Notice 2006-52

Part III. Administrative, Procedural, and Miscellaneous
Deduction for Energy Efficient
Commercial Buildings
Notice 2006–52
SECTION 1. PURPOSE
This notice sets forth interim guidance,
pending the issuance of regulations, relating to the deduction for energy efficient
commercial buildings under § 179D of the
Internal Revenue Code. Specifically, this
notice sets forth a process that allows a taxpayer who owns, or is a lessee of, a commercial building and installs property as
part of the commercial building’s interior
lighting systems, heating, cooling, ventilation, and hot water systems, or building
envelope to obtain a certification that the
property satisfies the energy efficiency requirements of § 179D(c)(1) and (d). This
notice also provides for a public list of software programs that must be used in calculating energy and power consumption for
purposes of § 179D. The Internal Revenue
Service and the Treasury Department expect that the rules set forth in this notice
will be incorporated in regulations.
SECTION 2. BACKGROUND
.01 In General. Section 1331 of the
Energy Policy Act of 2005, Pub. L. No.
109–58, 119 Stat. 594 (2005), enacted
§ 179D of the Code, which provides a
deduction with respect to energy efficient
commercial buildings. Section 179D(a)
allows a deduction to a taxpayer for part
or all of the cost of energy efficient commercial building property that the taxpayer
places in service after December 31, 2005,
and before January 1, 2008. (See section
2.02 of this notice.) Sections 179D(d)(1)
and 179D(f) allow a deduction to a taxpayer for part or all of the cost of certain partially qualifying commercial building property that the taxpayer places in service after December 31, 2005, and before
January 1, 2008. (See sections 2.03, 2.04,
and 2.05 of this notice.) For purposes of
this notice partially qualifying commercial
building property is property that would
be energy efficient commercial building
property but for the failure to achieve the
50-percent reduction in energy and power

June 26, 2006

costs required under section 2.02(1)(c) of
this notice.
.02 Energy Efficient Commercial Building Property.
(1) In General. Energy efficient commercial building property is depreciable
property that satisfies each of the following conditions:
(a) The property is installed on or in
any building that is located in the United
States and is within the scope of Standard
90.1–2001. (See section 5.02 of this notice for the description of buildings within
the scope of Standard 90.1–2001 and section 5.06 of this notice for the complete description of Standard 90.1–2001.)
(b) The property is installed as part of—
(i) the interior lighting systems,
(ii) the heating, cooling, ventilation,
and hot water systems, or
(iii) the building envelope.
(c) It is certified that the interior lighting systems, heating, cooling, ventilation,
and hot water systems, and building envelope that have been incorporated into
the building, or that the taxpayer plans
to incorporate into the building subsequent to the installation of such property,
will reduce the total annual energy and
power costs with respect to combined
usage of the building’s heating, cooling,
ventilation, hot water, and interior lighting systems by 50 percent or more as
compared to a Reference Building that
meets the minimum requirements of Standard 90.1–2001. The required 50-percent
reduction must be accomplished solely
through energy and power cost reductions
for the heating, cooling, ventilation, hot
water, and interior lighting systems. Reductions in any other energy uses, such
as receptacles, process loads, refrigeration, cooking, and elevators, are not taken
into account in determining whether the
50-percent reduction is achieved.
(2) Maximum Amount of Deduction.
(a) In General. The deduction for the
cost of energy efficient commercial building property installed on or in a building
shall not exceed the excess (if any) of—
(i) the product of $1.80 and the square
footage of the building, over
(ii) the aggregate amount of the § 179D
deductions allowed with respect to the
building for all prior taxable years.

