Information Reporting

Federal Tax Law

References are to Sections of the Internal Revenue Code

Payments made by host to IPP (Independent Power Producer) for the sale of electricity

• Assume payor is engaged in a trade or business
• Assume payments are $600 or more annually
• Assume IPP is not a corporation*
  • Electricity is property and as such the sale of property of this nature is NOT subject to informational reporting*

Payments made by IPP to host for use of property

• Assume IPP is engaged in a trade or business
• Assume payments are $600 or more annually
• Assume host is NOT a corporation*
  • Rents are subject to informational reporting via IRS Form 1099-MISC.

Payments received by IPP from the sale of SRECs (solar renewable energy certificates)

• Assume purchaser is engaged in a trade or business as a public utility
• Assume payments are $600 or more annually
• Assume IPP is NOT a corporation*
  • SRECs are property and as such the sale of which are not subject to informational reporting.
  • However, if the sale is arranged by the IPP’s broker the broker may be required to report the sale to IPP via Form 1099-B.  Section 6045.
  • Exempt recipients as set forth under Treasury Regulation Section 1.6045-1(c)(3)(i) may include a dealer in securities or commodities that is registered under federal or state law.
    • If SRECs are registered by IPP to trade on an exchange (i.e. PJM GATTs) then the IPP may be an exempt recipient

* For transactions taking place prior to 2012.  For transactions occurring after 2011, the rules apply to all recipient types and with respect to property transactions (however, see proposed federal legislation to repeal post 2011 changes).