Notice 2009-53

Part III - Administrative, Procedural, and Miscellaneous

Nonbusiness Energy Property

Notice 2009-53

SECTION 1. PURPOSE
This notice updates interim guidance, pending the issuance of regulations,
relating to the credit for nonbusiness energy property under § 25C of the Internal
Revenue Code. Specifically, this notice provides procedures that manufacturers may
follow to certify property as either eligible building envelope components or qualified
energy property, as well as guidance regarding the conditions under which taxpayers
seeking to claim the § 25C credit may rely on a manufacturer's certification.
Additionally, this notice provides guidance about changes made to the § 25C credit by
the Energy Improvement and Extension Act of 2008 (EIEA), Division B of Pub. L. No.
110-343, 122 Stat. 3765 (2008), and the American Recovery and Reinvestment Tax Act
of 2009 (ARRTA), Division B of Pub. L. No. 111-5, 123 Stat. 115 (2009). This notice
also provides transition rules for certain nonbusiness energy property acquired before
June 1, 2009, and for certain nonbusiness energy property placed in service after
December 31, 2008. The Internal Revenue Service (Service) and the Treasury
Department expect that the regulations will incorporate the rules set forth in this notice.

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SECTION 2. BACKGROUND
.01 Energy Policy Act of 2005. Section 1333 of the Energy Policy Act of 2005
(EPACT), Pub. L. No. 109-58, 119 Stat. 594 (2005), added § 25C to the Internal
Revenue Code. Section 25C, as added by EPACT, provided a credit for amounts paid
or incurred for qualified energy efficiency improvements installed during a taxable year
and for residential energy property expenditures paid or incurred by a taxpayer during
the taxable year. Section 25C, as added by EPACT and as modified by EIEA and
ARRTA, defines qualified energy efficiency improvements as building envelope
components that satisfy specified efficiency standards (eligible building envelope
components) and the requirements listed in section 2.05(1) of this notice and defines
residential energy property expenditures as expenditures for energy property that
satisfies specified energy standards (qualified energy property) and the requirements
listed in section 2.05(1) of this notice. The credit was available for property placed in
service after December 31, 2005, and before January 1, 2008. Notice 2006-26, 2006-1
C.B. 622, as clarified by Notice 2006-53, 2006-1 C.B. 622, provides guidance on the
credit under § 25C for property placed in service after December 31, 2005, and before
January 1, 2008.
.02 EIEA. Section 302 of EIEA reinstated and modified the § 25C credit for
property placed in service during 2009. Neither EPACT nor EIEA provided any credit
under § 25C for property placed in service during 2008.
Section 25C, as amended by EIEA, provided a credit against tax for the taxable
year in an amount equal to the sum of--

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(1) Ten percent of the expenditures paid or incurred by the taxpayer for qualified
energy efficiency improvements installed during the taxable year, and
(2) The amount of expenditures for residential energy property.
The maximum amount of credit allowed was $50 for any advanced main air circulating
fan; $150 for any qualified natural gas, propane, or oil furnace or hot water boiler; and
$300 for any item of energy-efficient building property. The maximum amount of the
credit allowable to a taxpayer under § 25C for all taxable years was $500 ($200 in the
case of amounts paid or incurred for exterior windows (including storm windows and
skylights)).
.03 EIEA Energy Efficiency Standards. Section 25C, as amended by EIEA, and
Notice 2006-26, as clarified by Notice 2006-53, allowed a credit with respect to the
following property:
(1) Eligible Building Envelope Components.
(a) An insulation material or system (including any vapor retarder or seal to limit
infiltration) that-(i) Is specifically and primarily designed (within the meaning of section 4.03 of
this notice) to reduce heat loss or gain of a dwelling unit when installed in or on the
dwelling unit; and
(ii) May be taken into account in determining whether the building thermal
envelope requirements established by the International Energy Conservation Code
(IECC) are satisfied.
(b) An exterior window, skylight, or door (other than a storm window or storm

