The Treasury Department's inspector general is investigating a popular stimulus program that helped rooftop solar panel projects turn tax credits into cash grants.
The Treasury's internal watchdog is looking at how the department managed the program and is searching for "possible misrepresentations" about the fair market value of solar systems that received grants, one large installer of solar panels disclosed in a filing with U.S. regulators late last week.
The inspector general issued subpoenas to SolarCity Corp. and other big players in the market, working with the Justice Department's civil division, San Mateo, California-based SolarCity said.
A spokesman for the Treasury Department's inspector general declined to comment.
The watchdog has asked for documents dating back to 2007, including communications with other solar development companies and firms that appraised solar energy property for the grants, SolarCity said.
The program, known as Section 1603, allowed renewable energy project owners to recover 30 percent of their construction costs in cash. It has been credited with helping boost the solar industry at a time when it was difficult to find financing.
The cash grant program reverted to a tax credit at the end of last year. Solar developers have been able to sell such incentives to investors who finance the projects.
SolarCity said it did not know of specific allegations of misrepresentation. If any were found, the company could face damages, penalties and tax liabilities, it said.
"We anticipate that at least six months will be required to gather all of the requested documents and provide them to the Inspector General, and at least another year following that for the Inspector General to conclude its review of the materials," the company said in its filing.
The disclosure was made in SolarCity's U.S. Securities and Exchange Commission filing for an initial public offering. It wants to raise up to $201 million.
SolarCity said the Internal Revenue Service is also auditing two of SolarCity's investment funds and is reviewing the fair market value of the solar power systems receiving grants.
Companies that have provided funds to finance SolarCity's projects include Google Inc. and U.S. Bancorp. Such investors use the 30 percent federal tax credit for solar energy systems to reduce their tax liabilities.
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