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(b) Application to Multiple Taxpayers.
If two or more taxpayers install energy efficient commercial building property on or
in the same building, the aggregate amount
of the § 179D deductions allowed to all
such taxpayers with respect to the building
shall not exceed the amount determined
under section 2.02(2)(a) of this notice.
.03 Partially Qualifying Property: Energy Efficient Lighting Property.
(1) In General. Energy efficient lighting property is partially qualifying property, within the meaning of section 2.01
of this notice, that is subject to either the
permanent rule in section 2.03(1)(a) of
this notice or the interim rule in section
2.03(1)(b) of this notice.
(a) Permanent Rule. Partially qualifying property is subject to the permanent
rule if it is installed as part of the interior
lighting systems of a building and it is certified that the interior lighting systems that
have been incorporated into the building,
or that the taxpayer plans to incorporate
into the building subsequent to the installation of such property, will reduce
the total annual energy and power costs
with respect to combined usage of the
building’s heating, cooling, ventilation,
hot water, and interior lighting systems
by 162/3 percent or more as compared to
a Reference Building that meets the minimum requirements of Standard 90.1–2001.
The required 162/3-percent reduction must
be accomplished solely through energy
and power cost reductions for the heating, cooling, ventilation, hot water, and
interior lighting systems. Reductions in
any other energy uses, such as receptacles, process loads, refrigeration, cooking,
and elevators, are not taken into account
in determining whether the 162/3-percent
reduction is achieved.
(b) Interim Rule. Partially qualifying
property, within the meaning of section
2.01 of this notice, is subject to the interim
rule if it is not subject to the permanent rule
in section 2.03(1)(a) of this notice, if it is
installed as part of the interior lighting systems of a building before the date on which
final regulations under section 179D are
published in the Federal Register, and it is
certified that the interior lighting systems
that have been incorporated into the build-

2006–26 I.R.B.

ing, or that the taxpayer plans to incorporate into the building,—
(i) Achieve a reduction in lighting
power density of at least 25 percent (50
percent in the case of a warehouse) of the
minimum requirements in Table 9.3.1.1
or Table 9.3.1.2 (not including additional
interior lighting power allowances) of
Standard 90.1–2001;
(ii) Have controls and circuiting that
comply fully with the mandatory and
prescriptive requirements of Standard
90.1–2001;
(iii) Include provision for bi-level
switching in all occupancies except hotel
and motel guest rooms, store rooms, restrooms, and public lobbies; and
(iv) Meet the minimum requirements
for calculated lighting levels as set forth
in the IESNA Lighting Handbook, Performance and Application, Ninth Edition,
2000.
(2) Maximum Amount of Deduction.
(a) Property subject to the permanent
rule.
(i) In General. If the energy efficient
lighting property installed on or in a building is subject to the permanent rule in section 2.03(1)(a) of this notice, the deduction
for the cost of the property shall not exceed
the excess (if any) of—
(A) the product of $0.60 and the square
footage of the building, over
(B) the aggregate amount of the § 179D
deductions allowed with respect to energy
efficient lighting property installed on or in
the building for all prior taxable years.
(ii) Application to Multiple Taxpayers.
If two or more taxpayers install energy efficient lighting property on or in the same
building and the property is subject to the
permanent rule in section 2.03(1)(a) of this
notice, the aggregate amount of the § 179D
deductions allowed to all such taxpayers
with respect to the building shall not exceed the amount determined under section
2.03(2)(a)(i) of this notice.
(b) Property subject to the interim rule.
(i) In General. If the energy efficient
lighting property installed on or in a building is subject to the interim rule in section
2.03(1)(b) of this notice, the deduction for
the cost of the property is equal to the applicable percentage of the deduction that
would be allowed if the property were subject to the permanent rule. In addition, the
deduction for the cost of the property shall
not exceed the excess (if any) of—

2006–26 I.R.B.

