Frequently Asked Questions

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Question 1: 48C Phase II Program FAQs as of March 14, 2013 - General Information
Answer 1:

General
1.	What is the Qualifying Advanced Energy Project credit?	It is a tax credit for businesses which invest in eligible property designed to produce property which will be used for: · producing energy from renewable sources · producing electric vehicles · conserving energy or · capturing or sequestering greenhouse gases. An example is building or expanding a factory to make solar panels or wind turbines. Because the credit was enacted as section 48C of the Internal Revenue Code (Title 26 of the U.S. Code), it is sometimes referred to as the section 48C (§ 48C) credit. The credit amount is 30% of qualified investment in selected manufacturing facilities. Taxpayers must apply in advance and have their facilities selected to be eligible for the credit.
2.	How much in tax credits is available?	A total of $150,228,397 is available. The maximum credit for any single project is limited to $30 million. See the Application section below and sections 2.05 and 4.02(3) of Notice 2013-12.
3.	Is this a tax credit or do you receive cash back?	This is a tax credit which can be applied against a tax liability. The § 48C credit can reduce your federal income tax liability to zero, but it is not refundable, and it is not a grant like the grants issued by Treasury Department under § 1603 of the American Recovery and Reinvestment Act.
4.	What is the process for getting a section 48C tax credit?	See Notice 2013-12. To summarize, the steps in the process are these: · The taxpayer applies for the credit. · If approved, the IRS sends the taxpayer a letter allocating a credit to the taxpayer’s project. · The taxpayer sends the IRS two signed copies of the required agreement (Appendix A of Notice 2013-12). · The IRS signs the two copies of the agreement and returns one to the taxpayer. · Within 1 year of the date of the allocation letter, the taxpayer sends the IRS a request for certification of its project documenting its progress implementing the project. · If the IRS approves it sends the taxpayer a certification letter. · Within 3 years of the date of the certification letter, the taxpayer completes its project and notifies the IRS. See the FAQs below for information on each step of the process.
5.	How do I apply?	See the Application section below.
6.	When is the deadline to apply?	Concept papers must be submitted by April 9, 2013. See the Application section below and section 5 of Notice 2013-12.
7.	How much time do taxpayers have to complete their projects?	Taxpayers must place their projects in service within 3 years of the date the IRS issues the certification letter described in section 6 of Notice 2013-12 and in the Certification section below.
8.	May I change my project after I apply?	See the Changes section below.
9.	Is the tax credit transferable?	The tax credit is generally not transferable. See the discussion regarding successors in interest in Agreement Question 10.
10.	May I sell or transfer my project?	See the answer to Agreement Question 10.
11.	How do I use the credit?	See the Using the Credit section below.
12.	May I have someone represent me in dealing with the IRS regarding this credit?	Yes, you can authorize one or more persons to represent you by completing Form 2848, Power of Attorney and Declaration of Representative. See the Instructions for Form 2848, Power of Attorney and Declaration of Representative. The form and instructions also are available in the electronic application system. You and the person(s) you authorize must sign the form. Submit the completed form by uploading it into the application system with the other documents you submit. See the Application section below.
13.	Whom do I contact if I have a general question about this tax credit?	Send questions via fax to IRS point of contact Marc Bernabo at (713) 209-3964 or leave a telephone message at (713) 209-3669. Include your fax number and telephone number in your fax or telephone message.
14.	Will these FAQs be updated?	Yes, IRS and the Department of Energy will update them as they receive questions.
15.	How secure is the EERE Exchange system from being hacked by China?	The EERE eXCHANGE system is certified and accredited by the DOE Office of the Chief Information Officer.
16.	How does this tax credit differ from section 45 credits for projects through 2016?	The credits are given for doing different things. The § 45 credit is given for producing electricity from specified renewable sources in specified types of facilities. The § 48C credit is given for investing in eligible property designed to produce equipment which will be used for producing energy from specified renewable sources or will be used for other specified purposes. Investing in eligible property designed to produce certain equipment is not eligible for the § 45 credit. Producing electricity is not eligible for the § 48C credit. As an example, Taxpayer A might be given a § 48C credit for investing in a new factory to build solar panels. Taxpayer B might qualify for a § 45 credit by installing solar panels and producing electricity.

Question 2: 48C Phase II Program FAQs as of April 2, 2013 – Eligibility Information
Answer 2:

