On February 22, 2006, the Service issued Notice 2006-26, 2006-11 I.R.B.
622. This notice clarifies that section 4.04 of Notice 2006-26 should read
.04 Specifically and Primarily Designed.
A component is not specifically and primarily designed to reduce heat loss
or gain of a dwelling unit if it provides structural support or a finished
surface, as in the case of drywall or siding. In addition, a component is
not specifically and primarily designed to reduce heat loss or gain of a dwelling
unit if its principal purpose is to serve any function unrelated to the reduction
of heat loss or gain. For purposes of the preceding sentence, the principal
purpose of a component serves functions unrelated to the reduction of heat
loss or gain if—
(1) Production costs attributable to features other than those that
reduce heat loss or gain exceed production costs attributable to features
that reduce heat loss or gain; or
(2) The facts and circumstances otherwise establish that the component’s
principal purpose is to serve a function other than heat loss or gain.
Taxpayers who purchased siding on or before June 26, 2006 may rely on
a manufacturer’s certification that the siding is an Eligible Building
Envelope Component for purposes of the section 25C credit. A manufacturer
will not be subject to penalties under § 7206 or § 6701
on account of a certification that siding is an Eligible Building Envelope
Component under section 4.02 of Notice 2006-26 unless the manufacturer continues
to provide the certification to purchasers of the siding after June 26, 2006.
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