(A) the applicable percentage of the
product of $0.60 and the square footage of
the building, over
(B) the aggregate amount of the § 179D
deductions allowed with respect to energy
efficient lighting property installed on or in
the building for all prior taxable years.
(ii) Applicable percentage. If the interior lighting systems of the building
achieve a reduction in lighting power density of at least 40 percent, the applicable
percentage for the building is 100 percent.
If the interior lighting systems of the building achieve a reduction in lighting power
density of less than 40 percent, the applicable percentage for the building is 100
percent reduced at a rate of 31/3 percentage
points per percentage point by which 40
percent exceeds the percentage reduction
in lighting power density. For example,
if the interior lighting systems achieve a
reduction in lighting power density of 32.5
percent, the applicable percentage is 75
percent (100 - (31/3 x (40 - 32.5))).
(iii) Application to Multiple Taxpayers.
If two or more taxpayers install energy efficient lighting property on or in the same
building and the property is subject to the
interim rule in section 2.03(1)(b) of this
notice, the aggregate amount of the § 179D
deductions allowed to all such taxpayers
with respect to the building shall not exceed the amount determined under section
2.03(2)(b)(i) of this notice.
.04 Partially Qualifying Property: Energy Efficient Heating, Cooling, Ventilation, and Hot Water Property.
(1) In General. Energy efficient heating, cooling, ventilation, and hot water
property is partially qualifying property,
within the meaning of section 2.01 of this
notice, that satisfies both of the following
conditions:
(a) The property is installed as part of
the heating, cooling, ventilation, and hot
water systems of a building; and
(b) It is certified that the heating, cooling, ventilation, and hot water systems that
have been incorporated into the building,
or that the taxpayer plans to incorporate
into the building subsequent to the installation of such property, will reduce
the total annual energy and power costs
with respect to combined usage of the
building’s heating, cooling, ventilation,
hot water, and interior lighting systems
by 162/3 percent or more as compared to
a Reference Building that meets the mini-

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mum requirements of Standard 90.1–2001.
The required 162/3-percent reduction must
be accomplished solely through energy
and power cost reductions for the heating, cooling, ventilation, and hot water
systems. Reductions in any other energy
uses, such as receptacles, process loads,
refrigeration, cooking, and elevators, are
not taken into account in determining
whether the 162/3-percent reduction is
achieved.
(2) Maximum Amount of Deduction.
(a) In General. The deduction for the
cost of energy efficient heating, cooling,
ventilation, and hot water property installed on or in a building shall not exceed
the excess (if any) of—
(i) the product of $0.60 and the square
footage of the building, over
(ii) the aggregate amount of the § 179D
deductions allowed with respect to energy
efficient heating, cooling, ventilation, and
hot water property installed on or in the
building for all prior taxable years.
(b) Application to Multiple Taxpayers.
If two or more taxpayers install energy efficient heating, cooling, ventilation, and
hot water property on or in the same building, the aggregate amount of the § 179D
deductions allowed to all such taxpayers
with respect to the building shall not exceed the amount determined under section
2.04(2)(a) of this notice.
.05 Partially Qualifying Property: Energy Efficient Building Envelope Property.
(1) In General. Energy efficient building envelope property is partially qualifying property, within the meaning of section
2.01 of this notice, that satisfies both of the
following conditions:
(a) The property is installed as part of
the building envelope of a building; and
(b) It is certified that the building envelope that has been incorporated into
the building, or that the taxpayer plans
to incorporate into the building subsequent to the installation of such property,
will reduce the total annual energy and
power costs with respect to combined
usage of the building’s heating, cooling,
ventilation, hot water, and interior lighting
systems by 162/3 percent or more as compared to a Reference Building that meets
the minimum requirements of Standard
90.1–2001. The required 162/3-percent
reduction must be accomplished solely
through energy and power cost reductions
for the heating, cooling, ventilation, hot

