Posts Tagged ‘EPAct’

According to the US Department of Energy, buildings consume around 37% of the energy almost 70% of the electricity produced in the United States. The Energy Policy Act of 2005 (EPAct) was enacted to help save energy by encouraging commercial building owners to incorporate energy efficient features in their buildings. The program was originally scheduled to expire at the end of 2009, but in 2008 EPAct was extended through December 31, 2013. For buildings placed in service between January 1, 2006 and December 31, 2013, the building owner is eligible for a federal tax deduction of up to $1.80 per square foot if certain energy efficiency criteria are met. EPAct has proven to be a great incentive for owners, resulting in significant energy savings and an increased awareness of energy efficient technologies. To fully implement the intent of the legislation, in the case of public buildings where no federal tax liability exists, the designer of the building is allowed to take the deduction upon obtaining a written allocation letter from the owner.  

The designer is the “person primarily responsible for the design” and may include 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. To qualify for the full $1.80 per square foot deduction, the building must achieve a 50% energy savings as compared to a similar building that would have met the minimum requirements of ASHRAE 90.1 – 2001. The energy savings must be achieved through: (1) the building envelope; (2) the interior lighting system; and (3) HVAC & Hot Water systems. Each system contributes $.60 per square foot to the total deduction and can qualify independently. Partial deductions of from $.30 to $.60 per square foot are also available for lighting under IRS interim rules.

Any building that falls under the guidance of ASHRAE 90.1 – 2001 is eligible and IRS Section 179D defines the specific procedures required to obtain the deduction. Basically, the building must be modeled – both in a “baseline” (2001) version and an then using actual components, using approved building simulation software to determine how many systems qualify for certification. An independent, qualified person must conduct a physical site visit to certify that the qualifying systems were installed in accordance with the modeled documents. The amount of the deduction, taken in the year the building is placed in service, is entered on the tax return of the person applying for the deduction. The IRS allows taxpayers to amend tax returns for up to three years, so it still possible to claim the deduction for a building placed in service in 2007 depending on when the ’07 tax return was filed. 
Nilo C. Regojo, AIA, LEED^® AP  
nregojo@engineeredtaxservices.com 
267.303.1142

For additional information please contact:

Nilo was born in Miami, Florida, and grew up visiting construction projects with his father, a civil engineer. This early influence directed him to a career in architecture. His love of older buildings led him to Philadelphia. He received his Bachelor of Design from the University of Florida and a Master of Architecture from the University of Pennsylvania.

Nilo’s experience includes working for various architectural firms in Miami and Philadelphia as well as a national developer of historic residential properties. He also ran his own practice for four years. Prior to joining A² Group to develop the firm’s in house architectural practice, Nilo was a principal at spg³ in Philadelphia. His projects draw upon his unique expertise which consists of innovative design tempered with real world experience. 

Nilo is a member of the USGBC, the Delaware Valley Green Building Council (DVGBC) and Green Roofs for Healthy Cities. As spg3′s first principal to become a LEED Accredited Professional, he also led the firm’s Sustainability Initiative.

In December 2009, Nilo became a Certified Building Commissioning Professional

  A Federal Level Analysis:
The Practical Use of Sec. 179D Green Building Deductions by A&E
C-Corporations and C-Corps that Convert To Sub-S Status

Joe Belden of Belden Hutchison & Co. and Don McDougall of Engineered Tax Services recently offered a two-hour educational presentation on the Energy Policy Act of 2005 (EPAct) and Section 179D to the Orange County AIA. 
One attendee commented that C Corporations could generally not use EPAct.  We rose to the occasion and directly addressed that myth, discussing exactly how C Corps can and should be taking advantage of benefits under EPAct. 

Because we know that this issue is frequently misunderstood, particularly by C Corps, we asked Joe to prepare an analysis with sample case studies that we could share with all of our valued contacts.  It is a very complete analysis and we hope you find it useful. 

Please CLICK HERE to download a copy of the comprehensive Federal-level analysis.

