Economic Stimulus Bill Promotes Renewable Energy to Consumers

3/24/2009
www.hpba.org

Economic Stimulus Bill Promotes Renewable Energy to Consumers

On June 1, 2009, the Internal Revenue Service (IRS) issued its guidance for the 30% consumer tax credit (up to $1500) for the purchase and installation of a 75-percent efficient biomass-burning stove.

In a letter to the IRS in February 2009, HPBA asked for specific guidance on a number of issues, but we are confident that this minimal guidance is sufficient. We understand that the IRS is not asking for further testing if a stove manufacturer has already self-certified using valid test data.

Some important points of the tax credit are:

• To be considered, a stove must use the burning of biomass fuel to heat a dwelling unit or to heat water for use in such a dwelling unit, and have a thermal efficiency rating of at least 75% as measured using a lower heating value;
• Installation is covered, as long as it is a requirement for the stove’s proper and safe functioning;
• This consumer tax credit is 30% (up to $1500) for the purchase and installation of a 75% efficient stove, and is available in both 2009 and 2010;
• The tax credit is an aggregate, i.e., the total $1500 can include other energy efficient items. For instance, if a consumer claims $900 on a new stove, then he will have $600 to purchase additional energy saving products in the same tax year;
• If a taxpayer uses the entire $1500 tax credit on a competing product then they cannot use it for a biomass stove in that same tax year;
• This credit applies only to existing principle residences;
• Manufacturers must provide a certificate of qualification for each product as required in the guidance which can be obtained for the customer to use;
• Taxpayers must retain the certification statement for tax record keeping purposes, but the certification is not required to be attached to the tax return;
• Prior purchases made between January 1, 2009, and June 1, 2009 are covered if the manufacturer offers a certificate of qualification for the product;
• If a manufacturer has documentation that a stove has already achieved the required efficiency rating, no further testing is required;
• *The IRS has not stated that inserts are covered, or are not covered, but based on EPA’s practice of treating inserts and freestanding biomass stoves in a similar fashion, manufacturers may choose to include inserts.

If you would like to read the entire guidance, IRS Notice 2009-53, Non-business Energy Property, it can be found on www.hpba.org, or www.irs.gov/pub/irs-drop/n-09-53.pdf.

Overall, this tax credit is an outstanding achievement for the biomass stove industry and will clearly increase demand for the products.

Please consult your tax adviser if you have ANY questions about how this measure applies to your particular circumstance.

More information on this tax credit will be made available as it is learned.

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New Legislation Increases Tax Credit for Homeowners

Arlington, VA – February 17, 2009: The 2009 Economic Stimulus legislation signed into law today by President Obama includes a 30% tax credit (up to $1,500) for the purchase in 2009 and 2010 of a 75%-efficient biomass-burning appliance as measured using a lower heating value. The tax credit provisions are extended improvements of the legislation that passed in October 2008. The major changes are an extension of the credit to 2010 and the increase on the credit from $300 to 30% of the total cost.

While the new tax credit takes effect immediately, the Internal Revenue Service (IRS) has not issued the guidelines for determining what stoves meet the efficiency requirements to qualify for the credit or how a manufacturer will qualify their products. These guidelines are expected by May 15, 2009, however the credit applies to all qualifying stoves sold in 2009. Once the IRS guidelines are issued, wood and pellet stove manufacturers will test their stoves and will notify their retailers about their models that qualify.

The Hearth, Patio & Barbecue Association (HPBA), in conjunction with the Pellet Fuels Institute (PFI), worked to educate elected officials and their staffs on the benefits and energy efficiency of wood and pellet stoves. As the cost of heating oil and natural gas rise, this tax credit will help consumers save on energy costs.

"This stimulus legislation supports renewable energy and will help consumers control their winter heating costs," said Jack Goldman, president of HPBA. "It is a great example of how the hearth industry can work in Washington and on a grassroots level and help pass good legislation. With the long-term rise in home heating prices, this tax credit will help alleviate some of the initial cost for those consumers wanting to purchase a 75%-efficient wood or pellet stove next year."

The Hearth, Patio & Barbecue Association (HPBA), based in Arlington, VA, is the North American industry association for manufacturers, retailers, distributors, representatives, service firms and allied associates for all types of hearth, barbecue and patio appliances, fuels and accessories. For more information on HPBA and the tax credit developments, go to www.hpba.org.