UPDATED AND REVISED, APRIL 16, 2007

In early February 2007, the Environmental Protection Agency amended the Energy Policy Act of 2005 to include window film. The policy makes consumers who purchase certain energy-efficient products eligible for tax credits and refunds for their energy-efficient choices. In order for film to meet the Act’s guidelines, though, manufacturers must certify that their products qualify for the energy tax credit treatment under Section 25C of the Internal Revenue Code. Read on to find out how this program will affect you and your business.

How It Works
In order to be eligible for the tax credits, your customers must select products that qualify under Section 25C of the Internal Revenue Code. To view Section 25C, visit http://www.irs.gov/pub/irs-drop/n-06-26.pdf. The code offers a tax credit for “10 percent of the amount paid or incurred by the taxpayer for qualified energy-efficiency improvements (that is, property described in section 4.01 of this notice) installed during the taxable year.”

Thus, the homeowner’s refund would be 10 percent of the amount for the purchase of the film from your company, with a limit of $500. According to the Internal Revenue Code, the refund is based only on materials and does not include the cost of the labor.

Products that qualify for the credits must be “specifically and primarily designed (within the meaning of section 4.04 of this notice) to reduce heat loss or gain of a dwelling unit when installed in or on the dwelling unit,” according to section 25C of the Internal Revenue Code.

The credits apply for qualifying films purchased between January 1, 2006, and December 31, 2007.

What the Manufacturers Are Doing
To ready themselves for questions expected to pour in about which films qualify and how their customers might take advantage of the credit, many film manufacturers are in the process of issuing certification statements.

At press time, both Film Technologies International (FTI) of St. Petersburg, Fla., and St. Louis-based CPFilms Inc. had issued press releases indicating which of their films qualify for the credits and the zones of the United States in which they qualify.

While FTI also has detailed charts of which films qualify in what zones, the company’s press release lists SUN-GARD, Elite and GLASS-GARD as films that are eligible for the tax credits.

CPFilms’ parent company, Solutia Inc., announced that its Llumar®, Vista® and Gila® window films qualify for the credits.

Woburn, Mass.-based Madico Inc. currently is updating its website, www.madico.com, to include information on which of its films qualify in what locations, according to Paul Panarisi, marketing manager for the company.

“We’ve been trying to [set this up] for about two months,” Panarisi says. “It’s complex. The codes itself are complex and you want to make sure it’s done exactly right.”

Panarisi says Madico is taking the time it needs with this process to ensure accuracy.

“The reason we haven’t gotten the information to the website sooner is we want to make sure the information is accurate,” he says.

Once the website updates are complete, Panarisi hopes Madico will be able to offer a step-by-step procedure for how consumers can take advantage of the credits when purchasing its qualified films.

Commonwealth Laminating in Martinsville, Va., currently is researching the program, but hasn’t issued a formal statement yet, according to Paul Wingate, vice president of sales and marketing.

“We’ve taken a bunch of questions about it, but we have not done much yet to get ourselves ready for the new legislation,” he says. “We’ve got a ways to go."

What Shops are Saying
While it’s up to the manufacturers to determine which films qualify for the tax credits, film shops are the ones that will be fielding most of the questions and inquiries from customers—and will have to be involved on the paperwork end of the credits.

To date, those interviewed for this article say they have not yet received many inquiries. They speculate this is because the program is so new. Ron Rumfallo of Advanced Window Films in Mesa, Ariz., actually suggests the program to his customers.

“We’ve used it as a selling point,” he says. “When I go out and I’m selling film in the home and so forth, I tell people about the program.”

Despite marketing efforts both the government and the window film manufacturers have put forth, Rumfallo says most of his customers are surprised to hear about the program.“

I would say that probably 80 percent of the people don’t know anything about it,” he says.

However, when customers learn of the program from Rumfallo, it’s usually a strong selling point.

“It’s like getting a discount, so a person very seriously interested in [film] is very glad to hear about it,” he says.

The Drawbacks
While most agree that the addition of window film to the Energy Policy Act of 2005 is a good thing, they also say there is one drawback: the tax credits are based on the cost of the film itself and don’t include labor charges, according to Internal Revenue Code Section 25C. The tax credit is also limited to $500.“The concept of [the program] is nice,” says Mike Conklin, owner of Island Solar Controllers in Hilton Head, S.C., “but the tediousness of it leaves a little left to be desired.”

In addition to this issue, Conklin says he’s also concerned about the paperwork aspect of the program.

“I was talking with a distributor and he said you have to go through Step A, Step B, Step C and all that. You almost need to be a CPA to do it,” Conklin says.

However, Rumfallo says he keeps a packet of pages handy that the customer will need, including the proper forms for the IRS and information on the certification of the products he uses, so that he can provide these upfront. “I’ve made copies of the necessary things and I will give those to people upon request,” he says. “They have to have the certification paper to show that they qualify.”

Rumfallo says the entire packet totals about five pages.

Looking to the Future
While there are many concerns about the federal tax credit program and the drawbacks that may result, most everyone from manufacturer to dealer agrees that the publicity the program provides will be beneficial.

“The most important point is that it’s such good PR for our industry,” Panarisi says. “Even if people don’t take advantage of the tax credit this year, if all of the manufacturers do everything they can to promote it and maybe get it extended, it would be a great thing for all of us.”

Rumfallo agrees.“I think that film in general is becoming more understood than it used to be,” he says. “There [are] a lot of rumors and inconsistencies out there that people spread about film. I think it’s a great program that they’re doing and now we just have to let people know that it exists.”

Arekelian says he thinks the program is beneficial and will be an excellent sales tool in the future.

“Looking into the crystal ball, [the program] is a huge selling point,” he says. “There’s no paperwork involved for any of the dealers or salespeople. That is basically telling the customer that it’s proven that it will save them money on their energy bills. You can’t lose here.” 

Penny Stacey is the editor of Window Film magazine. 

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