June 26, 2006

water, and interior lighting systems. Reductions in any other energy uses, such
as receptacles, process loads, refrigeration, cooking, and elevators, are not taken
into account in determining whether the
162/3-percent reduction is achieved.
(2) Maximum Amount of Deduction.
(a) In General. The deduction for the
cost of energy efficient building envelope
property installed on or in a building shall
not exceed the excess (if any) of—
(i) the product of $0.60 and the square
footage of the building, over
(ii) the aggregate amount of the § 179D
deductions allowed with respect to energy
efficient building envelope property installed on or in the building for all prior
taxable years.
(b) Application to Multiple Taxpayers.
If two or more taxpayers install energy efficient building envelope property on or in
the same building, the aggregate amount of
the § 179D deductions allowed to all such
taxpayers with respect to the building shall
not exceed the amount determined under
section 2.05(2)(a) of this notice.
SECTION 3. METHOD OF
COMPUTATION
.01 In General.
The Performance
Rating Method (PRM) must be used to
compute the percentage reduction in the
total annual energy and power costs with
respect to combined usage of a building’s
heating, cooling, ventilation, hot water,
and interior lighting systems as compared to a Reference Building that meets
the minimum requirements of Standard
90.1–2001.
.02 Performance Rating Method
(PRM). For purposes of this notice, the
PRM includes the following computations:
(1) Reference Building Energy and
Power Costs equal the sum of the energy
and power costs for the following components of the Reference Building:
(a) Interior Lighting,
(b) Heating,
(c) Cooling,
(d) Ventilation, and
(e) Hot Water.
(2) Proposed Building Energy and
Power Costs equal the sum of the energy
and power costs for the same components
of the Proposed Building.

June 26, 2006

(3) Percentage Reduction in Energy and
Power Costs is determined by—
(a) Subtracting Proposed Building Energy and Power Costs from Reference
Building Energy and Power Costs; and
(b) Expressing the difference as a percentage of Reference Building Energy and
Power Costs.
.03 Reference Building. For purposes
of this notice, the Reference Building is
a building that is located in the same climate zone as the taxpayer’s building and
is otherwise comparable to the taxpayer’s
building except that its interior lighting
systems, heating, cooling, ventilation, and
hot water systems, and building envelope meet the minimum requirements of
Standard 90.1–2001. The energy performance of the Reference Building shall be
determined by following the methods for
baseline building performance in the PRM
in Appendix G of Standard 90.1–2004. In
calculating baseline building performance,
the Reference Building shall use the following additional requirements from the
2005 California Title 24 Nonresidential
Alternative Calculation Method (ACM)
Approval Manual:
(1) Number of occupants, occupant
sensible and latent heat loads, receptacle
loads, and hot water loads from ACM
Tables N2–2 for whole building values
and Table N2–3 for building area values
appropriate for mixed use buildings;
(2) Occupancy, HVAC, fans, infiltration, hot water, lighting, and equipment
schedules from ACM Tables N2–4 through
N2–9;
(3) Infiltration modeled following
ACM Section 2.4.1.6;
(4) Luminaire power for interior lighting systems from the 2005 California Title
24 Nonresidential ACM Appendix NB or
from manufacturers data.
.04 Proposed Building.
(1) Energy Efficient Commercial Building Property. In computing energy and
power cost savings for purposes of section 2.02 (relating to energy efficient commercial building property), the Proposed
Building is a building that contains the interior lighting systems, heating, cooling,
ventilation, and hot water systems, and
building envelope that have been incorporated, or that the taxpayer plans to incorporate, into the taxpayer’s building but that is
otherwise identical to the Reference Building.