Engineered Tax Services (ETS) has been working closely with the AIA in recent months, including a cooperative effort to urge Congress to expand the current $1.80/ft² deduction to $3.00/ft² (S. 1637/H.R. 4226) and extend it through 2015. Lobbying efforts on behalf of Julio Gonzalez and Andrew Goldberg, Senior Director of Federal Relations at the AIA, have been well received and the outlook is positive for change.

ETS is honored to be collaborating with the AIA to enhance benefits for architects under the Energy Policy Act of 2005. In addition to lobbying efforts, ETS has been helping architects and designers understand the current benefits under EPAct by hosting workshops to various AIA chapters all over the country. ETS is approved to provide continuing education to architects through the AIA (CES Provider #E275) and to LEED APs through the USGBC (LEED AP CE Provider #319613). We may be in your area soon! We are currently scheduled to present to the following AIA Chapters, and more locations/chapters are added to our calendars every day.

Who Should Attend:
This program is intended for architects interested in the latest tax benefits available through the Energy Policy Act.

Key Learning Objectives:

• Gain an understanding of the recently extended federal tax benefit available for the design of energy-efficient public or government-owned buildings
• Learn how to take advantage of valuable tax savings and increase cash flow for your business 

Please contact us if you would like more information about these or any other continuing education opportunities.

                                  
June 16, 2010 from 4:00-6:00PM
Join Don McDougall for a
2 hour CPE/CE presentation
to the Orange County AIA

Location:

Belden Hutchison & Co., LLP

125 E. Baker Street, Suite 280

Costa Mesa, California  92626 

The presentation will examine, review and explore:

• How Sec. 179D rewards energy-efficient design.
• History and requirements of Sec. 179D and EPAct
  • Actual benefits to architectural firms over the past 24 months
• How minor changes in design, with small cost increases, can generate significant energy savings and related tax deductions.
  • Examples for HVAC, SHELL and LIGHTING
• How to access benefits for projects completed between 2006 and 2009
• Identifying tax deduction opportunities for clients in the private sector & how to best communicate the opportunities to clients
• Identifying & maximizing tax deduction opportunities for architectural clients in the public sector
• Maximizing benefits of EPAct for “C” and “S” corporations

By Don McDougall

With Circular 230, tax preparers were made responsible for decisions that were not theirs and are now acting as much as anything else as the first line of enforcement. EPACT certification creates a major issue for CPAs, as many do not have enough experience with the process to protect themselves and their firms. EPACT has provisions to prevent fraud that are embedded in the regulations. Under Circular 230, it becomes the CPA’s responsibility to confirm that the requirements have been met. In order to protect your firm and yourself, please read on.

WARNING! EPACT is not just like Cost Segregation. EPACT generates a tax deduction; Cost Segregation accelerates the depreciation of an asset by giving it a shorter life. If you have been told they are just versions of the same accounting issue, you need to beware.

Who can do your reports? – More importantly, who can sign your reports? The reports MUST be completed by a licensed firm or individual. This means both the field verification and the energy calculations must be done by licensed people.

The reports themselves must be signed by a licensed firm (engineering or contactor) and should contain copies of the licenses for the individuals who did the work. Consider an example of a company that has CPAs on staff. Exxon-Mobile has CPAs on staff, but Exxon cannot do your tax returns. Likewise, a CPA firm or consulting firm cannot sign your EPACT certification. The reports may completed by firms that are not licensed engineering firms, but must be signed by the licensed engineer who actually did the work. The firm that subcontracted them or hired them cannot sign the report. In addition, that engineer carries 100% of the liability for any errors. Like the example above, you can have a friend who is a CPA that works at Exxon to do your taxes, but he cannot do it on Exxon letterhead.

There are also issues of liability and coverage in the event of an audit. If the firm is not licensed as an engineering firm, not only can they not sign the work, they also cannot defend it to the IRS. This frequently leaves you, their tax-preparing CPA, holding the liability bag. Who signs the reports matters to you even more than it matters to the IRS (because there will be consequences for YOU, not the IRS).

In addition, ALL of the field work and the calculations must be completed by licensed individuals. A common mistake many Cost Segregation firms make is using their non-licensed staff to complete the field inspections to save money. This is clearly not allowed under the guidelines: all work must be completed by licensed individuals.

