Under current law, homeowners can claim up to $500 in lifetime cumulative credits for installing qualified appliances, such as furnaces, air conditioners, heat pumps, hot water heaters, and more. The credits are limited by appliance; for example a 95% AFUE gas, oil, or propane furnace or boiler was eligible for only $150 in credits, and a 15 SEER air conditioner was worth $300.

The bill that passed in the Ways and Means Committee would remove the lifetime cap and allow homeowners to claim up to $1500 in credits for the tax years 2009 and 2010. Also, the per appliance limits are removed, meaning that a homeowner could claim all $1500 for a new high efficiency furnace, or all $1500 for a new high efficiency air conditioner or heat pump.

Current law allows taxpayers (or corporation) to claim 30% of the costs, up to $2,000, for the installation of a geothermal system. The bill approved today would remove the $2,000 cap and allow the taxpayer to claim the full 30% in tax credits for installing a geothermal system.

Other important small business incentives approved as part of this tax stimulus bill include: an extension of the bonus depreciation and expanded expensing allowances that expired at the end of 2008; a new 5 year carryback of net operating losses; and a repeal of the pending 3% withholding provisions on all government contracts.

The next step is for the full House of Representatives to vote on the bill, expected to begin in the middle of next week. Watch for an alert next week on how you send a message to your Representative to support the passage of these important tax incentives.

The Senate is expected to debate a similar measure in the near future. President Obama would like to sign the stimulus package into law by mid-February.

If you have any questions, please contact me at charlie.mccrudden@acca.org. Regards, Charlie McCrudden ACCA

To meet its obligations under the Montreal Protocol, the United States will phase out the manufacturing of R-22 based appliances on January 1, 2010. The HVAC industry has considered air conditioners and heat pumps as appliances. As part of the proposal, the EPA redefined appliances as “any device which contains and uses a refrigerant and which is used for household or commercial purposes….. Components such as condensing units, line sets, and expansion valves would not be considered appliances.” As part of the proposed ruling, the EPA has defined the date of manufacture of an appliance as:

• The refrigerant loop is completed,
• The appliance can function,
• The appliance holds the complete and proper charge,
• The appliance is ready for use in its intended purposes.

For split systems, this definition shifts the “appliance manufacturing date” from the date embedded in the manufacturer’s serial number to what the industry has historically considered the installation date. For packaged units, PTACs, and room air conditioners the manufacture date continues to be defined as the manufacture date contained in the manufacturer’s serial number.

Three weeks after the publication of this proposal, the EPA released a “Clarification Statement” that clarified several questions raised by its original proposal. One major question was if dealers could continue to install R-22 air conditioners and heat pumps after January 1, 2010. This clarification document clearly states that R-22 based air conditioners and heat pumps can be installed to service existing R-22 based appliances, “Sale and distribution would also be allowed for pre-charged appliance components that are manufactured before January 1, 2010 and used for the purpose of servicing existing (pre-2010) appliances. This means that components such as condensing units, line sets, and expansion valves that are charged with refrigerant and completely manufactured before January 1, 2010, but not yet installed in an appliance, could be sold and distributed for this purpose.” The clarification statement continues with, “Thus the proposed rules would not prohibit the sale or installation of stockpiled pre-charged condensing units that were manufactured before January 1, 2010, and used to replace a condensing unit in an existing residential split system.”

Bruce Ritchie, 09/23/2010 – 06:18 PM

House Republican leaders on Thursday said a special session could be held in November – possibly during the Legislature’s organizational session – to approve using federal economic stimulus money for state energy rebate programs.

Gov. Charlie Crist got into a flap with House and Senate leaders last week when he said in a letter he was disappointed that the Legislative Budget Commission on Sept. 14 did not authorize spending $51 million in federal stimulus dollars on energy rebates. But Republican legislative leaders said they didn’t have legal authority to approve the spending because there were no budget appropriations associated with the rebate programs.

On Thursday, the House Majority Office sent a memo to reporters saying that the Legislature could take up the issue in November or during the 2011 regular session.

Crist had requested $13.9 million for an expired solar rebate program and $17.5 million towards heating and air-conditioning system upgrades as part of a rebate program he announced last month. The solar program, which paid up to $20,000 towards solar panels on homes, ended in June with a backlog of at least $50 million after the program ran out of money in June 2009. The state spent $14.4 million federal stimulus dollars in 2009 to pay for rebates.

House Speaker Larry Cretul, R-Ocala, sent Crist a letter saying the governor had announced the $1,500 HVAC program in August knowing that funding had not been approved. He also said the Florida Energy and Climate Commission had been “duping” residents into believing they would receive rebates when money was not available. The governor’s office responded that some money was available.

The House Majority Office memo Thursday said Crist had promised money he did not have the legal authority to spend. “This is not an issue of whether or not legislators want to refund Floridians for these rebates that the governor prematurely promised them,” the memo said. “The issue is that members of the LBC (Legislative Budget Commission) cannot disregard state law and allow the governor to hand out federal dollars to Floridians in the manner he has requested.”

Sterling Ivey, a Crist spokesman, said in response that the governor’s office does not believe a special session or full action by the Legislature is needed. The governor’s office has said a spending authorization would be legal because the requests are for operating expenses, not a fixed capital expense as the Legislature’s Republican leadership claims.

Bruce Kershner, executive director of the Florida Solar Energy Industries Association, said he’s concerned that the state may face a deadline for spending the federal stimulus dollars before a special session could be held in November. “We have long advocated that we believe those (solar) rebates should be paid,” he said.

The bill also extended tax credits for solar energy systems and fuel cells to 2016. New tax credits were established for small wind energy systems and plug-in hybrid electric vehicles. Tax credits for builders of new energy efficient homes and tax deductions for owners and designers of energy efficient commercial buildings were also extended.

Read more about the 2011 Federal Tax Credits