© 2008 Door & Access
Systems
Publish Date: Winter 2008
Author: Tom Wadsworth
Pages 38-40
$700 Billion Bailout Benefits Garage Door Sales
Energy Tax Credits Extended for 2009
By Tom Wadsworth, Editor
Are you upset about the $700 billion government bailout for
the giant banks? As it turns out, the bailout bill gives
incentives to homeowners to buy insulated garage doors
in 2009.
This is no hoax. It’s official. Here are the facts.
The Headline Behind the Headlines
On Oct. 3, 2008, the world watched as President Bush signed
into law the so-called $700 Billion Bailout Bill (H.R. 1424).
At the time, though, everyone was focused on the bill’s
massive Treasury fund created to purchase failing bank assets.
Within a few weeks, DASMA learned that this bill included
tax credits to homeowners who purchase qualifying insulated
garage
doors in 2009.
Here’s how the tax credits were resurrected. While
the bill was being developed, Congress tacked on the Energy
Improvement
and Extension Act of 2008, extending the Energy Policy Act
of 2005 that, among many other provisions, had applied to
garage door purchases in 2006 and 2007.
DASMA Gets Confirmation
On Nov. 11, 2008, DASMA Legal Counsel Naomi Angel confirmed
this news with a key contact at the Internal Revenue Service.
The IRS Office for Passthroughs and Special Industries confirmed
that the rules that applied to qualifying insulated garage
door purchases in 2006 and 2007 now apply to purchases in
2009.
Energy Star, a joint program of the U.S. Environmental Protection
Agency and the U.S. Department of Energy, has also confirmed
that the bill applies to garage doors. The Energy Star Web
site (www.energystar.gov) responds affirmatively to the specific
question, “Are garage doors covered by the federal
tax credit?”
New Details for 2009
In 2007, this magazine reported the critical details of the
tax credit. Those details are identified below, along with
the new information for 2009.
- The new tax credits are available for qualifying garage
door purchases “placed in service” from Jan.
1, 2009, through Dec. 31, 2009. Garage door purchases
made in 2008 are
not eligible for the tax credit.
- The maximum amount that a taxpayer may claim from all
of these tax credits combined is $500 over the lifetime
of the
tax credit (2006, 2007, and 2009).
The tax credits also apply to exterior doors, insulation,
replacement windows, non-solar water heaters, and certain
high efficiency
heating and cooling equipment. If a taxpayer already
claimed the full $500 credit in 2006-2007, no further
tax credits
are available. However, since the 2006-2007 tax credits
were not
well publicized, it’s likely that millions of Americans
have not yet taken advantage of the credit.
A Big Incentive to Buy
Here’s the good news. Garage door dealers essentially
have the U.S. government offering financial incentives
to homeowners to buy qualifying garage doors.
Garage door dealers can offer customers a significant
reason to buy qualifying insulated residential garage
doors—a
tax credit. Tax credits are more valuable than an equivalent
tax deduction because a tax credit reduces tax dollar-for-dollar,
while a deduction only decreases the amount of income
that is taxed.
How to Identify an Eligible Garage Door
To be eligible for the tax credit, the purchased garage
door must meet all of the following criteria:
- The door must be an insulated residential garage door.
- It must be installed on an insulated garage.
- The door must have a U-factor equal to or less than
0.35, even if the door contains glazing. (See below.)
- The door perimeter must have a means to control air
infiltration.
- The door must be expected to remain in service for
at least five years.
- The garage must be part of the taxpayer’s principal
U.S. residence.
- Dealers should provide homeowners with a Manufacturer’s
Certification statement (see below) and a breakdown
of the material and labor costs.
The U-Factor Factor
The U-factor of a particular garage door must be determined
by testing using ANSI/DASMA 105, Test Method for Thermal
Transmittance and Air Infiltration of Garage Doors.
This standard is a consensus
test method for determining the garage door’s
U-factor (U-value).
You may be more familiar with R-values. Ask your manufacturer
for details about the U-factor of the insulated doors
you sell.
