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Maximize Energy Tax Benefits
Reap Maximum Tax Benefits
For Energy-Efficient
Building Design, Construction,
Upgrades and Renovations.

Special Guest Speaker:
Julio Gonzalez
Industry Expert and CEO of
Engineered Tax Services

Go Green and Get Green ($)
Through Energy Tax Benefits

What Are The Learning Objectives
Identifying Client Tax Opportunities
• How to identify valuable tax savings in the Energy Policy Act to take
advantage of energy efficient design, construction, upgrade and renovation
of buildings placed in service between Jan. 1, 2006 and Dec. 31, 2013;
• How owners of buildings can benefit and why their management companies,
architects and builders should be aware of this policy;
• How architects, engineers and contractors can benefit as the designer of
constructed or renovated public buildings and turn their knowledge and
application of the Energy Policy Act into a competitive advantage in the
marketplace;
• What accountants and property management companies need to know to
help their clients take advantage of the energy tax benefits;
• How to find additional savings through energy-efficient public utility rebates;
• Insurance savings resulting from an energy tax certification; and
• How to find additional tax savings through building cost segregation.

Engineered Tax Services
• Nationally Licensed Engineering Firm with 16 offices
across the United States
• ETS averages $24,000,000 in monthly refunds and tax
benefits for real estate clients
• ETS averages $2,500,000 in monthly refunds and tax
benefits for architects, contractors and engineering
firms involved in Public Building works.
• Clients include – IKEA, JW Marriott, Boeing, DelMonte,
Snowbird Ski Resort, Google, ESPN/ABC, Ford, BMW,
Outback
• Partner to Energy Star Partner, Green Building
Council, National Park Trust and ASHRAE


Energy Policy Act of 2005
• Congress passed legislation in August of 2005 to encourage
property owners to build energy efficient real estate properties to
promote reduction in energy consumption. Service dates were
from 1/1/06 through 12/31/08.
• The Emergency Economic Stabilization Act of 2008 (HR-1424),
approved and signed on October 3, 2008, extends the benefits
of the Energy Policy Act of 2005 through December 31, 2013.

• The ruling allows up to a $1.80 per sq. ft. tax deduction for
commercial property owners. Incentives were also allowed for
contractors, site home builders and residential home owners.

In Sum, you can go back three years and carry forward the
energy tax benefit for 15 years. Important: Refunds may be
due to you!

Attention: Architects, Engineers
And Builders
For energy-efficient commercial building property
expenditures made by a public entity, such as
public schools, the Secretary of the Treasury
shall promulgate regulations that allow the
deduction to be allocated to the “person
primarily” responsible for designing the property
in lieu of the public entity.
Did you read your AIA Journals?
Did your accountant tell you about this?

Solutions. Character. Depth.

Who Qualifies as the Designer?
• Person that creates the technical specifications for
installation of energy efficient property
• May include architect, engineer, contractor,
environmental consultant or energy services
provider
• Deduction can be allocated among multiple
designers
• Government entity must provide designer with
written declaration of the allocation of the
deduction

6

Tax Credits for Home Builders
• Home builders are eligible for a $2,000 tax credit for a new energy efficient home
that achieves 50% energy savings for heating and cooling over the 2004
International Energy Conservation Code (IECC) and supplements. At least 1/5 of
the energy savings must come from building envelope improvements. This credit
also applies to contractors of manufactured homes conforming to Federal
Manufactured Home Construction and Safety Standards.
• There is also a $1,000 tax credit to the producer of a new manufactured home
achieving 30% energy savings for heating and cooling over the 2004 IECC and
supplements (at least 1/3 of the savings must come from building envelope
improvements), or a manufactured home meeting the requirements established by
EPA under the ENERGY STAR program.
• Please note that, with the exception of the tax credit for an ENERGY STAR
qualified manufactured home, these tax credits are not directly linked to ENERGY
STAR. Therefore, a builder of an ENERGY STAR qualified home may be eligible
for a tax credit but it is not guaranteed.
• These tax credits apply to new homes located in the United States whose
construction is substantially completed after August 8, 2005 and that are acquired
from the eligible contractor for use as a residence from January 1, 2006 through
December 31, 2009.

