By Jessica Salerno, OSCPA senior content manager
Many organizations are working toward improved energy efficiency in buildings, said one CPA, but getting tax credits and incentives for those efforts can be a complicated matter for accountants.
“We all talk about energy efficiency, but it comes at a cost,” said Karen Koch, CPA, partner at Bedford Cost Segregation. “How do you help your clients fund energy efficient projects? And how does that ultimately change the bottom line and also lower their operating costs every day thereafter?”
Koch will speak about “Application of Tax Incentives for Cash Flow Related to Energy” at OSCPA’s June 22 Real Estate and Construction Mini-Conference.
“Holistically, we're talking about energy efficiency in buildings,” Koch said. “And to be able to ultimately get to the point where the CPA has all the documentation and everything they need to be able to deliver the benefit when they file the tax return, it has to go through a process.”
One of the biggest roadblocks CPAs run into when looking to get credit for their clients is not being involved in the building process from the very beginning. Although they aren’t engineers or architects, accountants will be able to inform the team of certain qualifications that must be meant in the building to receive the maximum benefit.
“The biggest questions CPAs are asking me is ‘Why did my client not qualify for this deduction or for this credit?’” Koch said. “And the reason is because that construction started with the wrong design. In other words, there wasn't an emphasis to design for energy efficiency.”
Koch said properties are built based on state and local energy codes, not the criteria to qualify for a tax incentive. Where those areas don’t match up can cause confusion and sometimes frustration after the fact when certain aspects can’t be changed.
Understanding this area can be beneficial for CPAs long-term, she said, as in the future there will continue to be a greater emphasis on energy efficiency and alternative energy in buildings.
“It's a new area that the accounting industry hasn't been in,” Koch said. “It's an opportunity to drive revenue for the firm and it's an opportunity to add value in real tax dollars that reduce tax liability for their clients. So, it's a win-win for all sides.”
Register for the Real Estate and Construction Mini-Conference on June 22 now.