Eligibility
1.	What types of technologies are eligible?	See the eight following rows, which are printed in this font.
	Specified Advanced Energy Property (SAEP)	Example Technologies
	Property designed to be used to produce energy from the sun, wind, geothermal deposits (within the meaning of section 613(e)(2)), or other renewable resources	§ Polysilicon, ingots, wafers, cells, consumable processing materials (specific to solar manufacturing), modules, module components, inverters, turnkey manufacturing lines, mirrors, thermal storage components, components of trough, tower, dish, or LFR systems. § Blades, towers, gear boxes, controllers, generators, other wind turbine components. § Jacks, rigs, pumps, drills (specific to the geothermal industry), anti-corrosive coatings, modular binary plant components, components specific to energy recovery from co-produced fluids. § Marine and hydrokinetic technologies, such as wave, tidal, current, and ocean thermal energy technologies, and related components.
	Fuel cells, microturbines, or an energy storage system for use with electric or hybrid-electric motor vehicles	§ Low and high temperature fuel cell components, membrane electrode assemblies, fuel cell system assemblies for stationary or transportation power. § Microturbines and component technologies. § Batteries for electric or hybrid-electric motor vehicles.
	Electric grids to support the transmission of intermittent sources of renewable energy, including storage of such energy	Smart grid technologies, energy storage or demand response technologies that directly support the transmission of intermittent sources of renewable energy.
	Property designed to capture and sequester carbon dioxide emissions	CO₂ separation membranes, physical and chemical solvents and absorbents, advanced compressor technologies optimized for CCS.
	Property designed to refine or blend renewable fuels or to produce energy conservation technologies (including energy-conserving lighting technologies and smart grid technologies)	§ Mass-produced components specifically designed for bio-refinery facilities, standalone modular biomass power units. § Advanced HVAC, energy-conserving lighting, building envelope materials and systems, residential heat pump water heaters, intelligent control technologies, other technologies designed to conserve energy. § Mass produced components for super boilers, isothermal melters, waste-heat recovery systems, CHP units.
	New qualified plug-in electric drive motor vehicles (as defined by section 30D), qualified plug-in electric vehicles (as defined by section 30(d)), or components which are designed specifically for use with such vehicles, including electric motors, generators, and power control units	Electric and certain hybrid-electric vehicles and components, including controllers, electric motors, advanced fuel injection (direct injection or lean burn), advanced light-weighting materials and designs.
	Other advanced energy property designed to reduce greenhouse gas emissions as may be determined by the Secretary	§ Technologies designed to increase the substitution of clinker by mineral components in cement. § Methane capture technologies.
2.	Does an entire plant have to be dedicated to manufacturing a single Specified Advanced Energy Property (SAEP)?	Your plant may produce both SAEP and other property. Remember that the tax credit is for equipment used in manufacturing only the SAEP, not other property, and not for the structural components of the building.
3.	What is the earliest date a manufacturing project could be placed in service and qualify for the section 48C credit?	February 18, 2009.
4.	Are foreign companies eligible for this credit?	Yes, as long as the manufacturing facility is or will be located in one of the 50 states or in the District of Columbia.
5.	Does it matter where the Specified Advanced Energy Property (SAEP) produced by the manufacturing plant will be shipped to and used?	No, the the final destination of the SAEP does not matter. The purpose of the credit is to increase domestic creation of manufacturing, not necessarily increasing domestic use of the SAEP.
6.	Are building upgrades eligible?	Buildings or the structural components of the buildings are not eligible property for the § 48C credit. The tax credit is not based on the components of the manufacturing facility, only the tangible property going into that facility.
7.	Would a newly formed company with no tax history be eligible for the § 48C credit?	Yes. The credit is based on eligible property placed in service in a taxable year rather than the taxpayer’s tax history. See Application Question 15 for the definition of eligible property.
8.	May I get a tax credit under section 48, 48A or 48B of the Internal Revenue Code or a payment under section 1603 of the American Recovery and Reinvestment Act of 2009 for my project in addition to the § 48C credit?	Not for the same project. If you choose one of the other credits or a grant, you must forfeit this credit and notify the IRS by letter that you have chosen to forfeit this credit.
9.	Am I eligible for the § 48C credit if I received a grant or loan under other manufacturing-related funding opportunities in the American Recovery and Reinvestment Act of 2009 (ARRA) or received a loan guarantee under another DOE program?	Section 48C does not prohibit allocating a § 48C credit to an applicant which received a grant or loan under other ARRA provisions or a loan guarantee under another DOE program. However, you also should look at the rules under the federal grant or loan program.
10.	If I did not receive a § 48C credit for my facility in the first allocation round in 2009-2010 and have since placed my eligible property in service, am I eligible for the § 48C credit in the second allocation round?	Yes. Eligible property placed in service before February 17, 2009, are not eligible, but those placed in service since then are eligible.
11.	I am concerned that I will not be able to place the eligible property for which I received a § 48C credit in the first allocation round in 2009-2010 in service by the deadline. Am I eligible for the § 48C credit in the second allocation round in 2013?	Yes, you are eligible, but you may not receive the credit twice for the same eligible property. If you are allocated a credit in the second round you must forfeit the credit allocated in the first round. You are not assured that your application in the second round will be allocated a credit just because your first round application was. The second round is a new competition.
12.	Does a manufacturer of component parts of advanced technology nuclear power plants qualify for the credit?	That technology qualifies as Specified Advanced Energy Property (SAEP), and manufacturing component parts of SAEP is eligible.
13.	Are charging stations for electric vehicles eligible?	Only eligible property producing the charging station hardware would be eligible. This technology could apply under the fuel savings category by assuming a standard level of performance for the "average PHEV or EV performance." See Application Question 15 for the definition of eligible property.
14.	Is a biorefinery or biofuel eligible?	No. Internal Revenue Code section 48C(c)(2) excludes buildings and structural components from the definition of eligible property. It specifies that property must be tangible personal property or other tangible property, not real estate. As a result of being excluded by the definition of eligible property, a biorefinery cannot be a qualifying advanced energy project. A qualifying advanced energy project is limited, in part, to property used in the refining or blending of renewable transportation fuel, as opposed to the fuel itself. Therefore, biofuel is not eligible for the tax credit.
15.	Can qualified investment in a prototype manufacturing facility qualify when the production of these prototypes must be proven before large scale commercial production can begin?	The credit is for products that are commercialized, not pilot or prototype projects.

