GSA dangled tax break before contractors, but asked for a piece

Rep. Charles Boustany, R-La. Rep. Charles Boustany, R-La. Harry Hamburg/AP

For seven months in 2011, the General Services Administration offered to give a tax break to contractors that made federal buildings more energy efficient. The agency, however, wanted a little something in return, the Associated Press reported Thursday.

From May 18 to Dec. 23, GSA told contractors they would receive a tax deduction for environmentally friendly building enhancements, but only if they qualified and wrote the agency a check for 19 percent of the value, according to AP. The offer raised concern on Capitol Hill over whether it is legal for GSA to try to raise money without congressional approval.

Rep. Charles Boustany, R-La., House Ways and Means Committee oversight panel chairman, announced his intent to investigate the allegations on Thursday. He sent letters to 17 agencies and Cabinet-level departments, including GSA, asking if they had similar policies, according to AP.

The policy’s giveback requirement was dropped after “basically, no one had taken part in it,” GSA spokesman Adam Elkington told AP. In the initial letter to contractors, GSA’s building operations division director, Patrick Fee, said the agency would use the revenue “to invest in additional energy-efficient projects.”

AP reported the proposal fell under the definition of a 179D deduction, established in 2005 to encourage energy-efficient buildings. Under the terms of the tax code, if the federal, state or local government owns a building that qualifies as energy efficient, they are allowed to pass the deduction to the entity they consider most responsible for the design.

Elkington told AP that agency officials believe the policy was legal. He cited a separate law that allows money "from rebates or other cash incentives related to energy savings" to go into a government building management fund and said that while the law does not specifically allow agencies to request paybacks from the energy tax deduction, the Internal Revenue Service has not placed limits on how agencies go about granting the deduction.

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