Extension of safe harbor, “beginning of construction” under sections 45 and 48 (COVID-19)

Notice 2020-41: Extension of safe harbor

The IRS today released an advance version of Notice 2020-41 that modifies prior IRS guidance concerning the “beginning of construction” requirement for both the production tax credit for renewable energy facilities under section 45 and the investment tax credit for energy property under 48.


Related content

Notice 2020-41 [PDF 39 KB] states that this relief is being provided in response to the coronavirus (COVID-19) pandemic.

Today’s notice states that the “Continuity Safe Harbor” as provided and extended by prior IRS notices is being further extended for projects that began construction in either calendar year 2016 or 2017.

Notice 2020-41 also provides a “3½ Month Safe Harbor” for services or property paid for by the taxpayer on or after September 16, 2019, and received by October 15, 2020.

According to a related IRS release—IR-2020-106—for certain projects that began construction in 2016 or 2017, Notice 2020-41 adds an extra year to the four year “Continuity Safe Harbor” provided by the prior IRS notices. If these projects are placed in service in five years, construction will be deemed continuous. Notice 2020-41 also provides relief for taxpayers that started construction by incurring 5% of project costs, and made payments for services or property and reasonably expected to receive such services or property within 3½ months. If these services or property is received by October 15, 2020, the taxpayer’s expectations at the time of the 2019 payment are deemed reasonable. 

Notice 2020-41 concludes that the IRS will not issue private letter rulings or determination letters to a taxpayer regarding the application of this notice, the prior IRS notices, or the beginning of construction requirement under sections 45 and 48. 

Read a June 2020 report [PDF 72 KB] prepared by KPMG LLP: What’s News in Tax: IRS Extends Tax Credit Timelines for Renewable Energy Projects

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Want to do business with KPMG?


loading image Request for proposal