Goal: Reduce Energy Use
In the US alone, Buildings Account for:

• 72% of electricity consumption
• 39% of energy use
• 38% of all carbon dioxide (CO2)
emissions
• 40% of raw materials
• 30% of waste output (136 million tons
annually)
• 14% of potable water consumption

Who Benefits?
• Owners or tenants who pay for new or
improved energy-efficient commercial
buildings since 2006.
• Designers of energy-efficient
properties installed in publically-owned
buildings.
• Homeowners
• Building and Real Estate Communities
all indirectly benefit.

Why Is the Energy Tax Benefit
Not Used?
• Less than 1% of eligible taxpayers have
filed for their energy tax benefits with the
IRS.
• Millions of taxpayers are due significant
refunds since 2006.
• Why are taxpayers missing significant
energy tax benefits and incentives?
Low Awareness – No one was interested in the “good” times.
Requires Qualified Engineer with Qualified Software
Requires Paperwork – 179 D Deduction

IDEAL CANDIDATES

Clients Properties That Have Had
System Upgrades & Retrofits.

New construction placed in service since
January 1 of 2006. – Schools, Government,
Office, Retail, Hospitality, Industrial, Multi-Family
• Architects, Engineers & Contractors that do
public design

• Three Year Look Back Opportunity!
• Green Buildings
• LEED CERTIFIED BUILDINGS

PUBLIC BUILDINGS & TAX DEDUCTIONS?

For energy-efficient commercial building
property expenditures made by a public
entity, the Secretary of the Treasury shall
promulgate regulations that allow the
deduction to be allocated to the “person
primarily” responsible for designing the
property in lieu of the public entity.

$103,000 Energy Tax Benefit
Waiting to Be Claimed by the Owner

$117,666 Tax Benefit Is Waiting
to Be Claimed by the Owner
• Republic Services • 65,370 square feet
• LEED Silver • Completed Fall 2008

The Spinnaker Group

Maximize Energy Tax Benefits Current Project
Sweetwater Creek Visitor Center
Completed: Summer 2006
Cost: $1,534,393 or $175/ft
Architect: Gerding Collaborative, LLC
Distinctions: LEED-NC Platinum;
One of only 20 LEED-NC Platinum
buildings in the world at the time of
certification and the first in the
southeastern U.S.

$292,137 Energy Tax Deduction CLAIMED by the ARCHITECT

Fern Hill School 54,637 square feet
Tax deduction per sq.ft. $1.10 Tax Benefit $60,101
Auburn Mountainville 183,676 square feet
Tax Deduction per sq. ft. $ .90 Tax Benefit $ 165,308
Capital High School 127,440 square feet
Tax Deduction per sq. ft $ .40 Tax Benefit $50,976
Meeker Elementary 39,382 square feet
Tax Deduction per sq. ft. $ .40 Tax Benefit $15,752

$ 1,391,089 Energy Tax Deduction CLAIMED by IKEA

IKEA Brooklyn, NY Project Area: 346,638 SF
Qualified for $ .60 per sq. ft. 179D Tax Benefit $ 207,983
Cost Segregation Study Five Year Cash Benefit: $16,975,757

$1,183,105.80 in Energy Tax Credits CLAIMED for Five
additional IKEA Locations.

Five year cash benefit from 3 Additional CSS = $8,301,688
Total Five Year Cash Benefit for 4 buildings = $25,277,445

PAYBACK ANALYSIS
Year of Study 1 2 3 4 5

Cost of Upgrades $ 130,000.00 $ 3,900.00 $ 3,900.00 $ 3,900.00

P/SF $ 3.25

% of total 1.30%

Cost savings w/ ES* $ 20,300.00
Cost savings w/
CSS $ 185,000.00 $ 216,608.00 $ 132,210.00 $ 86,068.00 $ 80,931.00
Utility Savings
(40%) $ 24,000.00 $ 24,720.00 $ 25,461.60 $ 26,225.45 $ 27,012.21

Less Study cost $ 15,000.00

Totals Savings $ (84,300) $ (241,328.00) $ (153,771.60) $(108,393) $ (104,043)

ROI % 158% 4042% 2897% 2767%

Payback Time 0.6 0.0 0.0 0.0 0.0

Note: * Energy Saving of $58,000 @ 35% federal tax rate

Qualifying the Whole Building
• Applies to improvements or new construction
• Up to $1.80 per square foot - If you meet?
• Building must reduce total annual combined energy
use by at least 50% (compared to similar building
based on 2001 energy guidelines vs. energy
actually designed into building).
• Deduction is eligible to anyone who funds the
investment.

