The IRS recently released the inflation adjustment factor and
reference prices for the 2012 calendar year, which are necessary
for calculating the Section 45 production tax credits. Based on the
2012 inflation factor of 1.4799, there are no changes from 2011 in
the tax credit amounts for electricity generated from renewable
sources; however, there is a small increase in the tax credit
amounts for refined coal and Indian coal production. The 2012 tax
credit amounts for renewable energy production, refined coal
production, and Indian coal production are set forth below.
Renewable energy source or
coal production activity
2011 credit amount (centers
per kilowatt-hour; dollars per ton)
Deadline for facility being
placed in service
Solar energy (pre-2006 facilities
Small irrigation power
Municipal solid waste (includes
landfill gas and trash combustion facilities)
Marine & Hydrokinetic
Indian coal production
2012 Reference Prices; No Tax Credit
If the reference price for a particular energy source (as
published by the IRS) exceeds a certain designated level, then the
Section 45 production tax credit will be reduced or completely
phased out. Based on the 2012 reference prices, there will be no
phase-out for any of the renewable energy sources or coal
production activities for the 2012 calendar year.
The 2012 reference price for wind is 5.31 cents/kilowatt hour.
Since this reference price does not exceed 11.84 cents/kilowatt
(i.e., 8 cents multiplied by the 1.4799 inflation factor for 2012),
there will be no phase-out during 2012 of tax credits realized from
the sale of electricity produced from wind energy. Similarly, the
2012 reference price for refined coal is $55.80/ton. Since this
reference price does not exceed $80.25/ton (i.e., $31.90 multiplied
by 1.4799 inflation factor and 1.7), there will be no phase-out
during 2012 for tax credits realized from the sale of refined
The IRS still has not determined reference prices for
electricity produced from closed-loop biomass, open-loop biomass,
geothermal, solar, small irrigation power, municipal solid waste,
hydropower and marine & hydrokinetic energy. Accordingly, there
will be no phase-out during 2012 for tax credits realized from
these renewable sources.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Protecting Americans from Tax Hikes Act of 2015 (PATH Act) accelerated the due date for filing Form W-2, Wage and Tax Statement and Form W-3, Transmittal of Wage and Tax Statements, and any returns or statements required by the IRS to report nonemployee compensation to January 31.
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