Calculating the Credit
A homeowner’s tax credit is based on the total material
cost of the purchase (the cost of installation does
not qualify). The tax credit is equal to the sum of 10
percent
of all qualified
energy-saving improvements installed in an existing
home in the calendar years of 2006, 2007, and 2009. The
maximum
credit
is $500.
For example, if a customer paid $2,500 in material
costs for two qualified insulated garage doors, that
customer
would be
eligible for a $250 tax credit. If the material costs
were $1,000, the tax credit would be $100.
The Certification Statement
A Manufacturer’s Certification is a signed statement
from the manufacturer certifying that the product or
component qualifies for the tax credit. Your manufacturer
must provide
this statement for all insulated garage door models
that meet the IRS requirements. The IRS encourages manufacturers
to provide
these certifications on their Web sites to facilitate
identification of qualified products.
Dealers should give customers this certification statement
and a breakdown of the cost of the door(s) and the
cost of labor. Remind your customers that they should
keep a
copy
of the certification statement for their records, but
they do
not need to submit a copy with their tax return. Contact
your manufacturer for these certification statements.
Getting a Head Start
The garage door industry is much better prepared to
promote the 2009 credit than it was in 2006 and 2007.
The first
tax credit was in effect for more than a year before
the IRS
confirmed that the tax credit applied to garage doors.
This news was officially confirmed on March 28, 2007,
when DASMA received a letter from the IRS. In a quick
effort to
spread awareness, DASMA distributed hundreds of flyers
two weeks later at Expo 2007 in Orlando from April
11-14, 2007.
In 2007, many garage door manufacturers were not ready
to report the U-values for insulated doors. However,
more than
18 months
have passed since then, and many manufacturers are
now routinely publishing U-values.
GarageWowNow to Boost Awareness
Besides the early start for 2009, our industry will
also have the benefit of our national public relations
campaign
promoting
the tax credits.
In 2007, the campaign was in its first year when the
news broke of the 2006 and 2007 tax breaks. GarageWowNow
press
releases
that promoted the tax credits were distributed in mid-2007,
but the publishing schedule of many home magazines
prevented the news from being printed until after October.
Now, with the early knowledge about the 2009 tax credits,
the GarageWowNow campaign is already drafting materials
to help
promote them beginning in early 2009. With the benefit
of widespread national exposure, you may have customers
calling
you and asking
about the tax credits.
What To Do
To take the best advantage of this program, dealers
should:
- Identify all the residential doors you sell that
qualify for the tax credit.
- Become familiar with all eligibility criteria (above).
- Contact your manufacturer(s) for the Manufacturer’s
Certification statements.
- Consider offering additional incentives to complement
the tax breaks.
- Prepare advertising materials (newspaper, radio,
TV, Web, flyers, signage, etc.) that promote the
tax credits.
- Get started now!
Your manufacturer may be preparing materials for
you. Your sales representative should have details
of available
programs.
A Chance of a Lifetime
The tax credit essentially gives the homeowner a
10 percent savings off the material cost of the door.
If you offer
additional incentives, the savings could be even
more
attractive.
This kind of opportunity may never happen again in
your lifetime. How often has the government helped
you sell
garage doors?
If you play your cards right, your tax credit promotion
can help boost sagging sales in a down economy and
beat your
competitors to the punch.
More Information on the Web
Text of HR 1424
http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:h1424enr.txt.pdf
About the Manufacturer’s
Certification Statement
http://www.energystar.gov/index.cfm?c=products.footnote
Energy Star’s Comments
About the Tax Credit
http://www.energystar.gov/index.cfm?c=products.pr_tax_credits#s2
Energy Star’s Comments About Exterior (Entry) Doors
http://www.energystar.gov/index.cfm?c=windows_doors.pr_taxcredits
Energy Star’s Comments
About Garage Doors
http://energystar.custhelp.com/cgi-bin/energystar.cfg/php/enduser/std_adp.php?p_faqid=3060&p_created=1175191809
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