Good News for Businesses--The Stimulus and Solar

The American Recovery and Reinvestment Act of February 2009 made a major improvement in the solar tax credit program for commercial installations. The Investment Tax Credit (ITC) of 30% of the total cost of the installation of a solar system remains unchanged for the next seven years. But now, a business owner can elect to receive a cash payment from the Department of Treasury in lieu of the ITC. A quick refund of 30% makes a lot of sense for business taxpayers who may happen to be carrying losses in these tough economic times, or for other reasons, would prefer to receive a cash payment rather than a reduction in taxes. This cash grant arrives from the Treasury 60 days after your system is placed in service. Information on the Treasury Department payment is available at the DOT's recovery website.

Of course, if you are able to take advantage of the ITC itself, the possibility exists that you can monetize the incentive even sooner, by withholding the full amount of your ITC from your next quarterly income tax prepayment.