Notice 2015-4

PGP-130597-11

Property Qualifying for the Energy Credit under Section 48

Notice 2015-4

SECTION 1: PURPOSE
This notice provides guidance on the energy credit under section 48 of the
Internal Revenue Code (Code). Specifically, this notice provides performance and
quality standards that small wind energy property must meet to qualify for the energy
credit under section 48.
SECTION 2: BACKGROUND
For purposes of computing the investment credit under section 46 of the Code,
section 48(a)(1) provides, in part, that the energy credit for any taxable year is the
energy percentage of the basis of each energy property placed in service during such
taxable year. Section 48(a)(3)(A)(vi) provides that energy property includes qualified
small wind energy property. Section 48(a)(2)(A)(i)(IV) provides that the energy
percentage in the case of qualified small wind energy property is 30 percent for periods
ending before January 1, 2017.
Under section 48(a)(3), energy property includes qualified small wind energy
property that is constructed, reconstructed, or erected by the taxpayer (or acquired by
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the taxpayer if the original use of the property commences with the taxpayer), subject to
depreciation (or amortization in lieu of depreciation), and meets the performance and
quality standards (if any) that have been prescribed by the Secretary by regulations
(after consultation with the Secretary of Energy) and are in effect at the time of the
acquisition of the property.
Section 48(c)(4) defines qualified small wind energy property as property that
uses a “qualifying small wind turbine” to generate electricity. A qualifying small wind
turbine is a wind turbine that has a nameplate capacity of not more than 100 kilowatts
(kW). Qualified small wind energy property shall not include any property for any period
after December 31, 2016.
SECTION 3: SMALL WIND ENERGY PROPERTY STANDARDS
.01 Performance and Quality Standards. To qualify as small wind energy
property under section 48, the property must use a wind turbine that has a nameplate
capacity of not more than 100 kW and meets the performance and quality standards as
set forth in either of the following:
(1) American Wind Energy Association Small Wind Turbine Performance and
Safety Standard 9.1-2009 (AWEA); or
(2) International Electrotechnical Commission 61400-1, 61400-12, and 61400-11
(IEC).
.02 Time of Acquisition. For these purposes, a small wind turbine must meet the
performance and quality standards of the AWEA or the IEC that are in effect at the time
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of acquisition of the small wind turbine. In the case of a small wind turbine constructed,
reconstructed, or erected by the taxpayer, the time of acquisition for purposes of this
section 3.02 of this Notice shall be the time the small wind turbine is placed in service.
SECTION 4: CERTIFICATION
.01 In General. The manufacturer of the small wind turbine may certify to a
taxpayer that the small wind turbine meets the performance and quality standards of
AWEA or IEC by providing the taxpayer with a certification that satisfies the
requirements of this section 4. The manufacturer may provide the certification by
including a written copy of the certification in printable form on the manufacturer’s
website, or in any other manner that will permit the taxpayer to retain the certification for
tax recordkeeping purposes.
.02 Content of the Certification. The certification must be issued by an eligible
certifier and must contain the following:
(a) The name and address of the manufacturer;
(b) The property name and model number;
(c) The name and address of the eligible certifier;
(d) The nameplate capacity of the wind turbine; and
(e) A signed and dated statement by the eligible certifier that the property
complies with the performance and quality standards of AWEA or IEC.

