IMGCAP(1)]“Going green” is all the rage. Some would say it’s the new black. Not only that, it can help your client's company stay “in the black” too.
Everyone knows there are tax incentives for building energy efficient businesses. Most don’t realize how many there are, to what they apply, and the substantial amount they can save when taking full advantage of these incentives.
The benefits of being energy efficient and green in your business are many. There are the superficial – goodwill for your brand, ability to incorporate specialized branding into your marketing strategy, etc. There are cost savings from less waste, energy cost reductions and recycling.
These are the typical steps most businesses take when attempting to be more environmentally friendly. Some will go a step further and purchase a few energy efficient appliances, or maybe a new copier that will give them tax credits. However most don’t stop to think that there are more ways to update their facilities that can result in extra tax savings.
This is where the expertise of a firm that specializes in energy efficiency tax credits can make a tremendous difference in your company’s bottom line. One such firm, Engineered Tax Services, headquartered in West Palm Beach, Fla., with locations throughout the U.S., is a professionally licensed engineering firm devoted to the CPA community as it relates to the Circular 230 standard. ETS is dedicated to Green and LEED Standards for energy efficiency and tax incentives. The staff comprises engineers with disciplines in structural, mechanical and electrical engineering, which gives ETS knowledge above your typical accounting firm and is why they are a great collaborator when it comes to determining the best green tax credits that a company can receive.
“Our primary goal is to help our CPA partners monetize what can be a very confusing and convoluted engineering process for certifying the proper tax benefits for their clients” said ETS CEO Julio Gonzalez. “It can be overwhelming to navigate the ins and outs, but that is why we’re here, to take the confusion out of it and teach them how to use these benefits to generate significant revenue and prospect opportunities.”
So what are these tax incentives that require such stringent certification? Specifically, 179D Federal Energy Tax Deductions. This deduction allows businesses to get a credit for creating an energy efficient property that reduces by 50 percent the total annual of energy and power costs with respect to interior lighting, systems, heating, cooling, ventilation and hot water systems. If the reduction does not meet this threshold, the business can take partial deductions. Energy simulation studies are required to justify the deduction. Inspection and testing must be completed by a qualified engineer or contractor registered in the jurisdiction.
The nuances of 179D are, quite honestly, somewhat convoluted and require a trained eye to understand the specifics and qualifiers. The basics of the incentive are as follows:
• Maximum Deduction: $1.80 per square foot as long as a 50 percent reduction in total costs is achieved, up to the cost of the equipment placed during that taxable year.
• Partial Deductions: $0.60 per square foot for a 16 2/3 percent reduction for building envelope, HVAC and service hot water systems and lighting. $0.30 per square foot for a 25 to 40 percent reduction in lighting power density (50 percent for warehouses).
• Qualifying Buildings: Commercial buildings (any size), for lease apartments (minimum of four stories), and commercial energy renovations.
• Deduction Recipient: Building owner at time of improvements. For public buildings, the owner may allocate the deduction to the designer for that taxable year.
• Eligibility Dates: Building completed or renovated between Jan. 1, 2006 and Jan. 1, 2013.
In order to receive the incentives, it is not enough to simply do the work and then report it. Because of the potentially significant tax savings, the IRS requires that the work be professionally reviewed and documented as having met the minimum required standards for either Title 24 of the California Building Energy Efficiency Standards or those of the International Energy Conservation Code that is followed throughout the rest of the US.
Firms like ETS work closely with the IRS to ensure that all certification standards are met during the building or upgrade process. They then assist CPAs with the certification paperwork required for documentation to receive all available tax credits.
The cost savings are numerous. New equipment costs can be immediately offset by the tax incentives. With the new equipment installed, energy costs will be reduced, resulting in lower bills. Another cost savings gaining some traction is that of creating a healthier workplace. According to a study by the Center for Building Performance and Diagnostics at Carnegie Mellon, making even a few small changes to the lighting and air quality have positive effects on productivity. The employees of the study had fewer sick days and were more productive in general when at work.
Everyone can find ways to go green and receive tax credits for these efforts. However, by using a firm that specializes in this area of the Tax Code during your building phase and during any upgrades, you can potentially find more than you thought possible and make your owners, shareholders and employees happy.
Bonnie Buol Ruszczyk is president of BBR Marketing, a firm that provides marketing strategy, training and tactical implementation for professional services firms. You can learn more by visiting their Web site at