Another caveat in the certification process: the firm performing the EPACT Certification may not be related to any part of the transaction. For example, a lighting contractor may not certify his/her own work. Contingency fees that rely on the conclusions of the certification to set the cost of the study are also to be avoided.

Summary – The 179D Certification must be signed by a licensed engineering firm, or a licensed individual. Reports not completed by a licensed engineering firm put you (the Tax Preparer) at risk. The firm completing the certification also cannot be involved in the installation or design of the properties that are being certified.

Follow these simple guidelines and you will protect your licensure as well as your firm.

Don McDougall is a National Director with Engineered Tax Services. He is responsible for operations on the West Cost with some national efforts as well. Don is an innovator in the fields of valuation and tax-based engineering. He has proudly contributed and pioneered many of the commonly-integrated services and components used in the industry. He has been providing cost segregation services since before cost segregation existed, having worked heavily in the field of investment tax credits (the depreciation services that pre-date cost segregation).

Joel Ackerman, CPA

The Energy Policy Act of 2005 (EPACT) provides substantial tax benefits. Under Section 179D of the Internal Revenue Code, owners of energy-efficient commercial buildings may take a tax deduction of up to $1.80 per square foot for qualifying construction or retrofits. 

To help reduce the energy consumption and CO2 pollution from commercial properties, Congress passed The Energy Policy Act of 2005, which provides substantial tax benefits where energy efficiencies are designed within a building.

The IRS Regulations require an independent engineering study in order to substantiate and make a valid claim for these federal tax deductions. These deductions became available as of January 1, 2006 and have recently been extended through December 31, 2013.

How does entity type affect the taxable income to building owners? Read the Full Article for details about the general tax treatment of each type of entity.

For Immediate Release

For more information on ETS, please contact 800-236-6519 email info@engineeredtaxservices.com or visit www.engineeredtaxservices.com

New York – Feb. 5 – John Cummings, Director of Business Development for Engineered Tax Services, was invited to speak at JH Cohn’s New York City office regarding the Energy Policy Act of 2005.   JH Cohn works closely with Engineered Tax Services to provide its clients with a resource for identifying and certifying tax deductions available to clients from the Act.  

Mr. Cummings’s presentation drew nearly fifty guests consisting of CPA’s from JH Cohn’s New York and New Jersey offices, clients with real estate holdings, architects and engineers involved in green design for federal, state and local governmental entities throughout the area and consultants from several green energy services companies.   The 50-minute presentation addressed the basic requirements of the EPAct, the benefits available to property owners, architects, engineers and contractors and the methodology applied by ETS.   

Engineered Tax Services is a nationally-licensed engineering firm with professionally staffed engineers who marry the science of engineering with the principles of tax and accounting to arrive at financial solutions that result in increased cash flow, minimized tax payments and increased return on investment.  ETS specializes in providing a wide spectrum of engineered accounting solutions such as energy tax credits, cost segregation studies, energy audits, carbon footprint certification and insurance appraisals. For more information, please contact 800-236-6519 or email info@engineeredtaxservices.com

Hauppauge, NY, February 02, 2010 – Engineered Tax Services proudly announces that they have been recognized by the Suffolk County Bar Association (SBA) as a go-to resource for engineering-based tax information and services. The SCBA published Joel Ackerman’s “Using EPAct to Speed Tax Payback” in their December 2009 newspaper, The Suffolk Lawyer, which reached thousands of attorneys on Long Island.  

The published article is printed below in its entirety:

“Using EPAct to Speed Tax Payback”

The Energy Policy Act of 2005 (EPAct) is a complicated government method that encourages integrators to make US buildings more energy-efficient. Less than 1 percent of eligible buildings owners or leaseholders have taken advantage of this multi-billion dollar benefit.

The US government does a lot of good things to encourage more efficient building; unfortunately the process is cumbersome and requires third-party engineering certification. This comprehensive tax legislation is where we find the $1.80 per square foot tax benefit we all talk about and we’ll attempt to clarify the process and increase the awareness of this very important benefit. The elusive $1.80 that EPAct holds can be broken down into three categories: Lighting, HVAC and Building Envelope. Each is worth $0.60/SF in tax benefits. The EPAct relies on the ASHRAE 90.1-2001 specification as a baseline to calculate savings percentages. To qualify for the full $1.80, the building must be 50 percent more efficient than this 2001 standard. To qualify for the partial incentive, the savings must be 16 ²/₃ percent better than 90.1-2001 in the respective categories.