16.	Will the webinar slides and/or a recording of the webinar be available?	The slides, script, and a link to the recorded webinar can be found at https://eere-exchange.energy.gov, under the 48C Phase II Program announcement.
17.	Would user of a technology qualify for these credits?	No.
18.	Could projects be bundled for a company?	Yes, if all of the projects meet the eligibility requirements and the bundled tax credit request does not exceed $30M, or 30% of total project cost, whichever is less.
19.	Are there any changes in eligibility between last round and this round?	See FAQ Application , #1
20.	What if my project is in a US territory, like Puerto Rico or Guam?	See FAQ Eligibility, #4
21.	Is equipment that is used to convert natural gas to diesel and other petro-chemical products (gas to liquid facilities) considered "specified advanced energy property" under Section 48C as "other property designed to reduce greenhouse gas emissions as may be determined by the service?	A property may be eligible if it can be proven that the resulting fuel will reduce green house gas emissions as compared to the fossil fuel based equivalent. It is the responsibility of the Taxpayer to demonstrate this in the Concept Paper.
22.	Does production of anode material utilized within lithium ion batteries for hybrid vehicles as well as for grid storage applications qualify as SAEP?	Yes, see FAQ Eligibility, #1, energy storage.
23.	Is a property in the production of energy from water eligible?	Yes, see FAQ Eligibility, #1.
24.	Would building a new photovoltaic cell manufacturing plant qualify as Qualified Project under 48C? In this case is the SAEP a solar cell/panel?	Yes. See FAQ Eligibility, #1.
25.	Just want to be clear, producing a renewable fuel does not qualify under this program, but rather producing equipment that is used to produce renewable fuel?	Correct.
26.	Can the project be justified in terms of "secondary manufacturing?" For example, if the project saves electricity, could it be counted towards a manufacturing facility which is a heavy electricity user? As a refined example, manufacturers are huge electricity users - quite a bit of that has moved to Iceland. Would keeping that capability in the US count towards the project, or would the direct manufacture of the device only count?	No, the tax credit is only for the tangible property going into that facility. See previous FAQ, Eligibility, #6.
27.	Do you have to include a tech user as a partner where the tech will be applied?	Information on the content of the Concept Paper can be found in Appendix B of the notice.
28.	Are facilities that manufacture catalysts or raw materials used in Li-ion batteries for electric vehicle applications eligible?	Yes, see FAQ Eligibility, #1, energy storage.
29.	If renewable fuels are included, does it apply to production of feedstocks for those renewable fuels?	See FAQ, Eligibility, #14.
30.	What if my technology is outside the Technology Focus Areas you list in the drop down menu?	You may select 'Other'.
31.	Is equipment that manufactures high performance energy efficient equipment qualify? This facility will make HVAC and lighting equipment along with modular building components.	Yes, see FAQ, Eligibility, #1.
32.	Can the qualified investments in tangible property to produce an SAEP be split among manufacturing facilities at more than one geographic location?	Yes, as long as all the sites are located in the United States and are all owned and operated by the tax credit applicant, the taxpayer may submit one application that includes all sites relevant to the SAEP.
33.	Do the projects applied for need to be completed and in production?	No, they may be completed any time between February 18, 2009, and the future date 3 years after a successful applicant has done all of these things: •Applied •Been allocated a credit •Requested certification (within 1 year of the allocation date) and •Received a certification letter from the IRS.

34.

Would a project to re-equip, expand, or establish a facility to manufacture a control system that would be used in an internal combustion engine qualify as a specified advanced energy project?

The definition of specified advanced energy product in 48C, includes "other property designed to reduce greenhouse gas emissions as may be determined by the Service as described in section 3.06 of th[e] notice."

As directed in the IRS notice, the concept paper is to provide a concise discussion of the market segment(s) for the manufactured product, including the overall size of the expected market. Also, taxpayers are requested to briefly identify any unique contribution(s) the product will make in avoiding or reducing air pollutants and/or anthropogenic emissions of greenhouse gases. This could include a brief discussion of the significance of the product within its larger industry.

35.

Does equipment to produce the enzyme that will aid in the production of cellulosic ethanol qualify?

Does equipment to make/grow/increase the cell mass of the organisms which are used and aid in manufacturing cellulosic ethanol qualify?

Does equipment that processes biomass and reduces it to an acceptable size- removes unnecessary soil and other materials and through various mechanical processes reduces the biomass to 1 millimeter solids, which is used in manufacturing cellulosic ethanol, a renewable energy source qualify?

Property (e.g., equipment, organic compounds used in processing, etc.) used directly in the refining and blending of renewable fuels may be SAEP. It is the property used to manufacture the SAEP that is evaluated for eligibility. While not exhaustive, the following are eligible examples:

• Equipment that will manufacture equipment used in the production of biofuel.

• The equipment that produces inorganic or organic (e.g., enzymes) compounds used in the refining or blending process.

• Equipment used to manufacture the equipment used to process feedstock in preparation for the biofuel production process.

Ineligible examples include:

• Installation of equipment or technologies that produce fuel.

• Fuel production.

• Any project or portion of a project that can be used for the refining or blending of non-renewable fuel.

If the manufactured component/product has uses other than in the production of renewable energy, only that portion used for that purpose is eligible for the tax credit.

In summary, eligible property includes property necessary for the production of Specified Advanced Energy Property (SAEP). SAEP, as defined, includes “property designed to refine or blend renewable fuels (but not fossil fuels).” Equipment used for the manufacture of property that is designed to refine or blend renewable fuels (but not fossil fuels) may be eligible property. Property that is used in refining or blending of renewable fuel would not be eligible property, but may be SAEP. Renewable fuel and renewable fuel feedstock are neither eligible property nor SAEP.

Question 4: 48C Phase II Program FAQs as of March 14, 2013 – Agreement Information
Answer 4:

