Mike Murphy

The United States Senate and House of Representatives recently passed what has been commonly referred to as the “bailout package for Wall Street.” Only after its initial failure to pass muster in the House did most proponents rally around the newly titled “stimulus package,” realizing that something must be done, not just for Wall Street, but for Main Street - and, in a hurry.

What was done by the Senate was to add about $100 billion dollars in new tax breaks in an initiative to get the House support for the new version, now an $800 billion package; that swelled Secretary of Treasury Paulson’s simple three-page plan into more than 400 pages.

Fortunately, the HVAC lobby found itself in good stead, having in the recent past made a very good case for extending some of the tax credits of the Energy Policy Act of 2005.

The bottom line is that tax credits in the recently passed Emergency Economic Stabilization Act of 2008 (EESA) will help this industry’s residential and commercial markets. You will see extensions of expired and expiring tax incentives for renewable energy, energy-efficient building upgrades, and appliance and equipment purchases.

I, for one, am glad to see a little pork come our way. I would call it the bridge to somewhere. The HVACR industry has a tremendous impact on the lives of people - safety for the medically infirmed and elderly, energy savings opportunities that help our country reduce a dependence upon foreign energy sources and puts more money back in individuals’ pockets.

The general comfort and productivity that HVACR has afforded the American economy knows no equal. Areas of the country that were once nearly considered uninhabitable are now flourishing with people and businesses. The HVACR industry has been touted as one of the 20 most important technologies of the 20th Century.

People, this is good stuff. This industry deserves a few breaks - well, at least tax credits for your customers if not tax breaks for your businesses.

What follows is a good snapshot of the tax changes that might have an effect on your customers. These may help to frame their decision-making process and their desire to work with you. You can read a complete summary of the EESA at www.novoco.com.

GOOD NEWS FOR COMMERCIAL

• An extension of the Commercial Building Tax Deduction until 2013 that allows building owners to deduct up to $1.80 per square foot for buildings achieving a 50 percent energy savings over ANSI/ASHRAE/IESNA Standard 90.1-2001.

• An extension and modification of Qualified Green Building and Sustainable Design Project Bond through 2012. The bill extends the authority to issue qualified green building and sustainable design project bonds.

• A new 10 percent investment tax credit for combined heat and power systems and geothermal heat pumps. The bill allows business owners to use these credits to offset the alternative minimum tax (AMT).

GOOD NEWS FOR RESIDENTIAL

• A one-year extension through 2009 of residential tax credits (up to $500) for energy saving HVAC appliances.

• A new $2,000 tax credit for homeowners that install geothermal heat pumps until 2016.

• A one year extension through 2009 of the $2,000 homebuilders’ tax credit for the installation of high efficiency appliances, including HVAC, in new homes.

THAT'S WHAT I'M TALKING ABOUT

It’s about time the rubber and the road met. Energy is one of the top issues of discussion around American kitchen tables and corporate conference tables. It isn’t getting any cheaper. If not for the current financial crisis and the presidential election taking the spotlight on the evening news shows, everyone would be even more angry about the price at the pump, or the cost of heating their homes this winter. The extensions of tax credits which help homeowners and business owners take advantage of energy saving HVAC solutions is one of the bright spots that might help your business in the near future.

As to whether the new economic stimulus package passed by Congress will eventually ease fears in the financial market, only time will tell. In the meantime you may find a stimulus for your own business. During your sales calls you might want to mention the potential tax credits; your customers just might find another reason to say “yes.”

Murphy’s Law:Follow the money.

Publication date:10/20/2008