The IRS has released Notice 2021-05, which extends the Continuity Safe Harbor detailed in Notice 2018-59 from 4 years to 10 years for offshore wind projects and renewable energy projects constructed on federal land. As such, federal tax credits may be claimed on such projects if construction is completed within 10 years after the year construction begins. The IRS released Notice 2021-05 in response to comments received from Congress and project stakeholders highlighting the possibly for significant delays on projects constructed offshore or on federal land, such as stringent permitting requirements and lengthy engineering and construction timelines.
Notice 2021-05 follows the latest Continuity Safe Harbor extension provided in Notice 2020-41, which, in response to development delays caused by COVID-19, extended the Continuity Safe Harbor from 4 years to 5 years for projects that began construction in 2016 or 2017. Notably, Notice 2021-05 does not affect the Continuity Safe Harbor for solar projects, which must still be placed in service before January 1, 2026 to claim any federal tax credit greater than 10%.
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