It was brought to our attention today that contractors are claiming the 179-D tax credit for public work meant for the designers of public projects.
This tax code section allows building owners to claim a tax deduction in an amount equal to the cost of energy efficient commercial property placed in service during a taxable year. It has a special rule for government owned buildings since the government doesn't pay taxes. In the case of government buildings, the rule states:
SECTION 3. SPECIAL RULE FOR GOVERNMENT-OWNED BUILDINGS
.01 In General. In the case of energy efficient commercial building property (or partially qualifying commercial building property for which a deduction is allowed under § 179D) that is installed on or in property owned by a Federal, State, or local government or a political subdivision thereof, the owner of the property may allocate the § 179D deduction to the person primarily responsible for designing the property (the designer). If the allocation of a § 179D deduction to a designer satisfies the requirements of this section, the deduction will be allowed only to that designer. The deduction will be allowed to the designer for the taxable year that includes the date on which the property is placed in service.
.02 Designer of Government-Owned Buildings. A designer is a person that creates the technical specifications for installation of energy efficient commercial building property (or partially qualifying commercial building property for which a deduction is allowed under § 179D). A designer may include, for example, an architect, engineer, contractor, environmental consultant or energy services provider who creates the technical specifications for a new building or an addition to an existing building that incorporates energy efficient commercial building property (or partially qualifying commercial building property for which a deduction is allowed under § 179D). A person that merely installs, repairs, or maintains the property is not a designer.
.03 Allocation of the Deduction. If more than one designer is responsible for creating the technical specifications for installation of energy efficient commercial building property (or partially qualifying commercial building property for which a deduction is allowed under § 179D) on or in a government-owned building, the owner of the building shall-
(1) determine which designer is primarily responsible and allocate the full deduction to that designer, or
(2) at the owner's discretion, allocate the deduction among several designers.
It is clear that the deduction should go to the person primarily responsible for the design, but one of our members has discovered that the contractor, working through AlliantGroup, has claimed the deduction for the exterior envelope
on two of their school projects, eliminating the opportunity for the architects to rightfully claim the deduction.
I am curious if other states are seeing this kind of action and to see if others feel that we should be doing something about it.
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Tammie Sueirro
Executive Director
AIA Washington Council
Seattle WA
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