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door) that meets or exceeds the prescriptive criteria established by the IECC for the
climate zone in which the window, skylight, or door is installed.
(c) A storm window that, in combination with the exterior window over which it is
installed, meets or exceeds the prescriptive criteria established by the IECC for the
climate zone in which such storm window is installed.
(d) A storm door that, in combination with a wood door that is assigned a default
U factor by the IECC, does not exceed the default U factor requirement assigned to
such combination by the IECC.
(e) Any metal roof that-(i) has appropriate pigmented coatings that are specifically and primarily
designed to reduce the heat gain of a dwelling unit when installed on the dwelling unit,
and
(ii) meets or exceeds either of the applicable Energy Star program requirements.
The applicable Energy Star program requirements for this purpose are those in effect at
the time the expenditures for the roof are actually paid or incurred and those in effect at
the time the expenditures are treated as made under § 25D(e)(8). (See § 25C(e)(1),
which requires the application of rules similar to those of § 25D(e)(8) (relating to the
time at which expenditures are deemed made for purposes of the credit under § 25D)).
(f) Any asphalt roof that-(i) has appropriate cooling granules that are specifically and primarily designed to
reduce the heat gain of a dwelling unit when installed on the dwelling unit, and
(ii) meets or exceeds either of the applicable Energy Star program requirements

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(within the meaning of section 2.03(1)(e)(ii) of this notice).
(2) Qualified Energy Property.
(a) An electric heat pump water heater that yields an energy factor of at least 2.0
in the standard Department of Energy (DOE) test procedure.
(b) An electric heat pump that has a heating seasonal performance factor (HSPF)
of at least 9, a seasonal energy efficiency ratio (SEER) of at least 15, and an energy
efficiency ratio (EER) of at least 13.
(c) A central air conditioner that achieves the highest efficiency tier that has been
established by the Consortium for Energy Efficiency, and is in effect on January 1,
2006.
(d) A natural gas, propane, or oil water heater that has an energy factor of at
least 0.80 or a thermal efficiency of at least 90 percent.
(e) A stove that uses the burning of biomass fuel to heat a dwelling unit or to heat
water for use in such a dwelling unit, and that has a thermal efficiency rating of at least
75 percent as measured using a lower heating value.
(f) A natural gas, propane, or oil furnace or hot water boiler that achieves an
annual fuel utilization efficiency rate of not less than 95.
(g) A fan that is used in a natural gas, propane, or oil furnace and has an annual
electricity use of no more than two percent of the total annual site energy use of the
furnace (as determined in the standard DOE test procedure).
.04 ARRTA. Section 1121 of ARRTA modified the credit under § 25C for
amounts paid or incurred in taxable years beginning after December 31, 2008, and

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extended the credit to apply to property that is placed in service in 2009 and 2010.
Section 25C, as amended by ARRTA-(1) Provides, with respect to property placed in service in 2009 and 2010, a credit
against the tax imposed for the taxable year in an amount equal to 30 percent of the
sum of-(a) The amount paid or incurred by the taxpayer during the taxable year for
qualified energy efficiency improvements, and
(b) The amount paid or incurred by the taxpayer during the taxable year for
residential energy property expenditures;
(2) Limits the cumulative total of credits allowed for taxable years beginning in
2009 and 2010 to $1,500 per taxpayer (credits allowed in, and unused credit limitations
from, prior years are disregarded in applying this limitation); and
(3) Applies new energy efficiency standards for certain types of property (see
sections 4.01 and 5.01 of this notice).
.05 General Provisions. Under all three of the acts, EPACT, EIEA, and ARRTA,
the following provisions apply:
(1) Requirements to Claim the Credit. A taxpayer may claim a credit under
§ 25C with respect to amounts paid or incurred for an item of property only if each of the
following requirements is satisfied:
(a) The item is installed in or on a dwelling unit located in the United States and,
at the time of installation, the dwelling unit is owned and used by the taxpayer as the
taxpayer's principal residence (within the meaning of § 121). Thus, the credit is only

