Dealing with Hacienda

Solar Blog Entry - Dealing with Hacienda

Dealing with the Puerto Rico tax office Hacienda is an important element of an alternative energy installation. The tax credit for tax year 2009 is 50%, which we expect to qualify for.

It was important for us for our file to be opened in 2009, as many of the required documents took time to obtain and were not finally submitted until early January 2010. All of these documents need to be submitted in person to office 624B of the Divisíon de Opiniones Administrativas y Legislación del Negociado de Asistencia Contributiva y Consultas Especializada (that mouthful translates roughly to the Division of Administrative Opinions and Legislation of the Office of Tax Assistance and Specialized Consultations). Some are submitted by the installer and others by the customer, as I summarize below.

1. First, they require demonstration that the taxpayer/customer has no debts to any government office or agency. For this, they require Certificaciones Negativas de Deuda, or Negative Debt Certificates from ...

- Department of Hacienda (tax office)

This can be obtained from the local Hacienda office or online from http://pr.gov.

- Centro de Recaudaciín de Ingresos Municipales, or CRIM (Municiple Property Tax Office), which refer to property taxes.

This must be obtained from the local CRIM office (have fun :-)).

- Departamento de Trabajo y Recursos Humanos (Department of Labor and Human Resources), which requires communicating with the central office in San Juan but can be carried out via FAX. This is automatic for a home installation, if you are not a business owner and have no relationship with this department.

We discovered that our local office in Arecibo could not provide this, and we called the main office in San Juan at 787-754-5818 who asked us to FAX the required information (photocopy of my drivers license and social security number along with an address of where to send the certification) to 787-281-5649.

- Corporación del Fondo del Seguro del Estado (State Insurance Fund Corporation), which, for a modest annual fee, provides accident and injury coverage for home and business owners who contract work on their property.

We went to our local Fondo office for this certification.

- ASUME, which is the office that monitors legal obligations such as child support and alimony payments.

We received this certification at the local ASUME office, which was the most efficient of all the offices we visited.

- and if the installation is for a business, such certifications must be obtained from its investors and partners who own over 25% of the company's shares or represent over 25% of its operations.

Happily, we did not have to do this one.

2. Second, you have to deliver certification of tax filings, which are obtained from Hacienda. If there is a partnership involved, such as for a business with investors and/or partners, they must also obtain these certifications.

3. The Installer should be responsible to submit the Photovoltaic Equipment Certifications (Certificados de de Equipos Fotovoltaicos) filed by the Administración de Asuntos Energéticos (Energy Issues Administration of Hacienda) (AAE).

4. The Installer Certificate must be provided, same as that issued by the AAE. This is also responsibility of the Installer.

5. The Installer should submit a "Design and Installation of Photovoltaic System" certificate, again issued by the AAE.

6. A copy of the Commercial Invoice from the Installer (i.e. the receipt for the installation, including both parts and labor, from the Installer to the Customer).

7. Any other document the petitioner considers relevant.

All of these documents must be delivered within a period of 60 days. Our process began December 14 and ended on January 25. Once delivered, Hacienda evaluates the case and submits a determination of whether the project qualifies for the tax credit. We are currently awaiting that determination, which we hope to have in time for filing our taxes in April.

My next post will summarize the first month of performance of our photovoltaic system.

tax credits for Puerto Rico solar power installations

Prior to the passage of law 248, the Puerto Rico legislature created the Administración de Asuntos Energéticos (AAE) to monitor and regulate solar electricity installations in Puerto Rico.

I read law 248 of 2008 (in Spanish) last night. There are a few useful points to highlight.

1. The 75% credit was during Puerto Rico fiscal years 2007-2008 and 2008-2009.

2. The 50% credit applies for FYs 2009-2010 and 2010-2011.

3. After FY2010-2011, the tax credit is 25%, and this seems to extend for an indefinite period.

4. The credit applies to both the equipment and installation, although it also applies only to equipment that carries 5 years or more warranty.

