Issues

Energy Tax Credits: Defend Your Solar or §25C Credit in Tax Court

The IRS disallowed your solar, heat-pump, or windows credit. A reversed credit hits you dollar-for-dollar—here's the fight you're actually in, and how to win.

The IRS disallowed the energy credit you claimed for your solar panels, your heat pump, or your new windows—and now a notice says you owe. Before you panic about the number, understand what kind of number it is.

A disallowed credit hits you dollar-for-dollar. A credit is a direct reduction of the tax you owe—not a reduction of your income. So when the IRS reverses a $9,000 solar credit, that is $9,000 of tax, not $9,000 times some rate. This is the single most important thing to grasp about these disputes, and it is what makes them sting more than a same-sized deduction fight.

A disallowed $9,000 deduction might cost a 22%-bracket taxpayer about $2,000 in tax. A disallowed $9,000 credit costs the full $9,000.

This is the substantive merits guide to defending a residential energy credit after a correspondence exam, a CP2000 notice, a 30-day letter, or a Notice of Deficiency. It covers the two credits that live on the same tax form—the § 25D Residential Clean Energy Credit (solar, battery, geothermal, fuel cells) and the § 25C Energy Efficient Home Improvement Credit (windows, doors, insulation, heat pumps)—because the IRS, and taxpayers, constantly blur them. Keeping them apart is the first job. The closest companion piece is Education-Credit Disputes in Tax Court: same skeleton—a nonrefundable credit whose whole fight is substantiation—but a different credit. Read it for the proof-of-payment and recompute-the-form machinery; this article owns the energy-credit-specific traps.

Two Credits, One Form 5695—Kept Distinct

Both credits are claimed on Form 5695, and both are worth 30% of what you spent. That is where the resemblance ends. The single most important contrast—state it plainly, because the IRS notice may not—is this: § 25D carries forward; § 25C does not.

"Carries forward" means that if the credit is bigger than the tax you owe this year, the unused part doesn't vanish—it rolls to a future year to reduce future tax. That difference shapes everything about how a disallowance hurts you.

§ 25D—The Residential Clean Energy Credit (the "solar/battery" credit)

This is the big one—the credit most people are fighting over, because solar systems cost tens of thousands of dollars. IRC § 25D gives a flat 30% of what you spent (§ 25D(a)) on six kinds of property:

qualified solar electric property (the panels),
qualified solar water heating property,
qualified fuel cell property,
qualified small wind energy property,
qualified geothermal heat pump property, and
qualified battery storage technology (added for expenditures made after December 31, 2022; it must have a capacity of at least 3 kilowatt hours).

Four features define § 25D:

It carries forward (§ 25D(c)). If the credit exceeds your tax, "such excess shall be carried to the succeeding taxable year." A $9,000 credit that only erases $4,000 of tax this year carries the remaining $5,000 forward.
No income limit, and no annual or lifetime dollar cap—with one exception: fuel cells are capped at $500 per half-kilowatt of capacity (§ 25D(b)(1)). Because there is no income limit, plenty of solar homeowners earn well above the levels that qualify for other credits—keep that in mind when you reach the free-help section below.
It does not have to be your main home. The system must go on "a dwelling unit located in the United States and used as a residence by the taxpayer"—which can include a vacation home you live in part of the year. The lone exception: fuel cells must be on your principal residence (§ 25D(d)(3)).
The credit is for the year the system is placed in service—not the year you paid. More on this timing trap below; it is one of the most common § 25D errors.

§ 25D is reported on Form 5695, Part I.

§ 25C—The Energy Efficient Home Improvement Credit (the "envelope/HVAC" credit)

IRC § 25C is also 30%—but it is hedged with annual dollar caps, and it has no carryforward. It covers the building "envelope" and heating/cooling equipment: exterior windows, skylights, doors, insulation, air-sealing, central air conditioners, furnaces, heat pumps, and the like.

The defining features run the opposite way from § 25D:

It does NOT carry forward. The IRS is explicit: the credit "is nonrefundable," and "you can't apply any excess credit to future tax years." So an unused § 25C amount in a year is simply gone—and when the IRS reduces a § 25C claim, there is no future offset to soften it. This is the trap.
Principal residence + existing home only (§ 25C(c)(1)). The improvement must be installed in a home "owned and used by the taxpayer as the taxpayer's principal residence"—your primary home, an existing home you improve (not new construction), located in the United States. A landlord who doesn't live there can't claim it. (Contrast § 25D, which reaches a second home for solar.)
Annual caps, not lifetime caps. These are the figures the IRS most often applies to cut a claim:
- $1,200 aggregate per year for the envelope-and-equipment bucket (§ 25C(b)(1));
- $600 per item of qualified energy property (§ 25C(b)(2));
- $600 total for all exterior windows and skylights (§ 25C(b)(3));
- $250 per exterior door, and $500 for all doors combined (§ 25C(b)(4));
- $150 for a home energy audit (§ 25C(b)(6)); and
- a separate $2,000 per year for heat pumps, heat-pump water heaters, and biomass stoves/boilers (§ 25C(b)(5)).
Because that last $2,000 sits on top of the $1,200, the practical maximum is $3,200 per year.