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(2) Energy Efficient Lighting Property.
In computing energy and power cost savings for purposes of section 2.03 (relating to energy efficient lighting property),
the Proposed Building is a building that
contains the interior lighting systems that
have been incorporated (or that the taxpayer plans to incorporate) into the taxpayer’s building but that is otherwise identical to the Reference Building.
(3) Energy Efficient Heating, Cooling,
Ventilation, and Hot Water Property. In
computing energy and power cost savings
for purposes of section 2.04 (relating to
energy efficient heating, cooling, ventilation, and hot water property), the Proposed
Building is a building that contains the
heating, cooling, ventilation, and hot water systems that have been incorporated, or
that the taxpayer plans to incorporate, into
the taxpayer’s building but that is otherwise identical to the Reference Building.
(4) Energy Efficient Building Envelope
Property. In computing energy and power
cost savings for purposes of section 2.05
(relating to energy efficient building envelope property), the Proposed Building is a
building that contains the building envelope that has been incorporated, or that the
taxpayer plans to incorporate, into the taxpayer’s building but that is otherwise identical to the Reference Building.
SECTION 4. CERTIFICATION
Before a taxpayer may claim the § 179D
deduction with respect to property installed on or in a commercial building,
the taxpayer must obtain a certification
with respect to the property. The certification must be provided by a qualified
individual and satisfy the requirements of
§ 179D(c)(1). A taxpayer is not required
to attach the certification to the return on
which the deduction is taken. 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 deduction claimed by the taxpayer.
Accordingly, a taxpayer claiming a deduction under § 179D should retain the certification as part of the taxpayer’s records for
purposes of § 1.6001–1(a) of the Income
Tax Regulations. A certification will be
treated as satisfying the requirements of
§ 179D(c)(1) if the certification contains
all of the following:

2006–26 I.R.B.

.01 The name, address, and telephone
number of the qualified individual.
.02 The address of the building to which
the certification applies.
.03 One of the following statements by
the qualified individual:
(1) Statement for energy efficient commercial building property: The interior
lighting systems, heating, cooling, ventilation and hot water systems, and building
envelope that have been, or are planned
to be, incorporated into the building will
reduce the total annual energy and power
costs with respect to combined usage of
the building’s heating, cooling, ventilation, hot water, and interior lighting systems by 50 percent or more as compared to
a Reference Building that meets the minimum requirements of Standard 90.1–2001.
(2) Statement for energy efficient lighting property that satisfies the requirements
of the permanent rule of section 2.03(1)(a)
of this notice: The interior lighting systems that have been, or are planned to be,
incorporated into the building will reduce
the total annual energy and power costs
with respect to combined usage of the
building’s heating, cooling, ventilation,
hot water, and interior lighting systems
by 162/3 percent or more as compared to
a Reference Building that meets the minimum requirements of Standard 90.1–2001.
(3) Statement for energy efficient lighting property that satisfies the requirements
of the interim rule of section 2.03(1)(b) of
this notice: The interior lighting systems
that have been, or are planned to be, incorporated into the building satisfy the requirements of the interim rule of section
2.03(1)(b) of Notice 2006–52.
(4) Statement for energy efficient heating, cooling, ventilation, and hot water
property: The heating, cooling, ventilation, and hot water systems that have been,
or are planned to be incorporated into the
building will reduce the total annual energy and power costs with respect to combined usage of the building’s heating, cooling, ventilation, hot water, and interior
lighting systems by 162/3 percent or more
as compared to a Reference Building that
meets the minimum requirements of Standard 90.1–2001.
(5) Statement for energy efficient building envelope property: The building envelope that has been, or is planned to be, incorporated into the building will reduce the
total annual energy and power costs with

2006–26 I.R.B.

respect to combined usage of the building’s heating, cooling, ventilation, hot water, and interior lighting systems by 162/3
percent or more as compared to a Reference Building that meets the minimum requirements of Standard 90.1–2001.
.04 A statement by the qualified individual that the amount of such reduction
has been determined under the rules of Notice 2006–52.
.05 A statement by the qualified individual that field inspections of the building
performed by a qualified individual after
the property has been placed in service
have confirmed that the building has met,
or will meet, the energy-saving targets
contained in the design plans and specifications, and that the field inspections
were performed in accordance with any
inspection and testing procedures that (1)
have been prescribed by the National Renewable Energy Laboratory (NREL) as
Energy Savings Modeling and Inspection
Guidelines for Commercial Building Federal Tax Deductions and (2) are in effect
at the time the certification is given.
.06 A statement that the building owner
has received an explanation of the energy
efficiency features of the building and its
projected annual energy costs;
.07 A statement that qualified computer
software was used to calculate energy and
power consumption and costs and identification of the qualified computer software
used (see section 6 of this notice).
.08 A list identifying the components of
the interior lighting systems, heating, cooling, ventilation, and hot water systems,
and building envelope installed on or in the
building, the energy efficiency features of
the building, and its projected annual energy costs.
.09 A declaration, applicable to the
certification and any accompanying documents, signed by the qualified individual,
in the following form:
“Under penalties of perjury, I declare
that I have examined this certification,
including accompanying documents,
and to the best of my knowledge and
belief, the facts presented in support of
this certification are true, correct, and
complete.”
SECTION 5. DEFINITIONS
The following definitions apply for purposes of this notice:

