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Time is Running Out to Buy 2010 Oregon Business Energy Tax Credits

Do you or your company have significant Oregon tax liability? Act now to buy Oregon Business Energy Tax Credits (BETC) at 67 percent of their face value before the end of your 2010 tax year. Such a purchase can offset your own tax costs and yield an internal return rate exceeding 20 percent.

Created in 1980, and administered by the Oregon Department of Energy (DOE), the BETC is an incentive program designed to encourage business owners and organizations to invest in energy and conservation projects in exchange for a 35 percent tax credit, or a 50 percent credit for certain renewable-energy projects. The credit is taken over five years, with an eight-year carryforward.

Businesses and organizations investing in such projects are taking advantage of the BETC. Yet, in many cases, project owners lack Oregon tax liability, leaving them unable to reap the BETC's full benefit.

Using what's called a Pass-Through Option, these owners can transfer their BETC for an eligible energy project to a partner: a business or individual with Oregon tax liability. In exchange, the pass-through partner makes a lump-sum payment to the project owner and then claims the BETC against its own state tax liability.

Set by the DOE, the current pass-through payment rate is 67 percent of face value for projects with a preliminary certification before January 1, 2010, and 73.6 percent of face value for projects with a preliminary certification thereafter.

Moss Adams works with a number of project owners that are interested in transferring their BETCs (preferably transactions of $500,000 or greater), where we can act as a qualified intermediary between you, the project owner, and the DOE to find a project that meets your Oregon tax needs. There's no charge to you for our assistance in helping you locate and secure a suitable BETC.

Beyond its potential to deliver a high internal return rate, purchasing BETC can help you diversify your investment portfolio, allow you to invest in renewable-energy projects, reduce your total state income tax liability, and lower your effective state tax rate.

As a result of new legislation, purchasers must buy BETC by the end of their 2010 tax year to include it on their 2010 income tax return. C corporations, S corporations, individuals, and taxpaying trusts are all eligible to purchase BETC. Please note that, once issued, a BETC cannot be revoked, and the amount paid for a BETC is generally deducted as state taxes over a five-year period.

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If you have questions or would like to learn more about BETC opportunities, please contact Rob O'Neill, Partner, State and Local Tax, Moss Adams, at (503) 478-2339 or rob.oneill@mossadams.com. Read more at www.mossadams.com/betc.