Now that I’ve got that “musing” out of my system (see Easter Sun Day, below), it’s back to the nitty-gritty.
While this post falls under the “Fine Print” series, it belongs to a subset known as “Find Print.” As in: “Where the hell is the dang “fine print”?!?!!!!
A simple question
Say you want to buy a solar electric system for your house. Let’s assume that you, like me and 99% of Americans, aren’t wealthy enough to be unconcerned about the cost.
With that in mind, here’s a simple, but important question:
Does the 30% federal tax credit apply to the total cost of the system, or only to what’s left over after subtracting all the other incentives?
A lot is riding on the answer. Including whether or not many people can afford to go solar.
On a 6 kW system in my own situation, the answer to this simple question makes a $6,000 difference to the bottom line, mostly because of an incentive by my power company, APS.
Down the rabbit hole
Getting an answer to the question isn’t difficult. In fact, I got many. The hard part is getting an answer that is also correct. Call me fussy.
The rep for one installation company read this blog and emailed:
Hi Osha, I was troubled by what seemed like some skewed numbers in your bids….WE ARE NOT TAX EXPERTS, but our contacts in the industry are telling us to take the conservative approach and apply the 30% Federal Investment Tax Credit to the net cost AFTER the utility rebate and state tax credits are applied.” [Emphasis in the original]
I emailed the rep for a different firm and got this information back:
Confirmed by APS legal eagles this week that the 30% tax credit is in fact 30% of the system cost. We are seeing “out of pocket” at the “end of the day” – costs of 25% of the project cost – now, there’s an investment for ya!
Absolutely. But is that correct?
Um, depends on who you ask.
I try the solar help-line at APS.
“The tax credit applies to the total cost of the system,” I’m assured. “It just makes sense. It wouldn’t be much of an incentive if it wasn’t done that way.”
Sounds good to me. Another vote, “yes.”
Democracy, we can all agree, is a wonderful thing. But voting has never been a particularly good method of determining whether a fact is true or false.
I call the Department of Energy. The representative there says that the federal tax credit is taken after subtracting all other incentives.
Uh-oh. A “no” vote.
She refers me to a website run by the Tax Incentive Assistance Project (TIAP) and directs my attention to a section heading that seems relevant.
How do the federal tax incentives interact with credits or rebates provided by my state or utility?
And here’s the answer they supply:
For federal credits that depend on the cost of a measure…the federal credit will generally be calculated after deducting the value of utility or state incentives.
The site is a public/non-profit partnership, the DOE rep tells me, which makes me think its information is probably accurate.
Of course, my inner-lawyer jumps all over the word “generally.” I seize the ambiguity introduced by that word and think up scenarios in which something unique to my particular situation allows me to dismiss this standard as inapplicable or quaint. (Maybe I can get Jay Bybee or John Yoo to write me a memo to that effect.)
Ah, self-deception — more powerful that solar energy, but twice as ephemeral.
Probably, we, I, will have to take the federal subsidy after subtracting state and utility incentives.
Sigh. Sometimes fine print, like a golf green at Augusta, breaks in your favor. Sometimes it doesn’t.
You probably shouldn’t take my word for it. I haven’t played golf since I was a kid and even then I sucked.