By Steve Rizer
With April 15 looming and millions of Americans panicking about a certain deadline arriving on that day, architects and designers have some tax-related news worth celebrating: The Senate Finance Committee has proposed to broaden the opportunities for these types of professionals to benefit from the 179D Energy-Efficient Commercial Buildings Tax Deduction. But it is a deduction that will need to be extended because it expired Dec. 31 (ConstructionPro Week/CPW, Dec. 27, 2013, “Group Laments the Exclusion of Building Energy-Efficiency Provisions from the New Senate Tax Plan But Has Not Given Up Hope: CPW Profiles 26 Congressional Bills”).
In an April 3 vote, the committee approved legislation to give the deduction a two-year extension. The Expiring Provisions Improvement Reform and Efficiency bill would allow a taxpayer to take a deduction equal to commercial building energy-efficiency expenditures made by the taxpayer as part of the building’s interior lighting systems; heating, cooling, ventilation, and hot-water systems; or building envelope. Certification would need to be obtained to verify that the retrofits are installed as part of a plan to reduce energy costs by at least 50 percent compared to a specified minimum standard. The bill would allow tribal governments and 501(c)(3) non-profit organizations to transfer the deduction to the architect or designer primarily responsible for designing the energy-efficiency project. The ability to transfer the deduction only has been available for public building projects.
As for what will happen with the proposal in Congress, “based on past history, the Senate Finance Committee bill would serve as the basis for Senate action and serve as the Senate basis for negotiating a final bill with the House,” Kyle Pistor, the National Electrical Manufacturers Association’s (NEMA) vice president of government relations, told CPW. He added that the proposed expansion of 179D eligibility “has bipartisan support.”
NEMA President Evan Gaddis believes “it is essential” that the deduction be extended.
When asked to provide statistical information about 179D’s impact, Pistor said, “We collected some anecdotal information on projects involving interior lighting, which is one of the three systems that can qualify under the deduction, and that has totaled probably some $800 million worth of tax deductions to commercial building owners. And that’s from one set of sources. The IRS [U.S. Internal Revenue Service] doesn’t release any full data on this, so it’s a partial report.”
“There are a great many projects that architects do for non-profit owners,” Andrew Goldberg, managing director of government relations and outreach for the American Institute of Architects, told CPW. “Over the years, we have heard from a large number of architects and non-profit building owners who have asked if the deduction could be employed for their buildings, only to be told that the law did not allow it. So, we are hopeful that this change will lead to an increase in energy-efficient projects.”
Among other things, the ConstructionPro Network member version of this article includes coverage of the next version of the National Green Building Standard.