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.03 Eligible Certifier. An eligible certifier is a third party that is accredited by the
American Association for Laboratory Accreditation or other similar accreditation body.
.04 Manufacturer’s Records. A manufacturer that certifies to a taxpayer that a
small wind turbine meets the performance and quality standards of AWEA or IEC must
retain in its records documentation establishing that the turbine meets the requirements
of this section 4. The manufacturer must, upon request, make such documentation,
including any test reports conforming to AWEA or IEC, available for inspection by the
Internal Revenue Service (Service).
.05 Taxpayer Reliance. Except as provided in section 4.06 of this notice, a
taxpayer may rely on a manufacturer’s certification that a small wind turbine meets the
performance and quality standards of AWEA or IEC. A taxpayer is not required to
attach a certification or any other documentation to the return on which the credit is
claimed. However, § 1.6001-1(a) of the Income Tax Regulations requires that
taxpayers 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 a small wind turbine should retain the certification statement as part of the
taxpayer’s records for purposes of § 1.6001-1(a).
.06 Effect of Erroneous Certification or Failure to Satisfy Documentation
Requirements. The Service may, upon examination, determine that a small wind
turbine that has been certified under this section 4 does not meet the performance and
quality standards of AWEA or IEC. In that event, or if the manufacturer fails to satisfy
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the requirements relating to documentation in section 4.04 of this notice, the
manufacturer’s right to provide a certification on which future purchasers of small wind
turbines may rely will be withdrawn, and taxpayers purchasing turbines 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
small wind turbines purchased on or before the date on which the announcement of the
withdrawal is published (even if the property is not installed or the credit is not claimed
before the announcement of the withdrawal is published). This notice reminds
manufacturers that an erroneous certification may result in the imposition of penalties –
(a) Under section 7206 for fraud and making false statements; and
(b) Under section 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).
.07 Examples. The following examples illustrate appropriate reliance on a
certification:
Example 1. On August 1, 2015, Taxpayer acquires wind turbines with a
nameplate capacity of not more than 100 kW manufactured by Manufacturer, and in
December 2015, Taxpayer places in service qualified small wind energy property that
includes the turbines. At the time of the acquisition of the wind turbines, Manufacturer
provides to Taxpayer a certification issued by an eligible certifier that includes all of the
information required by section 4.02 of this notice and is valid for a period that includes
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August 1, 2015. Taxpayer may rely on this certification as documentation that
Taxpayer’s small wind energy property meets the performance and quality standards
required in this notice. Taxpayer should keep this certification in Taxpayer’s records as
required by §1.6001-1(a).
Example 2. The facts are the same as those in Example 1, except that on
August 1, 2015, the time of the acquisition of the wind turbines, Taxpayer does not
receive a certification from Manufacturer for the wind turbines. On March 1, 2016,
however, an eligible certifier issues a certification meeting the requirements of section
4.02 of this notice and applying the same quality and performance standards that were
in effect on August 1, 2015, for the same model of wind turbine as the wind turbines
purchased by Taxpayer. The Manufacturer posts the certification in printable form on its
website, and the certification is valid for a period beginning on March 1, 2016. Because
the certification uses the quality and performance standards that were in effect on
August 1, 2015, the Taxpayer may rely on the certification statement as documentation
that the Taxpayer’s small wind energy property met the performance and quality
standards required in this notice as of the date of acquisition. Taxpayer should keep
this certification in Taxpayer’s records as required by §1.6001-1(a).
SECTION 5: EFFECTIVE DATE
This notice is effective for small wind energy property acquired or placed in
service (in the case of property constructed, reconstructed, or erected by the taxpayer)
after January 26, 2015.
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SECTION 6: 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 1545-2259.
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.
The collection of information in this notice is in section 4. This information is
required to be collected and retained in order to ensure that property meets the
requirements for the energy property credit under section 48. This information will be
used to determine whether the small wind energy property qualifies for the energy
credit. The collection of information is required to ensure that property meets certain
requirements that must be satisfied to qualify for the credit. The likely respondents are
corporations, partnerships, and individuals.
The estimated total annual reporting burden is 400 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 160.
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
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returns and tax return information are confidential, as required by section 6103.
SECTION 7: DRAFTING INFORMATION
The principal author of this notice is Martha M. Garcia of the Office of Associate
Chief Counsel (Passthroughs and Special Industries). For further information regarding
this notice, contact Ms. Garcia on 202-317-6853 (not a toll-free call).

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