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SOL and the 1603 Cash Grant – File Now or Forever Hold Your Peace

Taxpayers are running out of time to file refund claims against the government. If the government reduced or denied your Section 1603 cash grant, you can file suit in the Court of Federal Claims against the government to reclaim your lost grant money. Don’t worry, you will not be alone. There are numerous taxpayers lining up actions against the government and seeking refunds from this mismanaged renewable energy incentive program. Indeed, the government lost in round one of Alta Wind I Owner-Lessor C. v. United States, 128 Fed. Cl. 702 (2016). In that case, the trial court awarded the plaintiffs more than $206 million in damages ruling that the government unreasonably reduced their Section 1603 cash grants.

In Alta Wind, the trial court held that the Treasury Department had incorrectly reduced the plaintiffs’ eligible cost basis in their windfarm projects for purposes of claiming the Section 1603 cash grant. The trial court agreed with the plaintiffs’ argument that the purchase price of the projects was a reasonable starting place for calculating their basis in the renewable energy projects. The court also determined that power purchase agreements (PPAs) are correctly included as part of the eligible property of a project.

After the defeat, the government immediately appealed the decision. The Circuit Court for the Federal Circuit heard oral argument on January 12, 2018. We were there, and the issues were hotly debated during oral argument. We will continue to track the case.

You must file your refund claim law suit before the statute of limitations (SOL) has expired. After the SOL has expired, the court loses jurisdiction to hear your claim, and it will be lost forever! Refund claims based on the denial or reduction of a Section 1603 cash grant are subject to a six year statute of limitations period. See 28 USC § 2501; Reoforce, Inc. v. United States, 853 F.3d 1249, 1264 (Fed. Cir. 2017). There is no “equitable tolling” of the SOL, so regardless of the reason for your failure to file within the six year SOL period, your refund claim will be lost forever.

The clock begins to run on the six year SOL period when the claim “accrues”; that is, when “all the events have occurred that fix the alleged liability of the government and entitle the claimant to institute an action.” Ingrum v. United States, 560 F.3d 1311, 1314 (Fed. Cir. 2009). In the context of a Section 1603 cash grant refund claim, that period likely began on the date that the Treasury Department paid to you a cash grant lower than what you sought in the application.

Act now, or forever hold your peace! If you received a Section 1603 cash grant for an amount less than you applied, seriously consider filing a refund suit in the Court of Federal Claims immediately.

© 2022 McDermott Will & EmeryNational Law Review, Volume VIII, Number 129
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About this Author

Kevin Spencer, McDermott Will & Emery LLP , Tax Litigation Attorney
Partner

Kevin Spencer focuses his practice on tax controversy issues. Kevin represents clients in complicated tax disputes in court and before the Internal Revenue Service (IRS) at the IRS Appeals and Examination divisions.

 

In addition to his tax controversy practice, Kevin has broad experience advising clients on various tax issues, including tax accounting, employment and reasonable compensation, civil and criminal tax penalties, IRS procedures, reportable transactions and tax shelters, renewable energy, state and local tax, and private client matters. After earning his Master of...

202-756-8203
Philip Tingle Tax Attorney McDermott Will & Emery
Partner

Philip (Phil) Tingle represents energy companies such as utilities, independent power producers and financial institutions on a wide range of energy tax-related matters. He is the global head of the Firm's Energy Advisory Practice Group.

Phil provides advice regarding all aspects of renewable-energy projects, including tax equity structures, refinancings, acquisitions and dispositions, restructurings and workouts. He has extensive experience with the production tax credit and with the application of renewable credits to new technologies....

305-347-6536
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