. LaBonteBradford E. LaBonte focuses his practice on US and international tax matters. He advises multinational corporations and investment funds on matters related to cross-border mergers and acquisitions, cash repatriation, controlled foreign corporation (CFC) and passive foreign investment company (PFIC) regimes, financial instrument classification, US trade or business determinations, US income tax treaty qualification and planning, and US withholding tax issues. Read Bradford LaBonte's full bio.
Heather CooperHeather Cooper works on federal income tax matters, with a focus on energy tax issues. She represents clients in restructurings, mergers and acquisitions, and other transactional energy related matters. Heather's national practice includes advising on all aspects of renewable energy transactions such as solar and wind projects. She provides advice on tax equity structures, refinancings, acquisitions and dispositions, restructurings and workouts. Read Heather Cooper's full bio.
Philip TinglePhilip (Phil) Tingle represents energy companies such as utilities, independent power producers and financial institutions on a wide range of energy tax-related matters. He is the global head of the Firm's Energy Advisory Practice Group. Phil provides advice regarding all aspects of renewable-energy projects, including tax equity structures, refinancings, acquisitions and dispositions, restructurings and workouts. He has extensive experience with the production tax credit and with the application of renewable credits to new technologies. Moreover, he works with the investment tax credit for numerous kinds of solar projects. Read Philip Tingle's full bio.
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