Tips for Choosing a Specialty Tax Provider:
Questions To Ask When Assessing A Firm’s 179D Capabilities
As you begin your search for a firm to help you enhance your service offerings by providing 179D energy tax and cost segregation studies, there are several questions that you need to ask in order to protect your firm and ensure the highest quality of performance and compliance. Ask the firms you interview the following questions:
- How many years has your firm been performing EPAct studies?
- Is your firm a licensed engineering firm? What is your license number?
- What are your Errors & Omissions insurance limits and who is your carrier?
- What credentials does your staff possess to perform this type of technical work?
- Does your firm actually send a licensed engineer with expertise in lighting, HVAC, and envelope systems to verify the specifications modeled as required by the IRS?
- Do you recognize yourself as a non-signing tax preparer? Are you Circular 230 compliant?
- Does your firm have any experience with IRS audits? How do you handle audits?
- What is your fee for an initial feasibility analysis?
- In general, how do you bill?
- In the event that the IRS disallows the deduction, will you rebate the fee?
How many years has your firm been performing EPAct studies?
Since the Energy Policy Act of 2005 (EPAct) was enacted, ETS has been at the forefront of the energy accreditation and related tax benefits field. Since inception of the EPAct of 2005, ETS has performed more than 9,000 Section 179D Energy Tax Studies. Our CEO, Julio Gonzalez, has worked closely with both the American Institute of Architects’ (AIA) Executive Leadership, the United States Green Building Council Executive Leadership, and the Internal Revenue Service (IRS) to give clarity and awareness to the engineering processes involved in certification of public and private buildings. His goal has been to also bring awareness to this tax benefit on a nationwide scale.
Handling more than 100 certifications every month, we have perfected the process by working closely with the IRS on a regular basis. We fully understand the state tax benefit and federal certification process. Our precise documentation meets and exceeds the standards required by the Department of Energy and the IRS and consistently stands up to the toughest scrutiny.
Is your firm a licensed engineering firm? What is your license number?
ETS is a licensed engineering firm (Professional Engineering License No. 27824) – not a consulting firm that simply hires outside engineers as needed on a contractor basis. EPAct clearly states that energy and cost segregation studies should only be completed by licensed engineering firms with licensed engineers. The fact is that only a licensed engineering firm should be signing the final reports. To the best of our knowledge, we are one of the only firms in the country that is a licensed engineering firm with specific engineering licenses in the many jurisdictions where we work, which is an IRS requirement and compliance issue. Section 179D provisions mandate that the licensed engineer performing the work sign their name to the certificate, and the engineer be licensed in the jurisdiction of the property being analyzed.
What are your Errors & Omissions insurance limits and who is your carrier?
All of our reports are fully insured. ETS maintains $3 million in Errors & Omission (E&O) insurance through Lloyds of London, which is only possible because we are a licensed engineering firm with full time, licensed and registered engineers on staff. The E&O that protects you and your firm is tied to the license number of the firm that signs the report.
What credentials does your staff possess to perform this type of technical work?
Our team of staff engineers are disciplined in structural, mechanical, and electrical engineering, allowing ETS to be uniquely positioned to have expertise in all facets of modeling. We have engineers on staff who are licensed in each of the states where we perform energy studies and certifications. Our engineering professionals have over 100 years of combined experience in energy modeling. The ETS engagement team includes multi-disciplinary professionals such as Professional Engineers (PE), LEED Accredited Professionals (AP), Certified Public Accountants (CPA), and architectural professionals.
Our LEED AP designation strengthens and adds depth to the ETS experience and qualifications under EPAct while supporting energy efficiencies under LEED. We offer a measurable dynamic to increase your return on investment and improve efficiencies whether through LEED or through additional creative energy efficiencies – all with the goal of reducing operating expenses and obtaining additional tax deductions or credits.
This unique combination of experience and professional talent has enabled ETS to develop unique ways to identify and qualify commercial properties.
Does your firm actually send a licensed engineer with expertise in lighting, HVAC, and envelope systems to verify the specifications modeled as required by the IRS?
We keep ASHRAE-certified engineers on staff because the quality of the people completing your certification is directly related to the number of EPAct deductions obtained. In one example, ETS was asked to certify a building that was heated by an old city-wide centralized steam system. 99% of other engineers would have claimed that this building would fail certification. ETS was able to certify this building for the full amount possible solely because we were able to reclassify the basis of the building and provide an independent report that exceeded the IRS requirements.
