Law Article: IRS determination aids tribes with energy credits

Attorneys say a newly released determination from the Internal Revenue Service helps tribes with renewable energy projects:
The IRS released a ruling this week that opens the door to Indian tribes playing a much larger role in renewable power projects.

It allows an Indian tribal government to be an owner or lessee of these projects. The rationale: An Indian tribal government is not a governmental unit or tax-exempt organization for purposes of tax subsidies.

The taxpayer in the ruling leased a power plant from an Indian tribe and planned to sell power to a third party. The taxpayer and tribe agreed to let the taxpayer (the lessee) claim an investment tax credit. The option to let a lessee claim an investment credit is not available if the lessor could not have claimed the credit. The IRS ruled that the tribal government could have claimed the credit.

Get the Story:
John J. Marciano, III and Amanda Forsythe: Can Indian tribes own renewable power projects? IRS says yes; not a pickle! (Lexology 3/12)
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