Hatch continues green energy programs inquiry

Senate Finance Committee Chairman Orrin Hatch (R-UT) called for additional information into the use and administration of Section 1603 cash grants and energy tax credits in letters sent on Thursday to the Department of Treasury, the Internal Revenue Service (IRS) and the Treasury Inspector General for Tax Administration (TIGTA).

The Section 1603 program was created by the American Recovery and Reinvestment Act of 2009 as a means of subsidizing “green energy.” Taxpayers who made certain commercial investments in energy properties under the program could elect to receive a cash grant in lieu of claiming the energy investment tax credit. To date, the program has awarded approximately $25 billion in cash grants.

“While the program has undoubtedly funded legitimate projects throughout the country, it has also proven susceptible to misuse and fraud,” Hatch said in his letter to TIGTA Inspector General J. Russell George. “Despite TIGTA’s earlier recommendation, the Internal Revenue Service declined to establish an indicator on taxpayer accounts receiving Section 1603 cash grants. The IRS instead opted to extend its narrowly focused Compliance Initiative Project, and risks remain that the program is vulnerable to double-dipping and other abuses. Given the IRS’s limited work in this area, the extent that this is occurring is not fully known.”

Hatch requested information in March from the Treasury Department and the IRS concerning the safeguards and coordination strategies that the agencies had in place to review and award Section 1603 grants.

“Congress has an obligation to conduct rigorous oversight of how the Executive Branch spends taxpayer dollars,” Hatch said. “These programs have directed billions of dollars toward green energy projects, and taxpayers deserve nothing less than full transparency and accountability from the administration. I expect full cooperation from the agencies involved in administering this multibillion dollar grant program as we seek answers into how the funds were awarded.”

The review of the grant program comes after a 2013 TIGTA finding that the IRS had no system in place to catalogue the taxpayer accounts of entities receiving Section 1603 grants, which afforded recipients the opportunity to later amend tax returns and claim a tax credit in addition to the grant.