§ 25C is reported on Form 5695, Part II.

If your dispute is a 2022-or-earlier § 25C year, different rules apply. For 2022 and before, § 25C was the old "Nonbusiness Energy Property Credit"—a 10% credit with a $500 lifetime cap. The 30%/annual-cap regime described above starts with tax year 2023. So pin down the year first, then apply that year's rules.

First: Which Years Are Even in Play—the 2025 Sunset

Before you fight about whether your credit qualifies, confirm the credit existed for your year at all. The law here changed sharply, and getting it wrong wastes your whole response.

What Changed: Both Credits Ended After 2025

The One Big Beautiful Bill Act (OBBBA, P.L. 119-21), signed July 4, 2025, terminated both credits early. As enacted, current law as of 2026:

§ 25D ends for expenditures made after December 31, 2025. The termination lives in § 25D(h): "The credit allowed under this section shall not apply with respect to any expenditures made after December 31, 2025."
§ 25C ends for property placed in service after December 31, 2025. The termination lives in § 25C(i): "This section shall not apply with respect to any property placed in service after December 31, 2025."

Watch the lettering, because it is a trap even for professionals: § 25D(h) and § 25C(i) are the terminations. (A separate subsection, § 25C(h), is the new PIN rule covered in the next section—don't confuse them.)

"Expenditures made" means installation completed—not contract or deposit. For § 25D, the statute treats an expenditure as made "when the original installation of the item is completed" (§ 25D(e)(8)). So a homeowner who signed a solar contract and paid a deposit in 2025, but whose system was not finished until 2026, gets nothing. The IRS confirmed this in Fact Sheet FS-2025-05 (FAQ 7): "If installation is completed after December 31, 2025, the expenditure will be treated as made after December 31, 2025, which will prevent the taxpayer from claiming the section 25D credit." § 25C keys to "placed in service" and reaches the same result.

So What Years Are You Actually Fighting About?

Because the IRS generally has 3 years from when you filed to assess additional tax (see Understanding IRS Statutes of Limitations), the live battleground in 2026 is the still-open years:

§ 25D: tax years 2022–2025, all at the flat 30%.
§ 25C: tax years 2023–2025 at 30%/annual caps (and 2022-or-earlier under the old 10%/$500-lifetime regime).

These are the years a disputed credit can still be in play. The credit is not available for purchases made in 2026 and after—so if a notice concerns one of those open prior years, you are defending a credit that genuinely existed for that year, which is exactly the fight worth having.

§ 25D Disputes: Where Solar Credits Actually Fall Apart

If your disallowance is on the § 25D (solar/battery/geothermal) side, it almost always traces to one of four issues. Each is a different argument, so identify which one the IRS raised before you respond.

Ownership: A Leased System or PPA Means No Credit for You

This is the most common § 25D disallowance, and it surprises people. To claim § 25D, you must OWN the system. If you leased the panels, or signed a power purchase agreement (PPA)—an arrangement where a third party owns the panels on your roof and you simply buy the electricity they produce—then the third-party owner made the qualifying expenditure, not you. You get no § 25D credit.

The Department of Energy's homeowner guide says it directly: eligibility requires that "you own the solar PV system (i.e., you purchased it with cash or through financing but you are neither leasing nor are in an arrangement to purchase electricity generated by a system you do not own)." Financing the purchase with a loan is fine—you still own it. A lease or PPA is not. So if the IRS challenged ownership, the question you must answer with documents is simple: did you buy the system (cash or loan), or are you leasing/buying the power? Have the purchase or financing contract ready—not a lease.

Placed-in-Service Year: The Credit Follows the Energized Date

The § 25D credit belongs to the year the system is placed in service—meaning the year installation is completed and the system is energized, final-inspected, and interconnected—not the year you signed the contract or paid (§ 25D(e)(8)). A system permitted and largely installed in December but not granted permission to operate by the utility until January belongs to the later year.

Claiming the credit in the year of contract or payment, rather than the year of completion, is the single most common § 25D timing error—and it draws a disallowance for the wrong year. If that happened to you and the correct year is still open, the fix may be an amended return for the right year rather than a fight about the wrong one.