5. The equipment must be installed and certified by solar-licensed electricians and engineers.

6. The tax credit can be carried over for up to 10 years, so if for some reason you cannot receive some or all of the credit in one year, you can carry it over to the next, for up to 10 maximum. This may be important, as the total available in tax credits for any given FY is limited.

7. The tax credit can be transferred once.

8. Apparently, the documents that are required for the tax credits must be submitted with one's tax returns for 6 years following the installation.

9. The sales tax (the famous IVU) does not apply to the acquisition of solar electric equipment.

Later, I will detail the process of applying for the tax credit.

My Solar Home

Web resources:
English:
Puerto Rico Incentives for Renewables and Efficiency

Español
Ley 248 del 10 de agosto de 2008
Carta Circular Rentas Internas 08-13
Resumen de ley 248

Introduction
In August of this year (2008) the government of Puerto Rico announced tax incentives for the installation of solar energy systems in homes and businesses. These include both electricity and water heaters. They pay up to 75% of the cost through June 30, 2009, 50% during the following year, and 25% thereafter. Costs that exceed the taxpayer's tax liability can be carried over to following years, up to 10 years.

My goal is to install a grid-tied solar electricity system to provide for most of my house most of the time. I hope to reduce my electricity use by 1/2, and I hope to sell a little back to the utility (at 10¢/kW-h). Here in Puerto Rico we have adequate to good sun all year, so this should work well.

My home has a solar water heater, and I have been considering solar panels since we began building in 2002. This tax incentive has inspired me to move forward, though I have been studying the options for some time. An internet search identified a handful of solar energy retailers in Puerto Rico, and I send out several e-mail and webform inquiries. I received a response from PRGreenTech.com, and most of what follows came from that communication. I also have visited Casa Solar, PR in Bayamón.

Julio Correa, of PR Green Tech, visited my home on November 21. I was concerned by the fact that there is a tree-covered hill to the east and many afternoons are cloudy, both of which may limit sun exposure, but Correa did not feel these were such important concerns. Sun will be on the panels by between 8:30 and 9:00, even in mid-winter, when the shading is worst, and we should typically have 4-6 hours of full sun. The fact that Puerto Rico is 18N latitude also helps.

Correa works with 48 V DC systems, and the panels are 195 W, 24 V. Rather than connecting to the charging system in pairs, producing 48 V in full sun, he uses the panels in sets of 3, which will produce 48 V even in some degree of shade. The panels are polycrystalline, which, though they are less efficient, have two advantages: 1. they are more durable, and 2. (I understand that) their "turn-on" light level is lower than for monocrystalline (I have to confirm this).

My house has a few items that produce heavy loads. We will exclude the one air conditioner, which will continue to connect directly to the grid. It is a 18,000 BTU/h unit, which is rated for 1950 W. That excluded, we still have the following:
1. A water (deep well) pump. We always use water from a 600 Ga reservoir, which is supplied from the aqueduct authority. This is because water supplies here are quite unreliable (we recently had 2+ weeks with no water during the day, and only a trickle at night). This pump is rated for 1500 W.
2. A microwave oven. Correa says these are among the biggest problems for solar inverters.
3. A toaster oven.
4. Blowdrier
Happily, our oven and cloths drier are both connected to gas. The solar water heater has an electrical backup, but if we are using that, it means there hasn't been sun for a while, so we will be running off the grid in any case.

In future blog posts, I will describe the process by which we choose our solar energy system. These are divided up as follows:
1. Total power output of the panels.
2. Specifics of the charging system (voltage regulation)
3. Battery capacity (in A-h), costs etc. (batteries are not covered by the tax incentive law, so cost is critical)
4. Inverter capacity
5. Grid-tie system
6. Questions:
- At what point in the battery depletion do we switch off the solar powered system and go to grid?
- How much solar panel capacity is needed to provide sufficient charge to the batteries to run until charging re-commences?
- How much energy consumption (A-h) will we need, and how to we convert that throughout the system?
- How do we make sure the system is expandable, so we can add capacity later for running the air conditioner?