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available for existing homes. See § 45L for the credit applicable to new homes.
(b) The original use of the item commences with the taxpayer.
(c) In the case of a building envelope component described in section 2.03(1) or
4.01 of this notice, the component reasonably can be expected to remain in use for at
least five years. For this purpose, a component will be treated as reasonably expected
to remain in use for at least five years if the manufacturer offers, at no extra charge, at
least a two-year warranty providing for repair or replacement of the component in the
event of a defect in materials or workmanship. If the manufacturer does not offer such a
warranty, all relevant facts and circumstances are taken into account in determining
whether the component reasonably can be expected to remain in use for at least five
years.
(2) Time of Expenditure. The credit is allowed for amounts paid or incurred by
the taxpayer during the taxable year. Section 25C(e)(1) incorporates § 25D(e)(8),
relating to the time expenditures are treated as made. Accordingly, except as provided
in section 2.03(1)(e) and (f) of this notice, expenditures will be treated as made for
purposes of § 25C when the original installation of the property is complete or, in the
case of reconstruction, when the original use of the reconstructed property begins.
SECTION 3. REFERENCES TO THE INTERNATIONAL ENERGY CONSERVATION
CODE
Manufacturers and taxpayers may treat any reference in this notice to the
International Energy Conservation Code (IECC) as a reference to (1) the 2001
Supplement of the 2000 International Energy Conservation Code, (2) the 2004

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Supplement of the 2003 International Energy Conservation Code, or (3) the 2009
International Energy Conservation Code (2009 IECC). However, a reference to the
2009 IECC is a reference only to the 2009 International Energy Conservation Code.
SECTION 4. ELIGIBLE BUILDING ENVELOPE COMPONENTS
.01 Under ARRTA, an eligible building envelope component for a taxable year
beginning after December 31, 2008, is a component that is placed in service on or
before February 17, 2009, and is described in section 2.03(1) of this notice or a
component that is placed in service after February 17, 2009, and is described below:
(1) Insulation Material or System. An insulation material or system (including any
vapor retarder or seal to limit infiltration) that-(a) Is specifically and primarily designed (within the meaning of section 4.03 of
this notice) to reduce heat loss or gain of a dwelling unit when installed in or on the
dwelling unit; and
(b) Meets the prescriptive criteria for such material or system established by the
2009 IECC, as such Code (including supplements) was in effect on February 17, 2009.
(2) Exterior Window, Skylight, or Door. An exterior window, skylight, or door
(other than a storm window or storm door) that-(a) Has a U factor and Solar Heat Gain Coefficient (SHGC) of 0.30 or below; and
(b) Meets the prescriptive criteria for such component established by the IECC.
(3) Storm Window. A storm window that, in combination with the exterior window
over which it is installed-(a) Has a U factor and SHGC of 0.30 or below; and

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(b) Meets the prescriptive criteria for such component established by the IECC.
(4) Storm Door. A storm door that, in combination with the exterior door over
which it is installed-(a) Has a U factor and SHGC of 0.30 or below; and
(b) Meets the prescriptive criteria for such component established by the IECC.
(5) Metal Roof. Any metal roof described in section 2.03(1)(e) of this notice
(ARRTA did not change the efficiency standard for a metal roof).
(6) Asphalt Roof. Any asphalt roof described in section 2.03(1)(f) of this notice
(ARRTA did not change the efficiency standard for an asphalt roof).
.02 Installation Costs. With respect to eligible building envelope components, the
credit is allowed only for amounts paid or incurred to purchase the components. The
credit is not allowed for amounts paid or incurred for the onsite preparation, assembly,
or original installation of the components.
.03 Specifically and Primarily Designed. A component is not specifically and
primarily designed to reduce heat loss or gain of a dwelling unit if it provides structural
support or a finished surface, as in the case of drywall or siding. In addition, a
component is not specifically and primarily designed to reduce heat loss or gain of a
dwelling unit if its principal purpose is to serve any function unrelated to the reduction of
heat loss or gain. For purposes of the preceding sentence, the principal purpose of a
component is to serve functions unrelated to the reduction of heat loss or gain if-(1) Production costs attributable to features other than those that reduce heat
loss or gain exceed production costs attributable to features that reduce heat loss or

