HOUSTON, Feb. 11, 2016 /PRNewswire/ — Near the end of last year, Congress passed and the president signed into law the Protecting Americans from Tax Hikes (PATH) Act, a broader, bipartisan tax bill that extended (and in certain instances, made permanent) over 50 expiring provisions of the tax code. Among a host of other pro-business tax provisions, the bill included a two-year extension of the Energy-Efficient Commercial Building Deduction, or section 179D of the tax code. alliantgroup applauds both the PATH Act’s extension and modification of section 179D, citing the tax deduction as not only a vital incentive for U.S. job creation and economic growth, but also as sound environmental policy.
"By extending 179D, Congress has done architects, engineers and contractors a major favor as we have seen firsthand how this incentive has helped companies expand both their workforce and the scope of their services," said Dean Zerbe, alliantgroup National Managing Director and former Senior Counsel to the U.S. Senate Finance Committee. "Not only is 179D critical to the success of U.S. designers and builders everywhere, it is simply just good tax policy, taking a completely technology neutral approach to incentivizing energy-efficiency."
Section 179D was originally passed by Congress as part of the Energy Policy Act of 2005 in response to data from the U.S. Department of Energy showing that 73 percent of all electricity consumption was by buildings, with about half of that coming from commercial buildings. The owner of an eligible building can claim 179D, but in an effort to allow architects, engineers, construction companies and energy service providers to qualify for what can be an up to $1.80 per square foot tax deduction, section 179D allows eligible designers and builders to qualify through energy-efficient enhancements made to government-owned buildings at the federal, state or local levels. As government entities do not traditionally pay tax, the owners of these buildings can allocate the accrued tax savings to the business responsible for the energy-saving enhancements.
In order for a building to qualify for the deduction, the energy based improvements must be made to either the HVAC, hot water or interior lighting systems or to the building’s envelope. The PATH Act retroactively extends section 179D for 2015 and into 2016, but stipulates that buildings placed into service this year must meet ASHRAE 2007 standards as opposed to the old ASHRAE 2001 baseline. The bump up in the standard is a policy nod to modernizing energy-usage techniques and the need to raise the thresholds accordingly.
"The extension of 179D is tremendous news for our clients," said alliantgroup Senior Managing Director Rizwan Virani. "Even with the higher baseline beginning in 2016, 179D will remain broadly applicable to architects, engineers and contractors across the country. The deduction will continue to provide these companies the funds necessary for broader reinvestment and will allow them to be more competitive not only in their bids, but serve to make them more competitive in the marketplace as a whole."
alliantgroup’s mission is one of education and awareness—we exist to help industry organizations, U.S. businesses and the CPA firms that advise them, take full advantage of all federal and state tax credits, incentives and deductions available to them. Our government has legislated these powerful incentive programs to help businesses grow and successfully compete both in the U.S. and abroad. We are proud to have helped over 20,000 businesses claim more than $5 billion in tax incentives. alliantgroup’s headquarters is in Houston, Texas, with offices across the country including New York, Boston, Chicago, Orange County, Sacramento, Orlando, Indianapolis and Washington, D.C.