Tesla Defrauded Oregon Tax Credit Program, AG Says

‘In this case, we have been able to claw millions of tax dollars back from those who sought to cheat the system…’

Tesla's Solar Panel Co. Defrauded Oregon Tax Credit Program, AG Says 1

Tesla’s Elon Musk/IMAGE: CNBC via Youtube

(Michael Barnes, Liberty Headlines) Famed renewable energy giant SolarCity promises a cleaner, better source of electricity than dirty fossil fuels.

But it turns out, the company’s blatant abuse of government tax incentives is what’s really dirty.

Last week, SolarCity and its accounting firm agreed to settle allegations that they wrongfully inflated the company’s solar project costs in order to squeeze more money out of Oregon’s state Business Energy Tax Credit program.

The program awarded taxpayer-funded perks in the form of tax credits to commercial solar companies for up to half of all solar project costs.

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SolarCity, which is a subsidiary of Tesla, Inc., was happy to oblige—except it artificially increased its reported costs to over 100 percent of its actual costs in order to qualify for higher tax credits.

As a result of the settlement, SolarCity—recently renamed Tesla Energy Solutions—and its accountant, Novogradac & Company, were forced to pay back $13 million.

However, settlement terms allowed SolarCity and its accounting firm to avoid officially admitting wrongdoing.

According to a company statement provided to OregonLive, SolarCity said it was “entitled to every dollar of tax credits that it received.”

Oregon’s state attorney general saw it differently.

“The BETC program was meant to channel public funds to help local businesses, create clean energy jobs and stimulate the economy during a period of economic uncertainty. Unfortunately, some companies abused the program,” said Attorney General Ellen Rosenblum.

“In this case, we have been able to claw millions of tax dollars back from those who sought to cheat the system,” Rosenblum said.

The Oregon Department of Justice said Thursday that SolarCity used the tax credit program to fund 14 projects in the state and claimed project costs totaling $36.7 million.

Novogradac submitted reports certifying the accuracy of those figures, but an investigation by the state DOJ confirmed the reported costs had been more than double the actual costs, indicating that the tax credit applications were allegedly falsified.

The state investigation was launched after the Oregonian newspaper raised questions about the costs SolarCity submitted to qualify for $12 million in tax credits for six solar arrays at public universities across the state in April 2015.

Those efforts led to the arrest and conviction of an energy consultant and a state employee involved in the university projects.

In its statement, Tesla defended itself by saying Rosenblum made “hyperbolic claims of ‘false applications’ and ‘inflated’ costs,” and that the “dispute merely reflects a difference of opinion about how to interpret an Oregon regulation regarding BETC credits that were received by SolarCity many years ago.”

What isn’t open for interpretation is that the Oregon Legislature elected to shut down the BETC program, but not before hundreds of millions of dollars in “concerning” tax credits were shoveled out the door, according to a 2016 audit.

The $1 billion BETC program was found to be mismanaged by state Department of Energy officials, whose “due diligence and controls on tax credit applications worth millions of dollars apiece were often nonexistent,” OregonLive reported.