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gain; or
(2) The facts and circumstances otherwise establish that the component's
principal purpose is to serve a function other than the reduction of heat loss or gain.
SECTION 5. QUALIFIED ENERGY PROPERTY
.01 Under ARRTA, qualified energy property for a taxable year beginning after
December 31, 2008, is property that is placed in service on or before February 17,
2009, and is described in section 2.03(2) of this notice or property that is placed in
service after February 17, 2009, and is described below:
(1) Electric Heat Pump Water Heater. An electric heat pump water heater
described in section 2.03(2)(a) of this notice (ARRTA did not change the efficiency
standard for an electric heat pump water heater).
(2) Electric Heat Pump. An electric heat pump that achieves the highest
efficiency tier established by the Consortium for Energy Efficiency, as in effect on
January 1, 2009.
(3) Central Air Conditioner. A central air conditioner that achieves the highest
efficiency tier established by the Consortium for Energy Efficiency, as in effect on
January 1, 2009.
(4) Natural Gas, Propane, or Oil Water Heater. A natural gas, propane, or oil
water heater that has an energy factor of at least 0.82 or a thermal efficiency of at least
90 percent.
(5) Biomass-Burning Stove. A biomass-burning stove described in section
2.03(2)(e) of this notice (the retroactive clarifying change ARRTA made to the efficiency

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standard for a stove that burns biomass is reflected in section 2.03(2)(e)).
(6) Natural Gas Furnace. A natural gas furnace described in section 2.03(2)(f) of
this notice (ARRTA did not change the efficiency standard for a natural gas furnace).
(7) Natural Gas Hot Water Boiler. A natural gas hot water boiler that achieves an
annual fuel utilization efficiency rate of not less than 90.
(8) Propane Furnace. A propane furnace described in section 2.03(2)(f) of this
notice (ARRTA did not change the efficiency standard for a propane furnace).
(9) Propane Hot Water Boiler. A propane hot water boiler that achieves an
annual fuel utilization efficiency rate of not less than 90.
(10) Oil Furnace. An oil furnace that achieves an annual fuel utilization efficiency
rate of not less than 90.
(11) Oil Hot Water Boiler. An oil hot water boiler that achieves an annual fuel
utilization efficiency rate of not less than 90.
(12) Advanced Main Air Circulating Fan. A fan described in section 2.03(2)(g) of
this notice (ARRTA did not change the efficiency standard for a fan).
.02 Installation Costs. For qualified energy property, the credit is allowed only for
amounts paid or incurred to purchase qualified energy property and for expenditures for
labor costs properly allocable to the onsite preparation, assembly, or original installation
of the property.
.03 Natural Gas, Propane, or Oil Furnace with an Advanced Main Air Circulating
Fan. If a natural gas, propane, or oil furnace is qualified energy property, the entire
amount paid or incurred to purchase and install the furnace, including any costs

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attributable to the furnace’s main air circulating fan, are taken into account in
determining the amount of the credit under § 25C. If the furnace is not qualified energy
property, but the furnace’s main air circulating fan is qualified energy property, only the
amount paid or incurred to purchase and install the fan are taken into account in
determining the amount of the credit under § 25C. In such a case-(1) The amount paid or incurred to purchase and install the main air circulating
fan may be determined by any method that reasonably allocates costs between the fan
and other components of the furnace;
(2) The manufacturer of the furnace may determine, using any reasonable
method, the percentage of the cost of the furnace that is allocable to the fan and inform
taxpayers of the percentage in the certification it provides under section 6 of this notice;
and
(3) A taxpayer may treat this percentage of the total amount paid or incurred to
purchase and install the furnace as the amount paid or incurred to purchase and install
the advanced main air circulating fan.
.04 Geothermal Heat Pump Property. The credit under § 25D for geothermal
heat pump property expenditures in taxable years beginning after December 31, 2007,
is described in Notice 2009-41, 2009-19 I.R.B. 933.
SECTION 6. MANUFACTURER’S CERTIFICATION
.01 Requirements Applicable to Manufacturer. The manufacturer of a building
envelope component or energy property may certify to a taxpayer that the component is
an eligible building envelope component or that the energy property is qualified energy

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property by providing the taxpayer with a certification statement that satisfies the
requirements of sections 6.04, 6.05 and 6.06 of this notice. The certification statement
may be provided by including a written copy of the statement with the packaging of the
component or property, in printable form on the manufacturer's website, or in any other
manner that will permit the taxpayer to retain the certification statement for tax
recordkeeping purposes.
.02 Taxpayer Reliance. Except as provided in sections 6.03 and 6.08 of this
notice, a taxpayer may rely on a manufacturer's certification that a building envelope
component is an eligible building envelope component or that energy property is
qualified energy property. A taxpayer is not required to attach the certification
statement to the return on which the credit is claimed. However, § 1.6001-1(a) of the
Income Tax Regulations requires that a taxpayer maintain such books and records as
are sufficient to establish the entitlement to, and amount of, any credit claimed by the
taxpayer. Accordingly, a taxpayer claiming a credit for an eligible building envelope
component or qualified energy property should retain the certification statement as part
of the taxpayer's records for purposes of § 1.6001-1(a).
.03 Reliance Permitted Only for Installation Consistent with Certification. A
taxpayer may rely on a manufacturer’s certification in the case of a building envelope
component only if the building envelope component is installed in a manner that is
consistent with the manufacturer’s certification. For example, in the case of a storm
window (or door), a taxpayer may rely on the manufacturer’s certification only if the
component is installed over an exterior window (or door) of a class identified in the

