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Tax

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Policy & Regulations

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Scott Horne
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ScottHorne@isri.org
(202) 662-8513

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US tax policies, such as bonus depreciation allowances and incentives, are vital to capital investment and the competitiveness of the U.S. scrap recycling industry.

Recycling Investment Saves Energy

Recycling Investment Saves Energy (RISE) allows taxpayers to claim accelerated deprecation for the purchase of machinery or equipment used to collect, distribute or recycle a variety of commodities such as scrap plastic, scrap glass, textiles, scrap rubber, scrap ferrous and nonferrous metals, or electronic scrap.

RISE Act

Issue Update

RISE FAQs

The following information is not intended to be tax advice, it is provided for guidance purposes only. You should consult your tax preparer and/or tax attorney for advice appropriate to your individual situation.

RISE allows taxpayers to claim accelerated deprecation for the purchase of machinery or equipment used to collect, distribute or recycle a variety of commodities such as scrap plastic, scrap glass, textiles, scrap rubber, scrap ferrous and nonferrous metals, or electronic scrap.

Accelerated depreciation is a very common incentive often used by federal and state governments to spur manufacturing, production or certain purchasing behaviors, or to achieve certain policies:

  1. RISE provides a purchaser of "qualified reuse and recycling property," (which is just a fancy term for eligible recycling machinery or equipment) with the option to depreciate 50% of the cost of that machinery or equipment in the first year.
  2. Only qualified reuse and recycling property that is used exclusively to process materials (including sorting) and that has a useful life of at least five (5) years is eligible for the 50% accelerated depreciation allowance under RISE. Rolling stock, real estate, and buildings are not eligible for the depreciation allowance under RISE.
  3. In order to use the bonus depreciation under RISE, eligible machinery or equipment must be placed into service after August 31st, 2008. However, that same equipment must not have been ordered prior to August 31st.
  4. However, the economic stimulus package passed earlier this year also contains a 50% accelerated depreciation, but requires that in order to be eligible, that equipment must have been purchased in 2008 and placed into service by December 31st, 2008.
  5. RISE is purely voluntary. Some recycling equipment purchasers, based on their own tax situation, may elect not to use the accelerated depreciation schedule. Instead, they may elect to straight-line depreciate machinery or equipment equally over five years or more.

199 - American Jobs Creation Act

A little over six years ago Congress passed the American Jobs Creation Act of 2004 (“Jobs Creation Act”). Title I of the Jobs Creation Act had two purposes: first, it repealed the Exclusion for Extraterritorial Income (“ETI”) as required by a decision of the World Trade Organization and second, it added § 199 to the Internal Revenue Code of 1986. Section 199 was intended, in part, to compensate U.S. exporters for the tax benefits they would lose as a result of the repeal of the exclusion for ETI and also to encourage certain businesses to create jobs. Unfortunately, the IRS has interpreted § 199 in a manner that effectively vitiates the ability of scrap recyclers to claim the deduction, despite the fact that the scrap recycling industry is, and has been for decades, one of the United States largest net exporters, subjecting a large number of recyclers to huge deficiency assessments upon audit.

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