Agreement
1.	When is the agreement due?	The due date for sending the agreement to the IRS in the second allocation round is January 10, 2014.
2.	Where can I find the agreement?	A link to a template in Microsoft Word format is on the IRS Qualified Advanced Energy Project Credit home page at http://www.irs.gov/Businesses/Advanced-Energy-Credit-for-Manufacturers-(IRC-48C). The agreement also is contained in Appendix A of Notice 2013-12.
3.	Is a separate agreement required for each project which is allocated a credit?	Yes.
4.	Who must sign the agreement?	The agreement must be signed and dated by a person authorized to bind the applicant such as an officer of a corporation, a general partner of a state-law partnership, a member-manager of a limited liability company, a trustee of a trust, or the proprietor of a sole proprietorship. An authorization to represent the taxpayer such as Form 2848, Power of Attorney and Declaration of Representative by itself does not authorize that representative to sign the agreement. Only original, ink signatures will be accepted. Stamped, faxed, scanned or other copied signatures will not be accepted.
5.	Where do I send the agreement?	Send two (2) copies of the agreement, each with an original, dated signature, to this address: Internal Revenue Service Industry Director, Natural Resources and Construction Attn: Executive Assistant (Technical) 1919 Smith Street, Floor 23 Mail Stop 1000-HOU Houston, TX 77002
6.	May I change the terms of the agreement?	No, the IRS will not accept an agreement that has been altered except for filling in the blanks.
7.	When will the IRS return the agreement to me?	The IRS plans to mail the signed agreements to taxpayers by March 14, 2014.
8.	What will happen if I don’t sign the agreement?	You will forfeit the credit.
9.	Must I sign the agreement if I have already placed my project in service?	Yes, you must sign the agreement or forfeit all of the credit allocated to the project.
10.	If I sell or transfer the project, does the new owner need to execute an agreement for the credit with the IRS?	If you sell or transfer ownership of the project, you and the new owner must write to the IRS at the address in the answer to Agreement Question 5, describe the transaction and enclose copies of key documents. The IRS will decide whether to execute an agreement with the new owner.
11.	If a partnership’s application for the section 48C credit is accepted and later it restructures to become a C corporation, would this restructuring have any effect on its credit allocation?	Only the taxpayer that enters into an agreement with IRS is allowed the 48C credit. A new owner of the facility (a “successor in interest”) must ask IRS to execute a new agreement with it. In addition, if the applicant’s business restructuring constitutes a significant change, then any allocation or certification may be void.
12.	Will the IRS tell me in advance whether it will execute a new agreement if I sell or transfer my project?	The process for obtaining a formal ruling on a future transaction is to apply for a letter ruling. See Revenue Procedure 2013-1. for those procedures. For an informal discussion of ownership changes, you can contact the office of the Industry Director, Natural Resources and Construction, at 713-209-3669.

Question 5: 48C Phase II Program FAQs as of March 14, 2013 – Certification Information
Answer 5:

Certification
1.	What is certification?	Section 48C(d)(2) of the Internal Revenue Code requires taxpayers which were allocated credits to apply for certification within 1 year of the date of the allocation letter. To obtain certification, taxpayers must show that they have done certain things to implement their projects. If they are not implementing their projects, the Service will deny certification and those taxpayers will forfeit their credits. See section 6 of Notice 2013-12.
2.	How do I request certification of my project?	As described in section 6 of Notice 2013-12, send a letter requesting certification of the credit for your project to the IRS at the address in the answer to Agreement Question 5. Please put “SECTION 48C CERTIFICATION REQUIREMENTS” in a prominent location in your letter and on the outside of the envelope or package. See section 6 of Notice 2013-12 for what the letter should contain. The letter must include this statement: “I declare that I am authorized to bind {name of applicant}. Under penalties of perjury, I declare that I have examined this submission, including accompanying documents, and, to the best of my knowledge and belief, all of the facts contained herein are true, correct, and complete.” The letter must be signed and dated by a person authorized to bind the taxpayer who has personal knowledge of the facts contained in the letter and accompanying documents. Examples of persons authorized to bind the taxpayer are an officer of a corporation, a general partner of a state-law partnership, a member-manager of a limited liability company, a trustee of a trust or the proprietor in the case of a sole proprietorship. An authorization to represent the taxpayer by a power of attorney such as Form 2848, Power of Attorney and Declaration of Representative, by itself does not authorize that representative to sign this letter. Only original, ink signatures will be accepted. Stamped, faxed, scanned or other copied signatures will not be accepted. Enclose copies of documents to show that you have met the requirements for certification.
3.	When do I apply for certification?	You MUST apply for certification no later than 1 year after the date of the allocation letter the IRS sends you. Internal Revenue Code section 48C(d)(2)(B) sets this deadline and does not allow any extensions or exceptions. If you place your project in service less than 1 year after the date of the allocation letter, you may apply for certification as soon as you place it in service.
4.	What records do I send to obtain certification of the credit for my project?	As explained in section 6 of Notice 2013-12, send (a) copies of all permits required to begin construction or installation and (b) copies of sufficient other documents to demonstrate that you are implementing your project according to the timetable in your application. Examples of documents to send to show that you are implementing your project are listed below. Taxpayers may have other types of documents which demonstrate progress implementing their projects. Those are equally acceptable. Send enough documents to demonstrate the progress you have made. Please limit the documents you send to those which are most important to showing your progress. · Contracts for financing of the project · Contracts for significant purchases of land, goods or services · Contracts for significant purchases of raw materials the project will use · Invoices for significant goods or services purchased · Payment documents for significant purchases of land, goods or services · Recent reports on the progress of construction or installation · Recent reports on the amount of time your employees have spent on the project · Recent reports on costs incurred · Significant contracts for sales of the goods the project will produce · Inspection reports · Certificates of occupancy · Photographs of the site or equipment · Any other significant documents which demonstrate your progress implementing your project.
5.	Should the copies be printed or electronic?	We prefer documents in Adobe Acrobat format on CD or flash drive, but we also will accept printed copies. If you send a CD or flash drive, be sure that it is not encrypted, password-protected or redacted. Please label it with your company’s name and “48C certification request.”
6.	What do I do if I can’t obtain all the permits within 1 year of the date of the allocation letter?	Send copies of all the permits you have obtained along with a list of the other permits you will obtain, an explanation of why you did not obtain them within 1 year and an estimate of when you will obtain them.
7.	What do I do if I have fallen behind schedule implementing my project?	Explain the reason(s) you have fallen behind schedule, send copies of documents which show what you have accomplished, and provide your revised estimated completion schedule.
8.	Will the documents I send be public or confidential?	All correspondence with the IRS and all documents you send the IRS related to certification of this tax credit are confidential, just as your tax return is. See section 10 of Notice 2013-12 and section 6103 of the Internal Revenue Code. The only information the IRS is allowed to release to the public is an announcement of the names of taxpayers allocated credits and the amounts they are allocated. That announcement is required by section 48C(d)(5) of the Internal Revenue Code and is described in section 10.01 of Notice 2013-12.
9.	What kind of certification will the IRS send?	The Service will send you a letter certifying the allocation of credit for the project described in your concept paper and full application for the credit.
10.	What will happen if I don’t send the request on time?	You will forfeit all of the credit allocated to the project.
11.	What will happen if I don’t provide the documents to the IRS?	You will forfeit all of the credit allocated to the project.
12.	What will happen if the IRS is not satisfied with my letter or the documents?	The staff which reviews certification requests will contact you to ask any questions it has and/or ask for copies of additional documents.
13.	What will happen if the IRS is not satisfied with the progress I have made implementing my project?	The staff will contact you to discuss your progress and give you an opportunity to provide more evidence that you are implementing your project on time.
14.	When will I receive my certification letter?	The Service will review all the requests as soon as it can. Because all the certification requests are due on the same date, it may take some weeks or months to review all of the requests and respond to all of them.
15.	What will happen if the IRS determines not to send me a letter of certification?	You will forfeit all of the credit allocated to the project.
16.	How will I know if my project is not certified?	If the IRS determines that you have not met the requirements for certification, it will send you a letter stating that and stating that your credit is forfeited.
17.	Must I request certification if I have already completed my project?	Yes, Internal Revenue Code section 48C(d)(2)(B) requires certification of all projects. You must obtain a letter of certification even if you have already completed the project, or else you will forfeit all of the credit allocated to the project.
18.	Must I request certification if I have decided not to implement my project?	No, but please notify the IRS by letter that you have decided not to implement your project. Send your letter to the address in the answer to Agreement Question 5.