Certifying a building is a complex task when you remember that it is more than just looking at wattage per square foot or the EER (Energy Efficacy Ratio) of the HVAC system. The building’s orientation to the sun, elevation, exterior wall covering, and even the shading provided by trees and other buildings can affect the final results. No other firm analyzes all of these details like ETS does; therefore, no other firms get the highest results or provide the support that ETS does.
Do you recognize yourself as a non-signing tax preparer? Are you Circular 230 compliant?
Circular 230 was introduced several years ago to hold CPAs accountable for every item in a tax return they sign to lower questionable deductions. This standard holds the CPA liable for every item on a client’s tax return in which he signs. In order to comply with IRS Codes 2006.52 and 2008.40, which allows a tax preparer to sign off on a tax return in which an engineering study is submitted to the IRS, we must comply with IRS Circular 230 requirements. As such, we maintain a professional license as an engineering firm in each of the jurisdictions where we work and carry the necessary insurance required by our CPA partners to allow them to sign their clients’ tax returns submitted to the IRS.
We will not put our clients or their CPAs at risk with Circular 230. Our engineers are fully compliant and well-versed in IRS Circular 230 – FIN Standards. It is important to remember that at the end of the day, ETS provides an engineering study that is used for 179D tax deductions – EPAct certifications have both tax and engineering components. With this in mind, ETS recognizes that we are considered non-signing tax preparers, and we remain fully Circular 230 compliant as a result.
Does your firm have any experience with IRS audits? How do you handle audits?
To date, ETS has had a handful of studies audited and the result was NO change on any one of them. We meticulously follow IRS guidelines and go beyond the standards and basic requirements as published. Should any clients undergo an IRS audit for any of the engineering and energy studies performed by ETS, we will supply full warranty and audit support. Audit defense services are included in our fee structure at no additional charge. Additionally, ETS insures each report with Lloyds of London, who recognizes ETS’ expertise to allow 179D coverage.
What is your fee for an initial feasibility analysis?
ETS truly strives to create a win-win situation with every CPA partner. Therefore, we have elected not to charge our clients for the time and labor involved in the initial analysis. We offer a complimentary cost-benefit analysis to determine whether or not the study makes economic sense to the client as well as to our firm. We request ten basic property specs and deliver our complimentary analysis within 48 hours.
In general, how do you bill?
ETS collects half upon engagement as a retainer (after review of feasibility analysis) and the remainder upon certification issuance. As a general rule, for consulting projects associated with Federal income tax items (such as 179D), we do not offer our services under a contingency fee arrangement unless the given situation meets one of the exceptions to the contingency fee rules under Circular 230. We understand the compliance demands of Circular 230 and do not want to risk putting our clients or CPAs into a penalty situation for failing to comply.
In the event that the IRS disallows the deduction, will you rebate the fee?
A direct rebate based upon the success or failure of the project is barred by Circular 230. See Section 10.27(c)(1) – “A contingent fee also includes any fee arrangement in which the practitioner will reimburse the client for all or a portion of the client’s fee in the event that a position taken on a tax return or other filing is challenged by the Internal Revenue Service or is not sustained, whether pursuant to an indemnity agreement, a guarantee, rescission rights, or any other arrangement with a similar effect.”
ETS has an Advisory Board
Ten of the top 100 CPAs in the country sit on our Advisory Board. This panel of experts provides guidance and counsel related to all tax issues and issues that involve the IRS. ETS has integrated some of the finest accounting minds to assist us in ensuring that our engineering reports meet and exceed the IRS’s guidelines.
So, why SHOULD you choose ETS?
We are truly committed to helping you. The key to our CPA relationships is that we strive to be strategic partners, NOT vendors. We help our CPA firms utilize our services to not only serve their existing clients and relationships, but to grow their practices, increase their revenues, and gain a competitive edge in the marketplace. Critical to our relationship with regional CPA firms is quality service and reciprocity. We work with the American Institute of Architects (AIA) and the United States Green Building Council (USGBC) to maintain dominance in the energy tax arena and to advocate more green energy benefits – for the planet and for our partners’ pocketbooks. ETS serves as a business development provider for our partner CPA firms. We participate in joint marketing campaigns and introduce our partners to our existing contacts. We want to help you grow your practice!
Quality Service | Thoroughness | Experience | Licensed Engineers |
Circular 230 Compliant | Legal | Insured