Qualifying Partial Building Systems

1. Interior Lighting Systems
2. Heating,
Cooling, Ventilation &
Hot Water
3. Building Envelope
4. New or Existing Building partial
deduction of $.40 to $.60/sq ft
for upgrades to any one of the
three major systems.

Summary of Tax Deductions

20%
20%
10%

The Lighting Opportunity
• Lighting accounts for almost 40% of commercial electrical
consumption
• 71 Billion square feet of commercial space nationwide. Nearly
all requires lighting.
• Less than 3% of eligible facilities have claimed EPACT credit
• New energy-efficient lighting can save building owners as
much as 50% on their electric bills and payback in two years
or less
• Any building with a lighting system 10 years or older is using
old technology
• In addition to reduction in operating expense, new lighting can
also improve lighting quality and increase the asset value of
the building

Case Study - Lighting

Industry: Packaging Manufacturer
Building Size: 115,000 sq. Ft.
Actions: Replace (148) 400W MH
and (44) 190W T12 with (180)
220W T5 HO Fixtures
Project Cost: $35,000
Energy Savings: $11,000/year
Federal Tax Benefit: $35,000
Rebates and Incentive: $20,000
Environmental Savings: Prevents
emission of 147 tons of
greenhouse gases

HVAC
The Department of Energy received comments from a group of
nineteen significant stakeholders in response to the Advance Notice
of Proposed Rulemaking for Commercial Unitary Air Conditioners
and Heat Pumps. 69 FR 45460 (July 29, 2004). In summary, the Joint
Stakeholders recommend minimum energy efficiency ratios (EERs)
and coefficients of performance (COPs) for certain commercial
unitary air conditioners and heat pumps, both split and package
systems, respectively, as follows:

Air-Cooled Products Efficiency Standards
>65,000 - <135,000 Btu/h 11.2/11.0 EER for Air Conditioners
11.0/10.8 EER for Heat Pumps
3.3 COP @ 47ºF for Heat Pumps
>135,000 - <240,000 Btu/h 11.0/10.8 EER for Air Conditioners
10.6/10.4 EER for Heat Pumps
3.2 COP @ 47ºF for Heat Pumps

BUILDING ENVELOPE
• Walls & Roofs, Insulation
• Climate Considerations
• Doors, Windows & Openings
• Thermal Efficiency
• Reflectivity
• Moisture Buildup

QUALIFYING PROCESS
Submission of Plans and Energy Certificate Form
• Energy Certificate Form is required by each state
which indicates the energy assets installed in a
building. Form required to get building permit
(also known as Form J)
• Step 1: Compare Lighting Schedule to 2001
ASHRAE Standards. Are there efficiencies?
• Step 2: If yes in Step 1, compare Mechanical
Schedule with detail of HVAC & Water Boiler
System? Are there efficiencies?
• Step 3: If yes in Step 2, model simulation for
whole building approach

FEASIBILITY ANALYSIS
• Once review of plans is complete – Prepare benefit
analysis for building for owner/client to review
• If project does not qualify, make suggestions to
owner/CPA as to what asset upgrades would be
necessary to have the building have qualifications
• Review benefit which would include the following
calculations:
• Additional costs of upgrade assets
• Monthly savings from reduction in energy
• Tax deduction benefit
• Fee for Certification and/or Energy Audit
• Derive overall ROI

IRS GUIDELINES
CERTIFICATION MUST:
• Include a statement regarding the energy efficiency of the building (interior
lighting, HVAC and/or hot water system)

• Include a statement that the reduction has been determined under the Rules of
Notice 2006-52

• Include address of the building

• Include a statement that field inspections have been performed verifying the
energy-saving assets

• Include a statement that approved software has used for calculations

• Include a list of qualifying assets and projected annual energy costs

• Statement must be made by qualified individual
- Not related to individual
- Properly licensed engineer
- Must provide a written statement of qualification to taxpayer
- Must include the qualified individual’s name, address and phone number

Confused about Who can do the Certification?

While this new set of regulations has been around
since 2006, there is still much misinformation and
confusion about both who can provide these
services, and what is required for the studies to be
acceptable to the IRS.

The IRS is an enforcement agency. It’s job is to
enforce policy, not to promote it, nor choose to look
the other way when regulations are skirted. In order
to protect yourself when reviewing a 179D report you
need to follow the IRS guideline exactly as it was
written.

