Solyndra and the IRS
The government gave the solar company individualized tax breaks.


Historically, Congress and the IRS have zealously patrolled dual-use systems, tightly restricting credits and depreciation deductions to the part of the device that actually produces electricity. In an extreme example, passive conservation methods, such as south-facing windows and “super-insulation,” get no tax credits at all, even though, if properly implemented, they generally make a lot more economic sense than solar panels. Without this kind of supervision, dual use encourages vendors to build projects that harvest tax credits, not energy.

But since Obama took office, the IRS has also issued private-letter rulings that allow curtain walls, a key structural component of the ubiquitous glass-cube office building, to qualify for energy credits if the walls incorporate solar-power features. Another ruling gave a solar-panel manufacturer extended tax credits for unspecified components of a solar-power roofing system on its own factory. Because of the IRS’s redaction, just who got these rulings is unknown. “Clean coal” and aspects of nuclear power also have received private-letter rulings.

Given the amount of redacted information, it is unclear why the IRS chose to improve Solyndra’s tax prospects. The transaction may have been purely a technical issue between Solyndra and the agency. Alternatively, it may be that the IRS executed a decision by the Department of Energy and Secretary Chu, who are taking on a greater role in issues relating to solar credits. Investigators should not ignore this aspect of the case.

— Lou Dolinar is a retired reporter for Newsday who was born on the Right side of the tracks in a Pennsylvania coal-mining town. 


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