Question 6: 48C Phase II Program FAQs as of March 14, 2013 – Project Changes Information
Answer 6:

Project Changes
1.	What should I do if I change my project?	Section 7.01 of Notice 2013-12 and paragraph 5 of the agreement discussed in the Agreement section require you to inform the IRS if the plans for the project change in any significant respect from the plans you submitted in your application for the credit. If the change is a “significant change in plans” as defined in section 7.01 of Notice 2013-12, you will forfeit the credit.
2.	How do I inform the IRS?	Describe the change(s) in the project in detail in a letter to the IRS asking it to determine whether the change in your project is a “significant change in plans.” Enclose appropriate documents to fully describe the change(s). The letter should describe the effects of the change(s) on each of the Eligibility Criteria in section III of Appendix B, the Merit Review Criteria in section IV.F.2 of Appendix B, and the Program Public Policy Factors in section IV.F.3 of Appendix B of Notice 2013-12. The IRS will evaluate the significance of the change(s) and reply with a letter telling you its decision. Send your letter to the address in the answer to Agreement Question 5.
3.	What is a “significant change in plans?”	Section 7.01 of Notice 2013-12 defines it as “any change that a reasonable person would conclude might have adversely influenced the Department of Energy (DOE) in recommending or ranking the project or the Service in accepting the project application had they known about the change when they were considering the application.”
4.	What factors might influence DOE in recommending or ranking the project or the Service in accepting the project application?	Section III of Appendix B of Notice 2013-12 lists and describes the two eligibility factors the project must meet: 1. Qualification as an advanced energy project 2. Reasonable expectation of commercial viability. Section IV.F.2.a of Appendix B of Notice 2013-12 lists and describes the three merit review criteria for concept papers: 1. Technical applicability 2. Corporate viability 3. Commercial viability. Section IV.F.2.b of Appendix B of Notice 2013-12 lists and describes the six merit review criteria for full applications: 1. Has strong potential to expand American manufacturing 2. Demonstrates significant potential for commercial viability 3. Has the potential for technological innovation and commercial deployment 4. Provides domestic job creation 5. Has shortest project time from certification to completion 6. Contributes to avoiding or reducing airborne pollutants and/or greenhouse gases. Section IV.F.3 of Appendix B of Notice 2013-12 lists and describes the four program policy factors: 1. Geographic diversity 2. Technological diversity 3. Project size diversity 4. Regional economic development.
5.	Is a change in a project which results in a change in any of these aspects a “significant change in plans?”	It may be. Follow the procedures in the answer to Changes Question 2. In several requests reviewed to date the IRS has determined that some changes resulting in a mixture of improving some of the criteria and diminishing others were not “significant changes in plans” for those projects. CAUTION: Every determination depends on the specific facts of the situation. For these changes the key to the IRS’s determination was the overall effect on the eligibility and selection factors, not the effect on any single factor. These determinations do NOT mean that all changes which result in improving one or more factors and/or diminishing one or more factors will be determined not to be a “significant change in plans.” They mean that a change in a project which results in diminishing one or more of the factors is not necessarily a “significant change in plans.”
6.	Is a change of location of the project a “significant change in plans?”	It may be. Follow the procedures in the answer to Changes Question 2
7.	Is a cost overrun a “significant change in plans?”	No, not as long as the facilities are the same as described in the applications for the credit. Regardless of cost overruns, the amount of credit allocated to the project may not exceed the amount in the allocation letter. If this is the only change from the application for the credit, the taxpayer does not need to notify the IRS of this change.
8.	If the project costs less than estimated in the application for the credit is that a “significant change in plans?”	No, not as long as the facilities are the same as described in the applications for the credit. Remember that the credit is limited to the lesser of (1) 30% of the qualified investment or (2) the amount allocated to the project in the allocation letter. If this is the only change from the applications for the credit, the taxpayer does not need to notify the IRS of this change.
9.	Is a change in the cost, size or type of component parts of the project a “significant change in plans?”	A change in the cost of component parts alone is not a “significant change in plans.” A change in the size or type of component parts may be a “significant change in plans” if it affects any of the eligibility and selection criteria. Follow the procedure in the answer to Changes Question 2.
10.	Is a change to production of a different product a “significant change in plans?”	It may be. Follow the procedures in the answer to Changes Question 2.
11.	Is a change in size or capacity of the whole project a “significant change in plans”?	It may be. Follow the procedures in the answer to Changes Question 2.
12.	Will the IRS tell me before I make a change whether it would be a “significant change in plans?”	The process for obtaining a formal ruling in advance is to apply for a letter ruling. See Revenue Procedure 2013-1 for those procedures. For an informal discussion of changes, you can contact the office of the Industry Director, Natural Resources and Construction, at 713-209-3669.

