MARRERO – Solar panel customers are suing the state for allegedly violating their constitutional
rights when it imposed a cap on refundable solar tax credits in July 2015 and
denied claims for systems purchased before the cap went into effect.
In 2015, the state legislature sliced tax credits in response to a purported
$2 billion budget deficit. It imposed a cap of $10 million per year on the
solar tax credits through 2017. The cap drops to $5 million per year for the 2017-2018
In July 2016, the state Department of Revenue acknowledged
it had already reached the cap to pay claims on purchased systems through the end
of Dec. 31, 2017, writing, “Consumers purchasing residential solar energy
systems from this point forward should not expect to receive tax credits from
New Orleans Attorney Larry Centola filed the lawsuit on Sept. 9, requesting
certification of a class action against the Louisiana Department of Revenue for
refusing to pay more than 1,000 homeowners the credit for which they were
Before the tax credit went into effect in July 2015, thousands of Louisiana
residents purchased solar panels for their homes. The state promised them a
tax credit equal to 50 percent of the purchase price that could be combined with
the federal solar tax credit of 30 percent. The Louisiana legislature retroactively
applied the cap to the solar tax credit and denied credits to homeowners, however. Centola is
fighting to have the retroactive cap declared unconstitutional under property laws.
Part of the new law reads, “Beginning in Fiscal Year 2015-2016, the maximum
amount of tax credits for purchased systems which may be granted by the
department on any return, regardless of tax year, shall be as follows: for tax
credits claimed on returns filed on or after July 1, 2015, and before July 1,
2016, no more than ten million dollars of tax credits shall be granted.”
The court complaint alleges the language of the modified law harms consumers because it addresses
the date consumers file their tax returns rather than the date the solar panels
were purchased. Consumers who purchased systems for the first half of 2015 were
doing so prior to the law going into effect, but they could not possibly
file tax returns for their purchase until 2016. Consequently, the language of
the law places the cap on consumers who purchased systems before the law
existed, the suit claims.
“The right to the tax credit attaches
once a consumer puts the panels on their homes," Centola told The
Louisiana Record. "The people who put their panels (up) had that right when putting the panels on the house. The state can’t take that
right away. In our view, it is clear it was unconstitutional. The amount these
consumers could be owed is north of $10 million.”
Centola said he believes the motivation for the state to cap the tax credit was that companies were "possibly abusing the tax
He explained the tax credit offered 50 percent credits to a system up
to $25,000. Some of the systems solar companies were installing weren’t worth
that much, but they were fraudulently valuing them at the maximum amount.
information is that (the solar companies’) profit was very large," he said. "The legislature
was frustrated by a few bad apples spoiling the bunch so the legislature put a
tax cap on credits. Our message to them is that it’s not fair to injure the
consumers when the people you were going after were the solar companies."
Centola explained a lot of Louisiana consumers signed
up for one-year interest-free loans for their solar systems because the government didn’t have a cap at
the time they signed up. He said consumers now are faced with economic hardships
they don’t know how to cure.
“Here we are a year later and they don’t have the $12,500
from the state and their loans will
begin accruing 19 percent interest because (the) interest-free time period is about
to run out.”
In addition to the loss from the tax credits,
consumers have alleged that solar companies are still misrepresenting that the tax
credits are still guaranteed. Centola is considering filing a second lawsuit against
these companies to prevent further harm to consumers.
Centola said his firm is filing a motion to certify
the class and the next step will be to request the district court to declare
the cap unconstitutional.
“We are hoping
the lawsuit forces the state to pay the tax credit due to these people who
purchased the solar system prior to effective date," Centola said. "Our lawsuit has gotten the
attention of some state officials and we are looking forward to working with
them to get a resolution that is beneficial. People are frustrated, people are angry; we are
hoping our lawsuit is the vehicle for the state to right a wrong.”