The IRS is evaluating the negative tax implications of Value of Solar Tariffs (VOSTs). The issue came about because an Austin homeowner filed an Information Letter Request about VOSTs in Austin, which homeowners in the region are subject to instead of net-metering.
The Alliance for Solar Choice (TASC), an advocacy alliance for solar homes and businesses, said that VOSTs require that solar customers must sell all the power generated by their solar systems to the utility at a price the utility sets, which utilities can change on a yearly basis. At the same time they have to purchase all the electricity they need from the utility just like a homeowner without solar. Utilities generally support VOSTs over net-metering, TASC alleged.VOSTs can also carry more tax risk for homeowners. As such, VOSTs jeopardize a homeowner’s ability to claim the 30 percent federal investment tax credit (ITC), and can increase homeowners’ income taxes. That’s according to a legal memo from Skadden, Arps, Slate, Meagher & Flom.
In Austin homeowners can only be reimbursed for their solar power through a VOST agreement. Austin Energy implemented the VOST in October 2012, rescinding its net-metering program.
“VOST schemes expose unassuming homeowners to thousands of dollars in additional taxes,” said Bryan Miller, co-Chairman of TASC. “Austin can resolve this tax burden quickly and easily by making the VOST optional and giving homeowners the choice to utilize net metering alongside it.”
Under a net-metering program homeowners are paid or credited only for the solar power they put on the grid and not billed for the solar power their solar panels generate and that they use. They are still eligible for the ITC and other tax breaks under such offerings. TASC said that Austin Energy could reinstate net-metering alongside the VOST to address the tax problem.
The IRS will make a determination on the impact of VOSTs, which could have a nationwide impacts. TASC observed that 43 states have net metering policies in place. But in Texas there is no statewide policy on net-metering.Tweet