Question 7: 48C Phase II Program FAQs as of March 14, 2013 – Completion Information
Answer 7:

Completion
1.	Must I report completion of my project to the IRS?	Yes, paragraph 3 of the agreement discussed in the Agreement section requires you to notify the IRS in writing within 30 days of the date you place your project in service.
2.	How do I report completion of my project?	Notify the IRS by letter that you have placed your project in service. Include the date you placed it in service. Send the letter to the address in the answer to Agreement Question 5.
3.	What does “placed in service” mean?	It means “placed in a condition or state of readiness and availability for a specifically assigned function.” See section 3.04 of Notice 2013-12 and section 1.46-3(d)(1)(ii) of the Income Tax Regulations.
4.	What is the deadline for placing my project in service?	The deadline is 3 years after the date of the certification letter the IRS sends you.
5.	What will happen if I do not place the project in service by the deadline?	You forfeit the full amount of the credit. Notify the IRS of this by letter sent to the address in the answer to Agreement Question 5.
6.	What should I do if I decide not to complete my project?	Notify the IRS of that by letter sent to the address in the answer to Agreement Question 5.
7.	How do I forfeit the credit if I have already used part or all of it on tax returns?	You forfeit any unused part of the credit, and you must recapture the credit used on tax returns you have filed. See the following: · Form 4255, Recapture of Investment Credit · The “Recapture of Credit” section of the Instructions for Form 3468 and · Section 50(a)(2) of the Internal Revenue Code.
8.	How long must I use the project after I place it in service?	You must use the project for 5 years. If you do not use it for that long, you must recapture part or all of the credit. See the following: · Form 4255, Recapture of Investment Credit · The “Recapture of Credit” section of the Instructions for Form 3468 and · Section 50(a)(2) of the Internal Revenue Code.

Question 8: 48C Phase II Program FAQs as of March 14, 2013 – Using the Credit
Answer 8:

Using the Credit
1.	How do I use the tax credit?	Report your qualified investment in the project made after February 17, 2009, on Form 3468, Investment Credit. See the Qualifying Advanced Energy Project Credit section of the Instructions for Form 3468.
2.	Is the tax credit transferable?	No, in general the tax credit is not transferable. See the discussion of successors in interest in Agreement question 10.
3.	When may I use the credit?	The default method is to use the credit when you place the project in service. You also may elect to use the credit as you make qualified progress expenditures. If you elect the qualified progress expenditures method, you may not change to the default method later. See the “Qualified Progress Expenditures” section of the Instructions for Form 3468 and section 9 of Notice 2013-12 for information on qualified progress expenditures. Under either method, only expenses incurred after February 17, 2009, may be included in qualified investment.
4.	When may I begin using the credit?	Taxpayers which receive an allocation letter from the IRS in the second allocation round may claim the credit as early as the beginning of the tax year which includes the date of the allocation letter if they either completed their project or made progress expenditures during that tax year. The IRS expects to issue second round allocation letters by November 15, 2013.
5.	How do I compute the amount of the credit?	Under the default method (using the credit when you place the project in service), the credit amount is 30% of the qualified investment you made in the project after February 17, 2009. If you elect to use the credit as you make qualified progress expenditures, the credit for each year is 30% of the amount of your qualified progress expenditures made during that year which are qualified investment and are made after February 17, 2009. Under either method, your total credit is limited to the amount in the allocation letter the IRS sent you.
6.	Do I get any credit in a taxable year if I place only part of my project in service by the deadline and complete the project in a later year? (Updated 9/10/2013)	Generally, an allocation of the Qualifying Advanced Energy Project Credit is fully forfeited if the project is not fully placed in service by the deadline. If, however, the change in timing of your project does not constitute a significant change (see Project Changes Questions 1 through 12), you will get a decreased amount of credit. If the change in timing of your project does not constitute a significant change, your credit will be 30% of qualified investment placed in service by the deadline – limited to the amount of credit allocated to your project. As an example, if you were allocated $300,000 of credit for a project that you estimated in your application to have a qualified investment of $1,000,000, by the deadline you placed in service qualified investment property with a basis of $600,000, and the change in timing of your project does not constitute a significant change, your credit would be $180,000 (30% of $600,000). The next question addresses placing in service more qualified investment than you estimated in your application. See Completion Question 3 for the definition of “placed in service.” See Application Questions 14 and 15 for the definition of “qualified investment.”
7.	Do I get more credit than the allocation if I have a cost overrun?	No, your credit is limited to the amount in the allocation letter the IRS sends you.
8.	Does the 30% tax credit decrease the basis of the equipment being depreciated?	Yes, it decreases the depreciable basis by the full amount of the credit so the depreciable tax basis is decreased to 70% of the original amount because you are taking the credit.
9.	Is the credit refundable?	No, but if you do not use the credit in the year you report it on your return you may carry it back or forward. See the next question.
10.	If I don’t use the credit in the year I report it on my return, may I carry it back or forward?	Yes, you may carry any unused part of the credit back 1 year – but only to tax years ending on or after February 17, 2009 – by amending your previous return. If you still have not used all of the credit, you may carry the unused portion forward for 20 years until it is used. After 20 years, any unused portion expires.

