SECTION 6. CONTINUITY

REQUIREMENT

.01 Physical Work Test: Continuous Construction Test . A continuous program of construction involves continuing physical work of a significant nature (as described in section 4.02 of this notice). Whether a taxpayer maintains a continuous program of construction to satisfy the Continuity Requirement will be determined by the relevant facts and circumstances.

.02 Five Percent Safe Harbor: Contin- uous Efforts Test . Whether a taxpayer makes continuous efforts to advance towards completion of an energy property to satisfy the Continuity Requirement will be determined by the relevant facts and circumstances. Facts and circumstances indicating continuous efforts to advance towards completion of an energy property may include, but are not limited to:

(a) paying or incurring additional amounts included in the total cost of the energy property;

(b) entering into binding written contracts for the manufacture, construction, or production of components of property or for future work to construct the energy property;

(c) obtaining necessary permits; and (d) performing physical work of a significant nature (as described in section 4.02 of this notice). .03 Excusable Disruptions to Continu- ous Construction and Continuous Efforts Tests . Certain disruptions in a taxpayer’s continuous construction or continuous efforts to advance towards completion of an energy property that are beyond the taxpayer’s control will not be considered as indicating that a taxpayer has failed to satisfy the Continuity Requirement. However, these disruptions will not extend the Continuity Safe Harbor Deadline as provided in section 6.05 of this notice.

July 9, 2018 200 Bulletin No. 2018–28

The following is a non-exclusive list of construction disruptions that will not be considered as indicating that a taxpayer has failed to satisfy the Continuity Requirement:

(a) delays due to severe weather conditions;

(b) delays due to natural disasters; (c) delays in obtaining permits or licenses from federal, state, local, or Indian tribal governments, including, but not limited to, delays in obtaining permits or licenses from the Federal Energy Regulatory Commission (FERC), the Environmental Protection Agency (EPA), the Bureau of Land Management (BLM), and the Federal Aviation Agency (FAA);

(d) delays at the written request of a federal, state, local, or Indian tribal government regarding matters of public safety, security, or similar concerns;

(e) interconnection-related delays, such as those relating to the completion of construction on a new transmission or distribution line or necessary transmission or distribution upgrades to resolve grid congestion issues that may be associated with a project’s planned interconnection;

(f) delays in the manufacture of custom components;

(g) delays due to labor stoppages; (h) delays due to the inability to obtain specialized equipment of limited availability;

(i) delays due to the presence of endangered species;

(j) financing delays; and (k) delays due to supply shortages. .04 Timing of Excusable Disruption Determination . In the case of a single project comprised of a single energy property, whether an excusable disruption has occurred for purposes of the beginning of construction requirement of § 48 must be determined in the calendar year during which the energy property is placed in service. In the case of a single project comprised of multiple energy properties, whether an excusable disruption has occurred for purposes of the beginning of construction requirement of § 48 must be determined in the calendar year during which the last of multiple energy properties is placed in service.

.05 Continuity Safe Harbor: Deemed Satisfaction of Continuity Requirement . Except as provided in this section, if a

taxpayer places an energy property in service by the end of a calendar year that is no more than four calendar years after the calendar year during which construction of the energy property began (the Continuity Safe Harbor Deadline), the energy property will be considered to satisfy the Continuity Safe Harbor. The excusable disruption rules in section 6.03 do not apply for purposes of applying the Continuity Safe Harbor. However, if an energy property is not placed in service before the end of the fourth calendar year after the calendar year during which construction of the energy property began, whether the energy property satisfies the Continuity Requirement under either the Physical Work Test or the Five Percent Safe Harbor will be determined by the relevant facts and circumstances.

For example, if construction begins on an energy property on January 15, 2018, and the energy property is placed in service by December 31, 2022, the energy property will be considered to satisfy the Continuity Safe Harbor. If the energy property is not placed in service before January 1, 2023, whether the Continuity Requirement was satisfied will be determined by the relevant facts and circumstances.

Under section 48(a)(7), fiber-optic solar, qualified fuel cell, and qualified small wind energy property must be placed in service before January 1, 2024 to qualify for the ITC. Similarly, section 48(a)(6) reduces the ITC to 10 percent for any solar energy property placed in service after January 1, 2024. The Continuity Safe Harbor does not extend either of these deadlines.