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.01 Building Square Footage. The sum
of the floor areas of the conditioned spaces
within the building, including basements,
mezzanine, and intermediate-floored tiers,
and penthouses with headroom height of
7.5 feet or greater. Building square footage
is measured from the exterior faces of exterior walls or from the centerline of walls
separating buildings, but excludes covered walkways, open roofed-over areas,
porches and similar spaces, pipe trenches,
exterior terraces or steps, chimneys, roof
overhangs, and similar features.
.02 Building within the Scope of Standard 90.1–2001. A structure that—
(1) Is wholly or partially enclosed
within exterior walls, or within exterior
and party walls, and a roof, affording shelter to persons, animals, or property; and
(2) Is not a single-family house, a multifamily structure of three stories or fewer
above grade, a manufactured house (mobile home), or a manufactured house (modular).
.03 Conditioned Space. Any enclosed
space within the building qualifying as
cooled space, heated space, or indirectly
conditioned space defined as follows:
(1) Cooled Space. An enclosed space
that is cooled by a cooling system whose
sensible output capacity exceeds 5 Btu per
hour per square foot of floor area.
(2) Heated Space. An enclosed space
that is heated by a heating system whose
output capacity relative to the floor area
exceeds 5 Btu per hour per square foot of
floor area.
(3) Indirectly Conditioned Space. An
enclosed space (other than a heated space
or a cooled space) that is heated or cooled
indirectly by being connected to adjacent
space(s) and that satisfies either of the following conditions:
(a) The space’s surface area that is adjacent to heated or cooled space multiplied
by the weighted average U-factor of such
adjacent surface area exceeds the space’s
surface area adjoining the outdoors, unconditioned spaces, and semi-heated
spaces (e.g., corridors) multiplied by the
weighted average U-factor of such adjoining surface area; or
(b) The air from heated or cooled
spaces is intentionally transferred (naturally or mechanically) into the space at
a rate exceeding 3 air changes per hour
(ACH).

June 26, 2006

.04 Qualified Computer Software. Software that meets the following requirements:
(1) The software is included (at the time
the certification is given) on the Department of Energy’s published list of qualified software as described in section 6 of
this notice.
(2) The software provides any information that regulations or other guidance
require the taxpayer to file in connection
with energy efficiency of property and the
deduction allowed under § 179D.
(3) The software provides information
that allows the user to document the energy
efficiency features of the building and its
projected annual energy costs.
.05 Qualified Individual. An individual
that—
(1) Is not related (within the meaning
of §45(e)(4)) to the taxpayer claiming the
deduction under § 179D;
(2) Is an engineer or contractor that is
properly licensed as a professional engineer or contractor in the jurisdiction in
which the building is located; and
(3) Has represented in writing to the
taxpayer that he or she has the requisite
qualifications to provide the certification
required under section 4 of this notice (in
the case of an individual providing the certification) or to perform the inspection and
testing described in section 4.05 of this notice (in the case of an individual performing the inspection).
.06
Standard
90.1–2001.
ANSI/ASHRAE/IESNA
Standard
90.1–2001, Energy Standard for Buildings
Except Low-Rise Residential Buildings,
developed for the American National
Standards Institute by the American
Society of Heating, Refrigerating, and
Air Conditioning Engineers and the
Illuminating Engineering Society of
North America (as in effect on April 2,
2003, including addenda 90.1a–2003,
90.1b–2002, 90.1c–2002, 90.1d–2002,
and 90.1k–2002 as in effect on that date).
SECTION 6. LIST OF APPROVED
SOFTWARE PROGRAMS
.01 In General. The Department of
Energy will create and maintain a public list of software that may be used to
calculate energy and power consumption and costs for purposes of providing a certification under section 4 of