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certification statement as one which in combination with the storm window (or door) has
a U factor and SHGC of 0.30 or below.
.04 Content of Manufacturer’s Certification; Required Information. A
manufacturer’s certification must contain the following information:
(1) The name and address of the manufacturer.
(2) Identification of the class of eligible building envelope component as listed in
section 4.01 of this notice or the class of qualified energy property as listed in section
5.01 of this notice in which the component or property is included.
(3) The make, model number, and any other appropriate identifiers of the
component or property.
(4) A statement that the component is an eligible building envelope component
as defined in section 4.01 of this notice or the property is qualified energy property as
defined in section 5.01 of this notice. In the case of a certification provided after June 1,
2009, this statement may be provided only for components that are eligible building
envelope components and property that is qualified energy property under the rules
applicable to components and property placed in service after February 17, 2009.
.05 Content of Manufacturer’s Certification; Specific Information. A
manufacturer’s certification statement must contain any of the following statements that
are applicable:
(1) In the case of an exterior window, skylight, or door (other than a storm
window or storm door), a statement that the exterior window, skylight, or door has a U
factor and SHGC of 0.30 or below.

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(2) In the case of a storm window, the classes of exterior window (e.g., single
pane; double pane, clear glass; double pane, Low-E coating) over which the storm
window may be installed and that, in combination with the storm window, will have a U
factor and SHGC of 0.30 or below.
(3) In the case of a storm door, the classes of exterior door (e.g., 1-3/4” insulated
steel, 50 percent or less glazing, double pane, clear glass) over which the storm door
may be installed and that, in combination with the storm door, will have a U factor and
SHGC of 0.30 or below.
.06 Content of Manufacturer’s Certification; Required Declaration.
A manufacturer’s certification statement must contain a declaration, signed by a
person currently authorized to bind the manufacturer in these matters, in the following
form:
“Under penalties of perjury, I declare that I have examined this certification
statement, and to the best of my knowledge and belief, the facts are true, correct, and
complete.”
.07 Manufacturer's Records. A manufacturer that certifies to a taxpayer that a
component is an eligible building envelope component or that property is qualified
energy property must retain in its records documentation establishing that the
component or property satisfies the applicable conditions of section 4.01 or 5.01 of this
notice. In the case of an exterior window, the manufacturer must retain a record of its
National Fenestration Rating Council rating. If a manufacturer certifies the percentage
of the cost of the furnace allocable to an advanced main air circulating fan, the

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manufacturer must maintain in its records the basis for such allocation. The
manufacturer must, upon request, make such documentation available for inspection by
the Service.
.08 Effect of Erroneous Certification or Failure to Satisfy Documentation
Requirements. The Service may, upon examination (and after any appropriate
consultation with the DOE or Environmental Protection Agency (EPA)), determine that a
component that has been certified under this section is not an eligible building envelope
component or that property that has been certified under this section is not qualified
energy property. In that event, or if the manufacturer of the component or property fails
to satisfy the requirements relating to documentation in section 6.07 of this notice, the
manufacturer's right to provide a certification on which future purchasers of the
component or property can rely will be withdrawn, and taxpayers purchasing the
component or property after the date on which the Service publishes an announcement
of the withdrawal may not rely on the manufacturer's certification. Taxpayers may
continue to rely on the certification for a component or property purchased on or before
the date on which the announcement of the withdrawal is published (including in cases
in which the component or property is not installed and the credit is not claimed until
after the announcement of the withdrawal is published). Manufacturers are reminded
that an erroneous certification statement may result in the imposition of penalties-(1) Under § 7206 for fraud and making false statements; and
(2) Under § 6701 for aiding and abetting an understatement of tax liability (in the
amount of $1,000 per return on which a credit is claimed in reliance on the certification).