Lighting

Lighting consumes approximately 40% of the energy in commercial buildings; the goal is to rein in this energy hog. By using a $0.60 per SF tax benefit, EPAct encourages the use of more efficient fixtures and controls. In order to qualify for the lighting portion of the available deductions, lighting energy consumption must beat the ASHRAE 90.1-200 1 specifications for efficiency by 16 ²/₃%. If the building is undergoing a lighting retrofit or adding controls, it is worth investigating whether or not this new system will qualify for the $0.60 lighting deduction. In majority of cases the lighting savings level is achieved and can be introduced to your ROI calculations – win-win.

HVAC

HVAC is the second largest energy consumer in commercial buildings and can be very tricky to retrofit without major renovation and disruption to the space. The addition of new controls has the ability to bring the system energy consumption down by 16 213 percent in order to achieve the second tax benefit of $0.60/SF. This total of $1.20/SF could be included in the ROI calculations for your building owner. In a 100,000 SF building, this could be as high as $120,000 in tax benefits. Unlike tax credits, deductions don’t translate dollar for dollar; rather they are calculated as part of your tax return. The numbers add up fast and can make the purchase decision for your building owner easier.

Architects and designers

The benefits get even better for the architect and specifying segment of the market. The Government doesn’t pay tax, so what happens when the tens of thousands of schools, federal and state buildings are upgraded? Prior to 2008 this tax benefit was simply lost, or wasted. The government quickly realized that in order to encourage architects and designers to implement energy efficiency in federal buildings they had to provide encouragement. The EPAct was amended to run until 2013 and included a provision that for all public, government or non-profit buildings the EPAct tax benefit would go back to the designer of the specifications which could be the architect, designer or lighting contractor. This has resulted in approximately $25Mper month in tax benefits being discovered by one engineering/tax firm alone. As with many Federal grants and subsidies this EPACT deduction is out there to reward taxpayers for their efforts in saving energy. What better reward than with cash in the pocket from tax savings.

Want to be a hero to your clients? Did your client construct or renovate their lighting, HVAC, or building envelope to their commercial building? Discuss EPACT — you could save the client thousands of tax dollars.

Joel E. Ackerman, CPA is Director of Business Development for the Northeast for Engineered Tax Services, Inc. He earned a Masters degree in Tax from C.W. Post – Long Island University and a Bachelor of Science degree from Syracuse University. With over 16 years of experience in public accounting, Joel specializes in engineering-based real estate tax products such as cost segregation studies and energy efficiency studies.  He is active in the local CPA community and serves on the Board of Directors for the Suffolk County chapter of the New York Society of Certified Public Accountants. He is currently planning a series of seminars for the Suffolk and Nassau County Bar Associations on the benefits and technical aspects of real estate related tax and engineering opportunities.

ABOUT ENGINEERED TAX SERVICES

ETS has provided thousands of energy tax certifications since 2005. Handling over 50 certifications every month, they have perfected the process by working closely with the Internal Revenue Service on a regular basis. Their precise documentation meets and exceeds the standards required by the Department of Energy and the IRS and has consistently withstood the toughest scrutiny.  ETS is a member of the U.S. Green Building Council (USGBC). With the most innovative and highest-quality LEED and green building knowledge and training, the approved USGBC educational courses helps green building professionals across all market sectors build the capacity to build their careers.

Engineered Tax Services (ETS) is a nationally licensed engineering firm with professionally staffed engineers who marry the science of engineering with the principles of tax and accounting to arrive at financial solutions that result in increased cash flow, minimized tax payments and increased return on investment.  ETS engineering professionals have over 100 years of combined experience in energy modeling. The ETS team consists of multi-disciplinary professionals including Professional Engineers (PE), LEED Accredited Professionals (AP), Certified Public Accountants (CPA) and architectural professionals. ETS specializes in providing a wide spectrum of engineered accounting solutions such as energy tax credits, cost segregation studies, energy audits, carbon footprint certification and insurance appraisals.