Question 9: 48C Phase II Full Application Questions as of 7/17/2013.
Answer 9:

48C Phase II Full Application
#	Question	Answer
1.	How will the credits be allocated, meaning, if the top five ranked applications each ask for $30M in credits, will the credits run out before getting to the 45^th ranked applicant?	IRS Notice 2013-12 describes the scoring process. DOE will recommend to IRS as many applicants as required to expend the available $150,228,397 in tax credits. Not all applicants asked to submit a full application will receive a tax credit. Each applicant selected to receive a credit will be ranked and allotted the full amount requested. Depending on the availability of tax credit, the last applicant in the ranked list may not receive the full amount requested.
2.	What is expected for the requirement that a Professional Engineer inspect and certify the project documents?	The use of a Professional Engineer to inspect and certify the project documents ensures that the project meets established standards for the design and construction of the manufacturing facility or the installation of equipment. The PE can work for the applicant.
3.	If our project manufactures a product, say a material, that is then used by a downstream customer that manufactures equipment used ultimately to generate electricity, what energy type field should we use?	Electricity Generation.
4.	When inputting jobs into the Taxpayer Data Sheet, does each year (ie. 2010) mean calendar year months, or can they be in terms of taxpayer fiscal years?	For the purposes of the annual job creation in the Taxpayer Data Sheet, use jobs created during a calendar year (January to December).

If an applicant includes a title page and/or table of contents in a full application, does either/both of those count as pages for purposes of the 30-page limit?

Title pages and cover pages do not count against the page limit.

The proposed project calls for selection of a new facility for production. This facility will require no extraordinary features or enhancements. In the Requirements for Full Applications section of the full 48C tax credit IRS announcement, under the "Project Schedule and Time to Completion" header, taxpayer applicants are asked to submit documentation demonstrating the taxpayer's ownership or control of the project site and further documentation of the permits and key provisions of various agreements pertinent to the site. This project has a scheduled taxable year in which the project will be placed in service of 2016 -- three years from now. The current location is leased, and is only large enough to facilitate very limited production. We cannot provide an address for our primary proposed production facility nor can we provide any further documentation as requested in the full application content requirements. How do you suggest this be addressed in the full application's "Project Schedule and Time to Completion" section?

The taxpayer needs to demonstrate that the project will re-equip, expand or establish a manufacturing facility (as defined in section 3.05 of the notice) for the production of specified advanced energy property or property that, after further manufacture, will become specified advanced energy property. If the exact location of a new facility is not known at the time of application, an approximate location (a zip code or county) may be provided.

How do I classify a project in cell B-15?

Applicants should review the Attributable Manufacturing tab of the TDS in order to better understand and select the Energy Type that best fits their product. The applicant should also review Section V of Appendix B for more information.

8.	Projects placed in service beginning in 2009 are eligible for the credit, however, the taxpayer data spreadsheet only allows taxpayers to enter jobs from 2013 forward. Since costs and projects back to 2009 are eligible for the credit, presumably jobs back to 2009 are relevant as well. If so, how do we enter them into the spreadsheet?	While tax credits can be applied retrospectively, the impacts of proposed projects will be evaluated based on forward-looking projections. This enables technical reviewers to compare proposals within the same timeframe. Therefore, only those jobs created in 2013 and later will be considered when scoring proposals.
9.	Pg. 63 of the Notice has a list of supporting documents that taxpayers should include if applicable (these are in addition to those listed in Table 2 on pages 35-42). Included on that list are “internal or external engineering reports.” What types of reports does this refer to- engineering reports for the facility or for the SAEP? What should these reports demonstrate? If a manufacturing facility is completed and production has started are these reports necessary?	The engineering reports referred to are for the facility being built or upgraded. The reports demonstrate that the project has been reviewed by an engineer and it meets necessary code compliance. If a facility has been completed, these reports are not necessary.
10.	Pg. 41 of the Notice, under the “Project Time to Completion” lists required documentation (O&M Agreement, EPC contract, shareholder agreement) and states that “A Professional Engineer must inspect and certify the project documents for feasibility.” Can you please provide additional explanation of what the PE’s inspection and certification should include? If a facility has already been built/upgraded and the SAEP is in production, is this certification necessary?	The Professional Engineer’s inspection and certification confirms to the reviewer that the project meets the minimum engineering specifications required for code compliance. If a facility is complete, this certification is not necessary.
11.	Many O&M Agreements and EPC Contracts have confidentiality clauses and taxpayer are sensitive about providing them. Are they necessary? Is it acceptable to provide standard form documents that these agreements are based on? This is also an issue with off-take agreements.	The intent of supporting documentation, such as off-take agreements and O&M agreements, is to support the taxpayer's assertions of long-term market viability. Applicants who provide strong documentation to demonstrate buyer-seller relationships and a significant commitment to manufacturing the proposed product will score higher than those applicants who do not provide supporting materials. Materials submitted are subject to IRS confidentiality rules for release of sensitive data.
12.	Information required under “American Manufacturing” in Table 2 includes “whether the product or process is likely to contribute to greater research and development in the U.S.?” Does this refer to R&D from a tax definition perspective or does this refer to a R&D in a broader sense?	Address these contributions from the broadest perspective; DOE will NOT be using the IRS tax definition of R&D during the review process.
13.	Table 2 lists information that should be included in the financial model. One of the items listed is “identification of any other federal, state or local government funding assistance.” Does this refer only to funding specifically designated for the SAEP? What if a facility that produces the SAEP along with non-SAEP and the facility itself has received funding assistance, should that funding be included?	The taxpayer should designate any federal, state or local government funding assistance which has been or will be applied to support the production of the SAEP. Please document the assumptions used, including but not limited to, estimates regarding the percentage of the facility dedicated to producing the SAEP.
14.	For purposes of the payback period and other info necessary for the model, when a production facility is not 100% dedicated to the SAEP, is it required that such info reflects only segment of the facility producing the SAEP or the financial info for the entire facility?	The intent is to determine how quickly the investment costs attributable to the production of the SAEP will be recovered. Please document the assumptions used, including estimates regarding the percentage of the facility dedicated to producing the SAEP (capital investment) and/or the percentage of production (revenue) attributable to the SAEP.
15.	Should the payback information be reflected on a pre-tax or after-tax basis?	The best response would show the payback period for both the pre-tax and after-tax basis. This would demonstrate the financial viability of the project (after tax), as well as the impact of receiving the tax credit (by comparison). A response including only the after-tax payback period would be adequate.
16.	If a taxpayer does not collect/produce some of the data points requested, (e.g., payback period), can that taxpayer provide the data points it does collect on the SAEP and provide an explanation of those data points.	The applications will be evaluated using all of the criteria requested. The strongest proposals will address all information requested. Financial models may be reconstructed for existing projects, citing both real numbers and assumptions as appropriate.