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.09 Availability of Certification Information. Manufacturers are encouraged to
provide a listing of eligible building envelope components and qualified energy property
and applicable certification information on their websites to facilitate taxpayer
identification of qualified components and energy property.
.10 Special Rule for Energy Star. The Energy Star label designates that the
product has met energy efficiency guidelines set by the EPA and the DOE. Not all
Energy Star labeled building envelope components qualify for the tax credit under
§ 25C. The component must meet the definition of an eligible building envelope
component in § 25C. Taxpayers can no longer rely on an Energy Star label in claiming
the § 25C credit for exterior windows and skylights placed in service after the enactment
of the ARRTA. Similarly, an Energy Star label does not establish that a product is
qualified energy property. The product must meet the definition of qualified energy
property in § 25C.
SECTION 7. EFFECTIVE DATES AND TRANSITION RULES.
.01 For amounts that are paid or incurred in taxable years beginning after
December 31, 2008, with respect to property placed in service in calendar years 2009
and 2010, including amounts paid or incurred for property placed in service before
February 18, 2009, the credit is computed in accordance with sections 2.04(1) and (2)
of this notice.
.02 The efficiency standards listed for EIEA in section 2.03 of this notice apply to
property placed in service before February 18, 2009, and the efficiency standards listed
for ARRTA in sections 4.01 and 5.01 of this notice apply to property placed in service

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after February 17, 2009.
.03 In the case of amounts paid or incurred before June 1, 2009, for property
placed in service after February 17, 2009, taxpayers may rely on:
(1) An Energy Star label for exterior windows and skylights, rather than on a
manufacturer's certification statement, in claiming the § 25C credit, if the window or
skylight is installed in the region identified on the label;
(2) A manufacturer’s certification issued before February 18, 2009, that is made
in accordance with Notice 2006-26, as clarified by Notice 2006-53; or
(3) A manufacturer’s certification made in accordance with the procedures of
Notice 2006-26, as clarified by Notice 2006-53, for certifications issued after February
17, 2009, provided that the manufacturer’s certification statement clearly indicates that
the item complies with the efficiency standards contained in ARRTA.
.04 For amounts that are paid or incurred in taxable years beginning before
December 31, 2008, with respect to property placed in service in calendar year 2009,
the credit is computed in accordance with section 2.02 of this notice.
SECTION 8. PAPERWORK REDUCTION ACT
The collection of information contained in this notice has been reviewed and
approved by the Office of Management and Budget in accordance with the Paperwork
Reduction Act (44 U.S.C. 3507) under control number 1545-1989.
An agency may not conduct or sponsor, and a person is not required to respond
to, a collection of information unless the collection of information displays a valid OMB
control number.

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The collections of information in this notice are in section 6. This information is
required to be collected and retained in order to ensure that property meets the
requirements for the nonbusiness energy credit under § 25C. This information will be
used to determine whether the property for which manufacturers provide certifications is
property that qualifies for the credit. The collection of information is required to obtain a
benefit from manufacturers' certification statements that property qualifies for the credit.
The likely respondents are corporations, partnerships, and individuals.
The estimated total annual reporting burden is 350 hours.
The estimated annual burden per respondent varies from 2 hours to 3 hours,
depending on individual circumstances, with an estimated average burden of 2.5 hours
to complete the requests for certification required under this notice. The estimated
number of respondents is 140.
The estimated annual frequency of responses is on occasion.
Books or records relating to a collection of information must be retained as long
as their contents may become material in the administration of any Internal Revenue
law. Generally, tax returns and tax return information are confidential, as required by 26
U.S.C. 6103.
SECTION 9. EFFECT ON OTHER DOCUMENTS
This notice supersedes Notice 2006-26, as clarified by Notice 2006-53, which
was modified by Notice 2006-71, 2006-2 C.B. 316.
SECTION 10. DRAFTING INFORMATION
The principal author of this notice is Martha S. McRee of the Office of Associate

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Chief Counsel (Passthroughs & Special Industries). For further information regarding
this notice contact Ms. McRee at (202) 622-3110 (not a toll-free call).