Tax advisers are well educated on business strategy, accounting, auditing, taxation, systems and more - in the business field. Almost all lack an understanding of such terms as biomass, fuel cell, U factor, lean burn, SHGC of 0.30 and Standard 90.1–2001 of the American Society of Heating, Refrigerating, and Air Conditioning Engineers and the Illuminating Engineering Society of North America.
If a client asks their tax adviser what tax break they might get for solar panels, purchasing a plug in vehicle, new insulation, an energy efficiency audit, it is going to take the adviser some time to see if there is any tax incentive and if there is, exactly what the client needs to do and when. And, the tax adviser or client also needs to look at the federal and state environmental agencies to see if they offer any rebates or direct grants, and whether the utility company offers any incentive payment.
The American Recovery and Reinvestment Act of 2009 added another federal green incentive in that instead of claiming certain credits, the taxpayer can request a direct grant - from the Treasury Department! Why not from the Department of Energy?
Why bog down the tax law and the work of non-energy experts with figuring out how the help the environment and reduce one's tax bill? Why aren't the subsidies provided by the Department of Energy or EPA?
I've got a short article on this - The Greening of the Work of Tax Advisers, on the problem of giving this work to tax advisers and some additional policy issues with plethora of energy tax incentives.
Of course, there are consultants who specialize in particular energy tax incentives that taxpayers can hire to help them claim a credit or deduction. The extra compliance cost to claim some of the incentives make them worthless after a cost-benefit analysis. So, what is the point of that?
Also - I can't overlook a few policy oddities of so many energy subsidies in the tax law. Here are some more oddities:
- A business or household that performs an energy efficiency audit might find that the best way to reduce energy usage warrants no tax benefit. Is that a good approach?
- The system also can give someone a credit for solar panels or insulation who drives a gas-guzzling SUV. Is that what the rules should be incentivizing?
Where, if anywhere, should energy incentives be placed? How can incentives be designed to truly reward behavior that helps the environment?
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Inheritance tax is money that is paid on the value of the property you own. There is a nil rate band and can be assessed when you send in your inheritance tax return. The nil band rates can affect your capital gains tax.
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