The American Reinvestment and Recovery Act of 2009 (ARRA) authorized the Department of Treasury to award $2.3 billion in tax credits for qualified investments in advanced energy projects to support new, expanded, or re-equipped domestic manufacturing facilities. The Advanced Energy Manufacturing Tax Credit (MTC), also referred to as Section 48C of the Internal Revenue Code, does not apply to investments in energy generation projects, but rather the manufacturing facilities that support energy generation and conservation.

The MTC provides a 30% credit for investments in such manufacturing projects. The Department of Energy (DOE) and the IRS will review and make determinations on the eligibility and merit of MTC applications, and applicants will receive tax credits based on the expected commercial viability of their project and the ranking of their project relative to other projects. In addition to technology, geographic and project size diversity, and regional economic development, rankings will also be based on:

• Expected job creation
• Reduction of air pollutants and greenhouse gas emissions
• Technological innovation
• Ability to have the project up and running quickly

The MTC application period opened August 14, 2009, and preliminary applications are due to the DOE by September 16, 2009. Final applications are due to the DOE and the IRS on October 16, 2009. By January 15, 2010, the IRS will certify or reject applications and notify the certified projects with the approved amount of their tax credit. Awardees will receive acceptance agreements from the IRS by April 16, 2010. Credits will be allocated until the $2.3 billion in program funding is exhausted, and subsequent allocation periods will depend on remaining funds.

For more information, please contact Bryan Valencia, National Manufacturing & Distribution Practice Area Leader, at 713-850-9814 or bvalencia@heincpa.com.

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