Some things defy comprehension
I haven’t witnessed something this absurd in a long time. Here is the situation, in a nutshell.
In 2009, the U.S. Department of Energy (DOE) announced federal stimulus funds for smart grid development. For the most part, that money has not yet stimulated the development of the smart grid because it has not yet been awarded. One of the primary reasons for the delay is a decision on whether the stimulus funds will be considered taxable income to the recipients.
In case you missed it, I’ll rephrase it a different way: potential recipients of federal stimulus money that is made available through the U.S. Department of the Treasury are waiting to see how much of those funds will need to be repaid to the same agency that is funding them. Huh? We are all taxpayers and none of us want to see tax money wasted. Federal paper chases are, perhaps, the largest waste of taxpayer money.
Consider this example: Company A is awarded a stimulus grant of $30 million, but won’t receive it until there is resolution about if that $30 million will be taxed. If that company has an effective tax rate of 30 percent, it would mean their effective stimulus grant would be $21 million instead of the $30 million that was awarded.
Why on earth would the government award $30 million and then ask for $9 million of it back in taxes? It makes no sense and seems like a very complex way of making an award of $21 million. If they only wanted to award $21 million, then they should have done that and avoided these prolonged negotiations that are forestalling the development of the smart grid.
And, if it is ultimately decided that these funds are taxable, potential recipients may back away completely, or a significant paper chase may follow as tax forms are filed, then audited, then disputed, then litigated, then appealed, then negotiated, etc., etc., etc. Are the stimulus funds meant to stimulate work at the DOE, the Internal Revenue Service or on the smart grid?
We can only guess what kind of bureaucratic morass of misaligned missions converged to create this conundrum of incompetence, but this analyst believes it all to be remarkably silly.
I enjoy discussing industry issues with you. Please feel free to share your thoughts in the comments section, or reach me directly at bthielbar@energycentral.com
Comments
(DOE) The stimulus flow .........
Bart, very good reporting and 100% true about the renewable stimulus program. I represent a renewable project developer being impacted by the effects of Govt. contracting and stimulus allocation. In the 1st qtr 2009 we met with DOE chiefs and were told they would need to hire hundreds of staffers to deploy the $billions. Now seems the IRS wants to workout the tax/no tax question. In my industry there are scads of gung ho, get it done, federal green project stories that are being cancelled or delayed in huge numbers. Insiders tell us the Govt. cannot find the money. What? Interesting how your story is about Govt looking for revenue on the back of green stimulus, tax payer money, still not delivered to pirvate sector project services to the Fed. This situation is cratering so many small businesses that depend on project business. My people would rejoice in a small $10ml project and avert unemployement in 30 days; and they would be willing to think about healthcare at that point. Misdirection is rampant in Washington. Keep up the writings; we have to believe somehting will change. JF-Houston
Why stimulua anyway?
Maybe private business has no business with their hand out in the first place... Why does this industry believe the only way they can develop their technology is to get corporate wellfare funds?
Do it the old fashioned way and earn it... go get VC money if your idea is so great... the market for capitalization will flow to the deserving ventures... otherwise it is a 'Malinvestment'
tough lesson