17.	For the portions of the taxpayer data spreadsheet where it necessary to provide annual unit production, what is the appropriate unit when the taxpayer’s SAEP is a subcomponent of a larger product? Is the unit the subcomponent? The final product? Something in between?	The applicant should use annual unit production of the property that will be produced at the facility requesting the tax credit.
18.	How will the taxpayer data spreadsheet be used to score applications? How is it weighted among the other evaluation criteria?	The TDS will be used to provide additional context to the information in the full application narrative and appendices. Raw numbers in the TDS can assist reviewers with determinations on jobs, manufacturing dates, costs, etc. The TDS itself is not a scored component of the review. See Appendix B of Notice 2013-12 for more information.
19.	Should the full application (narrative and appendices) be submitted as one document or is the narrative submitted as one file and the appendices submitted as separate files?	The full application narrative and appendices may be uploaded as a single document in pdf format (maximum file size of 20mb). However, the narrative and appendices may be submitted separately, but the narrative must be a pdf. Additional files may be uploaded in native formats, but should be compatible with either the Microsoft Office Suite or Adobe Acrobat PDF.

20.

Please provide further guidance on the baseline for calculating AAMC. In the case of fuel efficiency, line 29 of the input sheet states: “Likely energy consumption of baseline system (without efficiency technology) under typical operation.” Assume applicant’s SAEP represents the next generation in fuel efficient transportation. Applicant believes that 50% of the sales of the SAEP will be to replace property that while still having years of operating life left, is several generations old and is not as cost effective as newer technology due to its large fuel consumption characteristics. Applicant also believes that 50% of its sales will go to meet demand for new transportation to satisfy expansion of the market. These SAEPs will not be replacing any retired property specifically. What baseline is appropriate to measure against in line 29, the previous generation equipment that the SAEP will be replacing or state of the art property over which SAEP still maintains an efficiency advantage? “Typical operation” generally contains both types of property.

The applicant is responsible for identifying the baseline system with which the SAEP energy consumption will be compared. If the SAEP will impact various systems, the applicant should calculate a single baseline system, and explain in the appendices how that baseline was derived. Explanations of assumptions and other information can be made with the knowledge that the reviewers are technical experts in the relevant technology.

21.

On page 38 of IRS Notice 2013-12, footnote 4 reads: "…A technology is in general use if it has been installed in and is being used in three or more commercial projects in the U.S. in the same general application as in the proposed project, and has been in operation in each such commercial project for a period of at least five years. The five-year period shall be measured, for each project, starting on the in-service date of the project or facility employing that particular technology and ending on the date that full applications are due."

Does this mean that the applicant needs to compare its "new or significantly improved technology" with other commercial technologies, and these other commercial technologies must have been in operation for a period of at least 5 years? Further, it appears these other technologies must be operational for a very specific period of time defined as: a five year period that starts July 23, 2013 (when 48C applications are due) up until the applicants proposed in service date? Is this correct? If so, it appears to count backwards in time.

Yes, the applicant should compare their technology to existing technologies which have been in use for at least five years, if applicable. The period of operation for commercial technology is in service for at least five years prior to the July 23, 2013 application deadline.

22.

My questions pertain to Cell B24 (“Incremental Levelized Cost for Fuel Efficiency”) on sheet “Taxpayer Data Sheet”:

1) Is the result from calculating the equation at the bottom of page 60 in the Notice 2013-12 IRS documents the correct value to enter into cell B24?

Information on Levelized Cost can be found on page 59 of the notice. The applicant should use an industry standard equation to determine the Levelized Cost. Section VII of Appendix B provides financial and resource assumptions which should be used in the equation.

The equations in Appendix B, starting on page 60, are used to show the applicant how the Tax Payer Data Sheet makes AAMC calculations.

23.	Page 43 of Notice 2013-12 provides wording that taxpayers may put in the text of the first page of the application. Pg. 43-44 states that taxpayer may insert text that is similar to the following: “The following contains proprietary information that [taxpayer] requests not be released to persons outside the Government, except for purposes of review” into specific portions or pages of the text. Is it permissible for taxpayers to add to the wording provided on pg. 43-44 or even use the wording provided for the first page of the application on every page of the text?	The applicant may use the same or similar wording. The applicant may at the beginning of the full application narrative, indicate that all information contained in the application is proprietary and requests that it not be released. See Section 10 of Notice 2013-12 for more information on Disclosure of information.
24.	Can you please confirm that all information (including all appendices) submitted by taxpayers as part of the full application is afforded protection as return information under section 6103? Can you please also confirm that this protection applies to the disclosure of the information by IRS employees, DOE employees, as well as outside contractors working for both the IRS and the DOE?	Paragraph 3, section 10 of IRS Notice 2013-12 provides confirmation that all documentation submitted by the taxpayer, with the exception of items of information that statute 48C(d)(5) requires be made public, is confidential, unless the applicant indicates that it wishes for the information to be disclosed. All employees and contractors are subject to this regulation.