The IRS says only “Qualified” Individuals can
prepare a 179D and must meet these three points:

(1) Is not related (within the meaning of §45(e)(4)) to
the taxpayer claiming the deduction under §
179D.
(2) Is an engineer or contractor that is properly
licensed as a professional engineer or contractor
in the jurisdiction in which the building is located.
(3) Has represented in writing to the taxpayer that
he or she has the requisite qualifications to
provide the certification required under section 4
of this notice (in the case of an individual
providing the certification) or to perform the
inspection and testing described in section 4.05
of this notice (in the case of an individual
performing the inspection).

Who is “Qualified”?
• The 179D must be completed by a professionally
licensed engineer a (P.E. must be licensed in the
state that the work is done) or a licensed contractor.
It is assumed that the contactor is working in their
specialized field.

• This all means that BOTH the person preparing and
signing the review in house AND the person
completing the inspection MUST be considered a
“qualified” individual.

• In completing a review of a 179D report, the CPA
should verify that BOTH the inspecting and signing
individual is “qualified”, as defined by the IRS.

Can the Contractor include the Energy Certification
in his Bid? No and here’s why…

The 179D Provider Must Be Totally Independent

• The firm preparing the 179D must be independent,
essentially free of any controls or influences that
might lead to their report being influenced.

• The END USER must be the firm that contracts with
the report preparer.

• The contractor CANNOT prepare the report for
themselves, nor can they hire the firm to do the 179D
report and bundle the report into their services.

• Bottom line…the person who contracts with & writes
the check to the 179D preparer must be the END
USER of the tax deduction.

Why does all this matter?

Circular 230
• As a Tax Preparer you have an obligation to make sure the
179D preparation is done correctly.

What is the CPA’s Exposure?
• IRC Code Section 6694 penalties can be substantial and if a
position taken on a tax return was not based upon the
substantial authority standard and therefore considered
unreasonable. These penalties are in in an amount:
• equal to the greater of $1,000 or
• 50 percent of the income derived (or to be derived) by the tax
return preparer with respect to the return or claim.
To ensure compliance with Treasury Regulations (31 CFR Part 10, §10,35), we inform you
that any tax advice contained in this correspondence was not intended or written by us to
be used, and cannot be used by you or anyone else, for the purpose of avoiding penalties
imposed by the Internal Revenue Code.

Additional Federal Incentives

• Fuel Cells = 30% credit
• Stationary Micro turbine
• Power Plants = 10% credit
• Solar Equipment = 30% credit

Additional Incentives and Programs

• Public Utility
Rebates
• Insurance
Savings
• State and Local
Rebates

Visit www.dsireusa.org for a clickable map and a listing of
all federal and state incentives for energy retrofits

State Incentives Can Be Equal or
Greater Than Federal Incentives
Federal Benefits Not Exclusive
• Important to know that energy incentives are coming online
everyday.
• In addition to federal incentives, many states have tax and
credit benefits, as well.
• Also, utility companies have incentives related to energy
assets.
• Important to look at all incentives: Federal, State, Local
Government and Utility Companies

Additional Incentives

• Corporate Tax Credit Renewable Energy Production Tax Credit
• Renewable Energy Technologies Investment Tax Credit
• Green Building Incentive Miami-Dade County - Green Buildings
Expedite Process
• Industry Recruitment/Support Miami-Dade County - Targeted
Jobs Incentive Fund
• Local Rebate Program Orange County - Solar Hot Water
Rebate Program
• Other Incentive Lakeland Electric - Solar Water Heating
Program

Additional Incentives
• Production Incentive Gainesville Regional Utilities - Solar Feed-
In-Tariff
• Orlando Utilities Commission - Pilot Solar Programs
• Property Tax Exemption Renewable Energy Property Tax
Exemption
• Sales Tax Exemption Solar Energy Systems Equipment Sales
Tax Exemption
• Sales Tax Refund Renewable Energy Equipment Sales Tax
Exemption
• State Grant Program Renewable Energy Technologies Grants
Program
• State Rebate Program Solar Energy System Incentives
Program

Stimulus Act Opportunities
• Renovation of South Side Cultural
Community Center This request is for
funding to complete the renovation of
the Federal Historic designated South
Side School building as a Cultural
Community Center. The design for the
building is complete Fort Lauderdale
FL $4,000,000

