On June 1, 2009, the Internal Revenue Service (IRS) issued its guidance for the 30% consumer tax credit (up to $1500) for the purchase and installation of a 75-percent efficient biomass-burning stove.
In a letter to the IRS in February 2009, HPBA asked for specific guidance on a number of issues, but we are confident that this minimal guidance is sufficient. We understand that the IRS is not asking for further testing if a stove manufacturer has already self-certified using valid test data.
Some important points of the tax credit are:
- To be considered, a stove must use the burning of biomass fuel to heat a dwelling unit or to heat water for use in such a dwelling unit, and have a thermal efficiency rating of at least 75% as measured using a lower heating value;
- Installation is covered, as long as it is a requirement for the stove’s proper and safe functioning;
- This consumer tax credit is 30% (up to $1500) for the purchase and installation of a 75% efficient stove, and is available in both 2009 and 2010;
- The tax credit is an aggregate, i.e., the total $1500 can include other energy efficient items. For instance, if a consumer claims $900 on a new stove, then he will have $600 to purchase additional energy saving products in the same tax year;
- If a taxpayer uses the entire $1500 tax credit on a competing product then they cannot use it for a biomass stove in that same tax year;
- This credit applies only to existing principle residences;
- Manufacturers must provide a certificate of qualification for each product as required in the guidance which can be obtained for the customer to use;
- Taxpayers must retain the certification statement for tax recordkeeping purposes, but the certification is not required to be attached to the tax return;
- Prior purchases made between January 1, 2009, and June 1, 2009 are covered if the manufacturer offers a certificate of qualification for the product;
- If a manufacturer has documentation that a stove has already achieved the required efficiency rating, no further testing is required;
- The IRS has not stated that inserts are covered, or are not covered, but based on EPA’s practice of treating inserts and freestanding biomass stoves in a similar fashion, manufacturers may choose to include inserts.