Alaska AHFC Energy Rebate should Not Be Taxable
Q. IS THE AHFC HOME ENERGY REBATE TAXABLE INCOME? I HEARD THAT I WILL RECEIVE A 1099 FORM FROM AHFC. AHFC has received a legal opinion from the State of Alaska Department of Law that requires AHFC to issue a 1099-G to individuals who receive payments under this program. It is up to the recipient to contact their tax advisor about any possible tax consequences. – See more at: . Indeed AHFC reports the amount in block 6 and reports the amount as a “taxable grant.”
The Internal Revenue Code provides for the exclusion from income of Energy conservation subsidies provided by public utilities under 26 USC § 136.
(A) Dwelling unit
Utility customers participating in test of “smart grid” technology utilizing new solar photovoltaic system to be installed in homes by taxpayer utility were not required to include value thereof in income per IRC § 61 because same was excludable as IRC § 136 “energy conservation measure;” nor was IRC § 6041 information reporting required. Private Letter Ruling 201046013, 2010 PLR LEXIS 2352.
As IRC § 136 did not apply to homeowner who received one-time renewable energy credit from utility upon installation of residential renewable energy system, homeowner was required to include gain from sale of associated environmental credits and benefits triggered by resulting electricity generation in income and to credit for 30% of expenditure. Private Letter Ruling 201035003, 2010 PLR LEXIS 1080.
Payments to residential customers by exempt entity to promote energy efficiency through state program were not income to recipients under I.R.C. § 61 but were energy conservation subsidies excluded under section 136; because payments were not income to customers, entity did not have to report payments under section 6041. Private Letter Ruling 200717010, 2007 PLR LEXIS 93.
It would be nice if AHFC would obtain a private letter ruling establishing that Alaska homeowners are not liable for taxes on the AHFC Energy rebate. The cost of the letter agreement exceeds the benefit to any single homeowner. But, AHFC would establish a lot of good will and keep more money in Alaska instead of shipping it off to DC. Instead, they issue the 1099 and give you the following advice. The IRS also provides advice here.
The U.S. Treasury Department requires us to advise you that this written advice is not intended or written by our firm to be used, and cannot be used by any taxpayer, for the purpose of avoiding any penalties that may be imposed under the Internal Revenue Code. Written advice from our firm relating to Federal tax matters may not, without our express written consent, be used in promoting, marketing or recommending any entity, investment plan or arrangement to any taxpayer, other than the recipient of the written advice.