June 26, 2006

this notice. This public list will appear at http://www.eere.energy.gov/buildings/info/tax_credit_2006.html. Software
will be included on the list if the software
developer submits the following information to the Department of Energy:
(1) The name, address, and (if applicable) web site of the software developer;
(2) The name, email address, and telephone number of the person to contact
for further information regarding the software;
(3) The name, version, or other identifier of the software as it will appear on the
list;
(4) All test results, input files, output
files, weather data, modeler reports, and
the executable version of the software with
which the tests were conducted; and
(5) A declaration by the developer of
the software, made under penalties of perjury, that—
(a) The software has been tested according to the American National Standards Institute/American Society of Heating, Refrigerating and Air-Conditioning
Engineers (ANSI/ASHRAE) Standard
140–2004 Standard Method of Test for the
Evaluation of Building Energy Analysis
Computer Programs;
(b) The software can model explicitly—
(i) 8,760 hours per year;
(ii) Calculation methodologies for the
building components being modeled;
(iii) Hourly variations in occupancy,
lighting power, miscellaneous equipment
power, thermostat setpoints, and HVAC
system operation, defined separately for
each day of the week and holidays;
(iv) Thermal mass effects;
(v) Ten or more thermal zones;
(vi) Part-load performance curves for
mechanical equipment;
(vii) Capacity and efficiency correction
curves for mechanical heating and cooling
equipment; and
(viii) Air-side and water-side economizers with integrated control; and
(c) The software can—
(i) Either directly determine energy and
power costs or produce hourly reports of
energy use by energy source suitable for
determining energy and power costs separately; and
(ii) Design load calculations to determine required HVAC equipment capacities
and air and water flow rates.

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.02 Addresses. Submissions under this
section must be addressed as follows:
Commercial Software List
Department of Energy
Office of Building Technologies,
EE–2J
1000 Independence Ave., SW
Washington, DC 20585–0121
.03 Original and Updated Lists. Software will be included on the original list if
the software developer’s submission is received before July 1, 2006. The list will
be updated as necessary to reflect submissions received after June 30, 2006.
.04 Removal from Published List. The
Department of Energy may, upon examination, determine that software is not sufficiently accurate to justify its use in calculating energy and power consumption and
costs for purposes of providing a certification under section 4 of this notice and remove the software from the published list.
The Department of Energy may undertake
such an examination on its own initiative
or in response to a public request supported
by appropriate analysis of the software’s
deficiencies.
.05 Effect of Removal from Published
List. Software may not be used to calculate energy and power consumption and
costs for purposes of providing a certification with respect to property placed in
service after the date on which the software is removed from the published list.
The removal will not affect the validity of
any certification with respect to property
placed in service on or before the date on
which the software is removed from the
published list.
.06 Public Availability of Information.
The Department of Energy may make all
information provided under paragraph .01
of this section available for public review.
SECTION 7. PAPERWORK
REDUCTION ACT
The collections of information contained in this notice have 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 1545–2004.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the

2006–26 I.R.B.