CONTACT:
Joel Ackerman

Engineered Tax Services

Toll Free: 1.800.236.6519

Northeast Office: 631-870-3920

email: jackerman@engineeredtaxservices.com

website: www.engineeredtaxservices.com

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West Palm Beach, FL, February 02, 2010 – Engineered Tax Services, a nationally licensed engineering firm that marries the science of engineering with the principles of tax and accounting, announced today that Julio P. Gonzalez, CEO, will be presenting at the MiaGreen Expo & Conference on February 25 & 26. The presentation, “Government Programs and Tax Rebates for Energy Efficient Buildings” will cover what the tax benefits of the extended incentives originating with the Energy Policy Act of 2005 are, who they affect, and how to go about achieving and applying for them and maximizing their benefits.

“The most often overlooked benefits relative to the Energy Policy Act extension are the tax benefits construed for commercial building owners,” explained Mr. Gonzalez. “The Energy Policy Act of 2005 includes a tax deduction for investments in energy-efficient commercial building property designed to significantly reduce the heating, cooling, water heating, and interior lighting energy costs. It is important that people understand what opportunities lie within green building practices.”

Handling over 50 certifications every month, Engineered Tax Services has perfected the energy certification process by working closely with the Internal Revenue Service on a regular basis. Through precise documentation required by the Department of Energy and the IRS, Engineered Tax Services has helped thousands of clients benefit from “going green”.  Mr. Gonzalez explains that the most ideal candidates for EPAct deductions include:

•          New Construction – Schools, Office, Retail, Hospitality, Industrial, Multi-Family, Single-Family

•          Retrofits – Energy Performance Contracting, CRA Redevelopment

•          Green Buildings

•          LEED Certified Buildings

CASE STUDY:

·         Location: Brooklyn, NY 

·         Project Area: 346,638 SF  

·         Qualified for $0.60 per sq. ft.                                                     

·         179D Energy Tax Benefit:  $207,983

·         Cost Segregation Study Five Year Cash Benefit:  $16,975,757

·         TOTAL BENEFIT TO CLIENT:  $17,183,740 million

JULIO P. GONZALEZ is the Founder and CEO of Engineered Tax Services, Inc.  He is supported by a staff of dedicated professionals with expertise in engineering, architecture and accounting.  Julio is a pioneer is the tax energy field and devoted to the conservation of resources. He generously donates his time to the U.S. Green Building Council.  Julio is committed to educating the accounting, financial advisor and real estate investor communities on engineered accounting services and the related tax benefits of these services. He is a regular public speaker on a national level regarding cost segregation studies, green construction and the emerging energy tax programs. Julio has had several articles published nationally in many accounting and real estate investment publications. Julio has worked on automating the IRS-approved software programs to help accounting professionals understand and better educate their own clients on the significance of energy efficient buildings and how substantial the tax benefits can be to the investor in addition to the Earth’s resources. Julio is also on the Board of Directors for the National Park Trust Foundation, to which he devotes his time and energy to conserving National Park resources.

ABOUT ENGINEERED TAX SERVICES

ETS is a member of the U.S. Green Building Council (USGBC). With the most innovative and highest-quality LEED and green building knowledge and training, the approved USGBC educational courses helps green building professionals across all market sectors build the capacity to build their careers.

Engineered Tax Services (ETS) is a nationally licensed engineering firm with professionally staffed engineers who marry the science of engineering with the principles of tax and accounting to arrive at financial solutions that result in increased cash flow, minimized tax payments and increased return on investment.  ETS engineering professionals have over 100 years of combined experience in energy modeling. The ETS team consists of multi-disciplinary professionals including Professional Engineers (PE), LEED Accredited Professionals (AP), Certified Public Accountants (CPA) and architectural professionals. ETS specializes in providing a wide spectrum of engineered accounting solutions such as energy tax credits, cost segregation studies, energy audits, carbon footprint certification and insurance appraisals.

CONTACT:
Julio Gonzalez

Engineered Tax Services

Office: 1.800.236.6519

email: jgonzalez@engineeredtaxservices.com

website: www.engineeredtaxservices.com

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