Architectural firms in charge of the design of public schools, government and municipal buildings are eligible to claim the EPAct §179D tax deduction for sustainable design. This deduction was part of the Energy Policy Act of 2005 and was intended as an incentive for architects to incorporate energy-efficient building components in their designs. Until recently, firms were limited by a three-year rolling statute to claim the deduction on amended tax returns.

However, in January 2011, the IRS issued Revenue Procedure 2011-14 that provided an alternative accounting method. Rather than amending tax returns, architectural firms that have not previously taken the deduction may go back as far as 2006 and claim the deduction on their current year’s return using a Form 3115. A certification report and allocation letter must be filed with the Form 3115.

In most cases, claiming the §179D deduction on a Form 3115 is the preferred method. However, if a firm has already claimed the deduction on amended returns, their accounting method is established and should remain the same. For more information on the EPAct §179D tax deduction, please contact me at chris.henderson@sourcecorptax.com.