Congress is set to pass the AIM Act as part of the year-end spending package, it also includes a fix for PPP deductibility, Section 179D, deductions for business meals, and funding for school HVAC improvements.
Today Congress is set to pass the American Innovation and Manufacturing Act as part of a large package of bills and funding for FY2021. This is a huge win for the industry as it sets a timeframe for the phase-down on the production of HFCs and makes it less likely that additional states will need to pass their own HFC legislation or regulations.
Earlier this year the AIM Act was submitted as an amendment to a bipartisan energy package moving through the Senate, after objections by some Senators, the Environment and Public Works Committee solicited feedback from the industry (Read HARDI’s comments here) and other stakeholders and were able to develop a compromise that was announced last September.
The next step for the AIM Act is to be signed into law by President Trump, who the White House has signaled the President plans to sign in order to avoid a government shutdown. Starting next year HARDI and the rest of the industry will work with the incoming EPA Administrator and our contacts within the Stratospheric Protection Division, which currently regulates refrigerants under the Clean Air Act, to determine next steps in regulating how the different industries using hydrofluorocarbons will phase-down their use. President-elect Biden has chosen Michael Regan, North Carolina’s top environmental regulator to lead the EPA during the next administration, it was also rumored Mary Nichols the outgoing California Air Resources Board chair was a possible pick. Regan as North Carolina’s Department of Environmental Quality was one of the few states in the US Climate Alliance to not adopt any HFC rules in recent years. HARDI’s goal is to ensure enough HFCs are retained to meet future service needs for the installed base of air-conditioning and commercial refrigeration.
Due to the expected use of A2L refrigerants to replace current HFC refrigerants, HARDI is also finishing up our work with the International Code Council’s Fire Code Action Committee to submit a proposed change early next year regarding the storage of flammable gases, including A2L service gases. This change is one of the necessary steps to completing the phase-down of HFCs mandated by the AIM Act.
HARDI Government Affairs continues to look for feedback on how to help prepare the distribution industry for the transition to low-GWP refrigerants. Feel free to reach out to Alex Ayers (firstname.lastname@example.org) with any questions.
Additional HARDI priorities included in package:
In addition to the AIM Act, the year-end package included several HARDI priorities. A key fix in the COVID relief portion of the package allows businesses taking PPP funds to deduct the value of expenses paid with those funds. HARDI joined nearly 700 trade associations in pushing for the fix for PPP deductibility as part of the year-end package. With this fix any expenses paid with PPP funds can be deducted as business expenses on 2020 taxes. Additionally, the bill contained additional PPP funding and the opportunity for second-draw loans for businesses that have seen losses in revenue due to the pandemic. HARDI will update our PPP resources with more information as it becomes available.
Also included in the COVID relief portion of the bill is $82 billion in school funding, including funds meant for upgrades and repairs of HVAC equipment to better handle the coronavirus to help school reopen. We will share more information as more details on how this provision will be implemented in released.
Congressional tax writers included a package of tax changes that will benefit HARDI members. The first change is permanent extension of the Section 179D Commercial Buildings Energy Efficiency Tax Deduction. This deduction allows building owners to write off specified amounts per square foot for improvements to the buildings HVAC equipment, electrical systems, and envelope improvements. In previous Congresses this provision has been extended retroactively and was nearly impossible for building owners to plan for, the permanent extension of this tax provision provides an additional selling opportunity for HARDI members. The permanent extension also updates the efficiency standard required to qualify for the deduction and an inflation adjusted deduction value. It is unknown how this provision will interact with full expensing of HVAC equipment provisions through already existing small business expensing and Qualified Improvement Property.
A second tax change included in the COVID stimulus package is a return of the deduction for meals and entertainment. The provision was included as an attempt to increase spending at restaurants and entertainment venues as the economy returns to normal more people receive the coronavirus vaccine. The return of the deduction is temporary for 2021 and 2022 before returning to 50%.
We will continue to update you as we receive more information. Please reach out to Alex Ayers with any questions.