• Melrose Park Community Center This is a
funding request for $2 million to meet the
needs of this recently annexed youth
oriented community by providing a new
community recreation center, security and
site lighting and parking. Fort Lauderdale FL
$2,000,000
• Flagler Drive Greenway The greenway will
run along the two west lanes of Flagler
Drive from East Sunrise Blvd. to North
Andrews Ave. Fort Lauderdale FL $700,000

• Osswald Park - Recreation Amenity
Improvements Osswald Park is a 30-
acre community park located in the
Rock Island neighborhood. It was
annexed by the City of Fort Lauderdale
in November 2005 and is one of the
CityÂ’s busiest parks. The recreation
amen Fort Lauderdale FL $700,000

How Has the New Stimulus Bill Affected the Tax
Credits for Energy Efficient Home Improvements?
• On February 17, 2009, President Obama signed a stimulus bill
(The American Recovery and Reinvestment Act of 2009) that
made some significant changes to the energy efficiency tax
credits. The highlights are:
• The tax credits that were previously effective for 2009, have been
extended to 2010 as well.
• The tax credit has been raised from 10% to 30%.
• The tax credits that were for a specific dollar amount (e.i. $300 for
a CAC), have been converted to 30% of the cost.
• The maximum credit has been raised from $500 to $1,500 for the
two years (2009–2010). However, some improvements such as
geothermal heat pumps, solar water heaters, and solar panels are
not subject to the $1,500 maximum.
• The $200 cap on windows has been removed.

Summary of Tax Credits for
Homeowners
• Product Category Product Type Tax Credit Specification Tax Credit
Notes Windows & Doors Exterior Windows and Skylights U factor <=
0.30

SHGC <= 0.30 30% of cost, up to $1,5002 Not all ENERGY STAR
labeled windows and skylights qualify for tax credit.
• Storm Windows Meets IECC1 in combination with the exterior window
over which it is installed, for the applicable climate zone 30% of cost, up
to $1,5002 Manufacturer Certification Statement3 will list classes of
exterior window (single pane, clear glass, double pane, low-E coating,
etc.)4 that a product may be combined with to be eligible in specific
climate zones.

Summary of Tax Credits for
Homeowners
• Exterior Doors U factor <= 0.30

SHGC <= 0.30 30% of cost, up to $1,5002 Not all ENERGY STAR doors
will qualify.
• Storm Doors In combination with a wood door assigned a default U-
factor by the IECC1, and does not exceed the default U-factor
requirement assigned to such combination by the IECC 30% of cost, up
to $1,5002 Roofing Metal Roofs,
Asphalt Roofs ENERGY STAR qualified 30% of cost, up to $1,5002 All
ENERGY STAR labeled metal and asphalt roofs qualify for the tax credit.
• Must be expected to last 5 years OR have a 2 year warranty.
• Insulation meets 2009 IECC & Amendments 30% of cost, up to $1,5002
For insulation to qualify, its primary purpose must be to insulate.
(example: vapor retarders are covered, siding does not qualify).
• Must be expected to last 5 years OR have a 2 year warranty


“Over the past several years, we have actually made concerted efforts to maximize
these and other tax benefits, and have focused on precisely the opportunities you
outlined below. I agree that these credits are very valuable and thankfully our CFO and
the whole Toyota organization has been very supportive of our efforts”. Toyota Motor
Sales, USA. Inc.

Next Steps: Lower Your Energy Costs
and Have the Government Pay for It!
• Forensic Energy Audit
• Critical Path to Energy
Efficiency
• Maximize Your Return on
Energy with:
Federal, State and Local Energy Tax Benefits
Public Utility Rebates
Energy Savings Analysis
Measurement & Verification
Cost Segregation
Financing
Carbon Credits

What are the stakes?

About Engineered Tax Services
ETS marries the science of engineering with the
principles of tax and accounting to arrive at financial
solutions that result in increased cash flow,
minimized tax payments and increased ROI. These
IRS sanctioned services include Cost Segregation
Studies, Energy Tax Credits, Deductions and
Development Credits.
www.engineeredtaxservices.com
info@engineeredtaxservices.com
800-236-6519
Engineered Tax Services, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing
education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for
CPE credit. Complaints regarding registered sponsors may be addressed to the National Registry of CPE Sponsors, 150 Fourth Avenue North,
Suite700, Nashville, TN, 37219 Website www.nasba.org

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