Bills would allow public power to access payroll, energy and investment tax credits

February 8, 2021

by Paul Ciampoli
APPA News Director
February 8, 2021

Public power utilities would gain access to payroll tax credits for emergency paid sick and family leave and to energy production and investment tax credits under two bills introduced in Congress on Feb. 4 and supported by the American Public Power Association.

The payroll tax credit legislation was included in the House-passed HEROES Act last year and has a good chance of being included in COVID-relief legislation that the House and Senate Committees are expected to begin debating this week.

The energy tax provisions were included in the House-passed Moving Forward Act last year and could be included in infrastructure legislation that the House and Senate are expected to take up later this year.

The Growing Renewable Energy and Efficiency Now (GREEN) Act (H.R. 848) was reintroduced by House Subcommittee on Select Revenue Mike Thompson, D-Calif., and cosponsored by all other Ways and Means Committee Democrats, including Chairman Richard Neal, D-Mass.

APPA has worked closely with the subcommittee on ensuring that the legislation benefits public power utilities, including special provisions to benefit tribal utility authorities while protecting their unique status under the federal Tax Code.

Ditto sends letter to Rep. Thompson

In a Feb. 4 letter sent to Rep. Thompson, APPA President and CEO Joy Ditto noted that the GREEN Act addresses the underlying inequity of providing investment incentives through the tax code. It does so by allowing for the direct payment of energy production and investment tax credits and carbon capture tax credits to any entity that owns the project.

“This would remove the financial disincentive for public power utilities to own such facilities, which are needed to transition to cleaner generating technologies and addressing climate change, and would allow the full value of these credits to pay for additional investment or be passed on to our 49 million customers,” she wrote.

Details on GREEN Act

Section 4 of the GREEN Act allows taxpayers to elect to be treated as having made a payment of tax equal to 85 percent of the value of the credit they would otherwise be eligible for under the investment tax credit, production tax credit or Tax Code Section 45Q credit for carbon capture and sequestration.

Rather than opting to carry forward credits to years when their credits exceed their tax liability or being prevented from claiming the credit at all in the case of public power utilities, taxpayers can take a reduced credit and request a refund of any resulting overpayment of tax. This allows entities with little or no tax liability to accelerate utilization of these credits or claim them when previously they would have been prevented from doing so. Tribal governments are treated as making a payment equal to the full value of the credit, instead of 85 percent.

Payroll tax credits

Meanwhile, the Supporting State and Local Leaders Act was introduced in the House and Senate on Feb. 4. The bill is H.R. 786 in the House, but a bill number is not yet available in the Senate.

It would allow state and local entities, including public power utilities, to claim payroll tax credits intended to offset the cost of providing emergency paid sick leave and emergency paid family leave as required under the Families First Coronavirus Response Act of 2020. It would also make these tax credits available to utilities that voluntarily extend these benefits through March 20, 2021.

Original bill sponsors in the House are Representatives Brad Schneider, D-Ill., John Katko, R-N.Y., and Diana DeGette, D-Colo., and in the Senate, Tina Smith, D-Minn., and Richard Durbin D-Ill.

APPA strongly supports this bill and is listed as one of the supporting organizations on a Dear Colleague letter from the bill sponsors seeking additional cosponsors.

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