Taxation and Energy Tax Credits

Taxation and Energy Tax Credits

Taxation affects us all. Notwithstanding the popular appeal of tax simplification, there is nothing simple about tax regimes around the world. Hunton & Williams LLP provides clear and creative tax advice to clients for their transactions and tax controversies, and with respect to tax legislation and administration.

In transactional matters, our strength is assisting the client in weighing complex and often competing legal, tax and financial accounting considerations so the client can make an informed decision about whether to engage in a particular transaction. Once the client decides to proceed, we advise on structure and review the transactional documents to assure that the agreed-upon structure is in place.

To meet the challenge of double taxation, we are constantly developing new ways to structure transactions in order to minimize entity-level tax, generate tax benefits or defer taxable gains.

Our individual tax lawyers are responsive and cost-effective. They are focused on specific areas of the law, with national preeminence in:

  • project finance
  • leveraged and cross-border leasing
  • asset securitization
  • real estate investment trusts
  • corporate mergers and acquisitions
  • financial products
  • tax-advantaged investments
  • hospitality industry transactions
  • employee benefits
  • state and local taxation.

In addition to serving tax clients directly, we work with our firm's corporate, securities and real estate lawyers to provide a tax perspective on their clients' financings, mergers and acquisitions and other transactions. Our lawyers design, draft and monitor employee benefit plans of all types and provide estate planning advice.

Other areas of our experience include:

  • spin-offs and other corporate reorganizations
  • corporate debt and equity offerings
  • international tax planning for multinationals
  • partnerships and joint ventures
  • venture capital transactions
  • development of federal and state tax legislation, regulations and rulings
  • tax audits and litigation
  • mutual funds
  • tax credit transactions
  • natural resources
  • public utilities
  • tax-exempt bond financings
  • inbound investments in stock, securities and real estate
  • tax-exempt organizations, from family trusts and foundations to public charities and trade associations
  • economic development incentives for locating new facilities.

Energy Tax Credits

Hunton & Williams LLP lawyers have extensive experience in energy tax credit transactions, including Section 45, Section 45Q, Section 48, Section 48A, Section 48B, Section 48C and various renewable fuels tax credit transactions. Our lawyers have worked with a wide range of clients in all aspects of transactions from due diligence through audits of transactions. In addition, our lawyers routinely represent clients before Congress, the Treasury Department and the Internal Revenue Service in order to obtain guidance and to preserve and extend the benefits of the credits.

Section 45 Tax Credits
Hunton & Williams has substantial experience on projects involving Section 45 tax credits for the production and sale of electricity from renewable resources, including wind, open-loop biomass, closed-loop biomass, landfill gas and waste-to-energy. Over the past several years, our lawyers have advised clients and potential clients regarding the applicability of Section 45 tax credits to various transactions and have monitored and explained legislative proposals included in various energy bills regarding the extension and expansion of Section 45 tax credits. In addition, our lawyers were active in the successful efforts to extend the Section 45 tax credit and have worked with members of Congress, the Department of the Treasury and the Internal Revenue Service to assist clients in clarifying and interpreting Section 45 requirements.

Our lawyers were actively involved in obtaining IRS Notice 2006-88 to provide guidance on the Section 45 tax credit for open-loop biomass. Our lawyers also were consulted by Treasury and the IRS in connection with Revenue Procedure 2007-65 providing a safe harbor for partnership-flip transactions for wind energy projects.

The firm has extensive experience in structuring renewable energy projects. We have represented sponsors, developers, lenders and off-takers in connection with the development and financing of renewable energy facilities. Currently, our tax, corporate, real estate and environmental lawyers are representing several clients in Section 45 tax credit transactions, including the purchase of developed and undeveloped facilities, the structuring of commercial arrangements for the operation of facilities at host sites, and the structuring of and the sale of interests in developed facilities. Our lawyers also are assisting clients in all stages of these transactions, including performing due diligence regarding the facilities and sites, creating and analyzing various structures for the purchase of facilities and commercial arrangements for the facilities.

In addition to Section 45 renewable energy projects, our lawyers played a key role in obtaining guidance on the Section 45 tax credit for refined coal. Our lawyers worked directly with Treasury and the IRS on IRS Notice 2009-90 providing interim guidance on the refined coal tax credit. They also coordinated issues between Treasury and the EPA on emission testing issues reflected in IRS Notice 2010-54 on the refined coal tax credit. They have advised clients on the development and structuring of transactions involving refined coal and in obtaining private letter rulings from the IRS on those transactions.

Section 48 Tax Credits
Hunton & Williams has assisted multiple clients in connection with development and financing of, and investment in, projects involving Section 48 investment tax credits for solar projects. Currently, our tax, corporate, real estate and environmental lawyers are representing multiple clients in Section 48 solar transactions, including the structuring of commercial arrangements for the operation of facilities at host sites, and the structuring of sale-leaseback transactions of solar facilities. Our lawyers also are assisting clients in all stages of these transactions, including preparing and advising responses to requests for offers, performing due diligence regarding the facilities and sites, creating and analyzing various structures for the sale-leaseback of facilities and commercial arrangements for the facilities.

Section 1603 Treasury Grant Program
Following the enactment of American Recovery and Reinvestment Act in 2009, our lawyers have assisted project developers and equity investors in claiming a Treasury grant in lieu of investment tax credits under Section 48 and production tax credits under Section 45. We work with our clients to devise the best deal structures to capture the Treasury grant and maximize the overall economics of the deal. We represented the developer of a wind project that received the largest Treasury Grant issued in 2010.

Our lawyers are active advocates for the renewable energy industry with respect to the Treasury Grant program. Our attorneys submitted comments to Treasury and the IRS on behalf of the solar industry with respect to application of the Treasury grant program in solar transactions. In addition, we submitted comments to Treasury and the IRS on behalf of clients on application of the program to incremental hydropower and landfill gas projects. Our lawyers also have assisted clients in disputes with Treasury over qualification of projects for Treasury grants.

Section 48A, 48B and 48C Tax Credits
Hunton & Williams has assisted several clients in connection with applications to the Department of Energy for certification and the Internal Revenue Service for an allocation of Section 48A, 48B and 48C tax credits for certain advanced coal-based generation, gasification and qualifying advanced energy projects. In addition, our lawyers met with the Internal Revenue Service to discuss the establishment of the Section 48A and 48B tax credit programs and have worked with the IRS in clarifying and interpreting the tax credit requirements. Our lawyers have particular experience representing clients with respect to the Section 48C manufacturing investment tax credits. Our team represented five of the world's leading solar equipment manufacturers in connection with their successful applications to the Department of Energy and the Internal Revenue Service for an allocation of Section 48C manufacturing investment tax credits.

Renewable Fuels Tax Credits
Over the past few years, Hunton & Williams has advised various clients regarding the availability of and procedures for claiming income and excise tax credits with respect to various renewable and alternative fuels including biodiesel, renewable diesel, and liquid fuels derived from coal and biomass. Our lawyers have assisted clients in all stages of these transactions, including performing due diligence regarding the renewable fuel production processes, the structuring of commercial arrangements for transactions, and meeting with the Internal Revenue Service in advance of requesting private letter rulings regarding the transactions. Our lawyers coordinated between DOE, NREL, Treasury and other administrative agencies to obtain IRS Notice 2007-37 from Treasury and the IRS on renewable diesel fuel.