collection of information displays a valid
OMB control number.
The collections of information in this
notice are in sections 4 and 6. This information is required to be collected and
retained in order to ensure that energy
efficient commercial building property
meets the requirements for the deduction
under § 179D. This information will be
used to determine whether commercial
building property for which certifications
are provided is property that qualifies for
the deduction.
The collection of information is required to obtain a benefit.
The likely respondents are two groups:
qualified individuals providing a certification under § 179D (section 4) and software developers seeking to have software
included on the public list created by the
Department of Energy (section 6).
For qualified individuals providing a
certification under § 179D, the likely respondents are individuals. The likely number of certifications is 20,000. The estimated burden per certification ranges from
15 to 30 minutes with an estimated average
burden of 22.5 minutes. The estimated total annual reporting burden is 7,500 hours.
For software developers seeking to
have software included on the public list
created by the Department of Energy, the
likely respondents are individuals, corporations and partnerships. The estimated
total annual reporting burden is 75 hours.
The estimated annual burden per respondent varies from 1 to 2 hours, depending
on individual circumstances, with an estimated average burden of 11/2 hours to
complete the submission required to have
the software added to the public list. The
estimated number of respondents is 50.
The estimated frequency of responses is
once.
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 8. DRAFTING
INFORMATION

& Special Industries). For further information regarding this notice, contact
Jennifer C. Bernardini at (202) 622–3120
(not a toll-free call).

Clarification of Notice
2006–26
Notice 2006–53
On February 22, 2006, the Service issued Notice 2006–26, 2006–11 I.R.B. 622.
This notice clarifies that section 4.04 of
Notice 2006–26 should read as follows:
.04 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 serves
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
gain; or
(2) The facts and circumstances otherwise establish that the component’s principal purpose is to serve a function other
than heat loss or gain.
Taxpayers who purchased siding on or
before June 26, 2006 may rely on a manufacturer’s certification that the siding is
an Eligible Building Envelope Component
for purposes of the section 25C credit. A
manufacturer will not be subject to penalties under § 7206 or § 6701 on account
of a certification that siding is an Eligible Building Envelope Component under
section 4.02 of Notice 2006–26 unless the
manufacturer continues to provide the certification to purchasers of the siding after
June 26, 2006.
DRAFTING INFORMATION

The principal author of this notice is
Jennifer C. Bernardini of the Office of
Associate Chief Counsel (Passthroughs

2006–26 I.R.B.

The principal author of this notice is
Jennifer C. Bernardini of the Office of

1180

Associate Chief Counsel (Passthroughs
& Special Industries). For further information regarding this notice, contact
Jennifer C. Bernardini at (202) 622–3120
(not a toll-free call).

Credit for New Qualified
Alternative Motor Vehicles
Notice 2006–54
SECTION 1. PURPOSE
This notice sets forth interim guidance, pending the issuance of regulations,
relating to the new qualified alternative
fuel motor vehicle (QAFMV) credit under
§ 30B(a)(4) and (e) of the Internal Revenue Code (including the reduced credit
under § 30B(e)(5) for mixed-fuel vehicles). Specifically, this notice provides
procedures that a vehicle manufacturer
(or, in the case of a foreign vehicle manufacturer, its domestic distributor) may use
if it chooses to certify:
(1) that a vehicle of a particular make,
model, and year meets certain requirements that must be satisfied to claim the
new QAFMV credit under § 30B(a)(4)
and (e); and
(2) the amount of the credit allowable
with respect to that vehicle.
This notice also provides guidance to
taxpayers who purchase vehicles regarding the conditions under which they may
rely on the vehicle manufacturer’s (or, in
the case of a foreign vehicle manufacturer,
its domestic distributor’s) certification in
determining whether a QAFMV credit is
allowable with respect to the vehicle, and
the amount of the credit. In addition, the
notice provides guidance with respect to
certain issues relating to qualification for
and computation of the credit. The Internal
Revenue Service and the Treasury Department expect that the regulations will incorporate the rules set forth in this notice.
SECTION 2. BACKGROUND
Section 30B(a)(4) provides for a credit
determined under § 30B(e) for certain new
QAFMVs. The credit is equal to the applicable percentage of the incremental cost of
the new QAFMV. The minimum applicable percentage for QAFMVs is 50 percent,
but the applicable percentage is 80 percent

June 26, 2006