What Counts: Labor Yes, a New Roof Mostly No

The creditable cost is the energy property itself plus the labor to install it: "labor costs properly allocable to the onsite preparation, assembly, or original installation" and the wiring/piping to connect it to your home (§ 25D(e)(1)). The DOE guide adds permitting fees, inspection costs, and balance-of-system equipment—inverters, mounting hardware, wiring.

But a roof replacement generally does NOT qualify. The Form 5695 instructions exclude structural components "such as a roof's decking or rafters that serve only a roofing or structural function." If you re-roofed in order to mount panels and then claimed the whole roof, you over-claimed—only the solar property and its installation labor count. The narrow exception: solar roofing shingles and tiles that both generate electricity and serve as your roof do qualify, because they aren't serving "only" a roofing function.

The Residence Rule

For solar, wind, geothermal, and battery, the system just has to be on a U.S. home you use as a residence—a vacation home can qualify. Only fuel cells are restricted to your principal residence. If a notice questioned a second-home solar claim, the residence rule is on your side; if it questioned a second-home fuel-cell claim, it isn't.

§ 25C Disputes: Caps, Standards, and a Brand-New PIN Rule

The § 25C (windows/doors/insulation/heat-pump) fights are different in character. Here the most important question is whether the IRS denied a qualifying item (which you can fight) or simply applied the statutory cap (where the IRS is usually right). Separate the two before you respond.

The Caps Are Often the Whole Story

Because § 25C is capped per category and per year, a very common "disallowance" is really the IRS reducing an over-claim down to the ceiling. If you spent $4,000 on windows and claimed 30% ($1,200), the IRS will cut that to $600—the statutory annual maximum for windows and skylights—and it is correct to do so. Re-run the caps line by line (the list is above) before assuming the IRS made an error. Conceding a correct cap reduction lets you focus your energy on the part that's actually fightable.

Principal Residence, Existing Home, Efficiency Standards

A § 25C item must be installed in your principal residence (not a vacation home, not a rental) and in an existing home (not new construction). The property must also meet the applicable efficiency standard: doors must meet Energy Star; windows must meet the "Energy Star Most Efficient" certification; and qualifying equipment generally must meet the "Consortium for Energy Efficiency (CEE) highest efficiency tier." A disallowance can turn on a product that simply didn't meet the standard—so the manufacturer's certification is the document that decides it.

The New 2025 Product-ID (PIN/QMID) Requirement

This one is brand-new and will catch a lot of 2025 filers. For § 25C property placed in service after December 31, 2024—that is, the 2025 tax year—the law adds a reporting requirement in § 25C(h):

"No credit shall be allowed under subsection (a) with respect to any item of specified property placed in service after December 31, 2024, unless—(A) such item is produced by a qualified manufacturer, and (B) the taxpayer includes the qualified product identification number of such item on the return of tax for the taxable year."

In plain terms: for a 2025 § 25C claim, each qualifying item must (1) be made by a qualified manufacturer registered with the IRS, and (2) have its four-character qualified product/manufacturer identification number (the IRS and Form 5695 instructions call it the QMID/PIN) reported on your return. A missing or invalid PIN is a standalone disallowance ground for a 2025 claim—even if the product is otherwise fully qualified and you paid every dollar. And if you bought from a manufacturer that never registered, the item is ineligible regardless of what number you put on the return.

Two things to keep straight. First, this PIN rule is § 25C(h), which is different from the termination in § 25C(i)—don't mix them up. Second, there is a useful exception: insulation and air-sealing materials are exempt from the qualified-manufacturer and PIN requirements. So if your 2025 disallowance was an insulation item denied "for no PIN," the exemption is your answer. The PIN requirement applies to 2025 claims only; 2023 and 2024 § 25C claims don't carry it.

Proving It: Substantiation Is the Whole Game

Here is the rule that governs every one of these fights: a credit, like a deduction, is a matter of legislative grace—it exists only because a statute grants it, and the burden of proving you fit the statute is on you, the taxpayer.

The Supreme Court has said this three ways, in cases that predate these credits by decades but supply the rule that governs them. The Commissioner's determination "has the support of a presumption of correctness, and the petitioner has the burden of proving it to be wrong" (Welch v. Helvering, 290 U.S. 111 (1933)). A tax benefit "depends upon legislative grace; and only as there is clear provision therefor can any particular deduction be allowed"—and the taxpayer "must be able to point to an applicable statute and show that he comes within its terms" (New Colonial Ice Co. v. Helvering, 292 U.S. 435 (1934)). And the modern restatement: a tax benefit "is a matter of legislative grace and . . . the burden of clearly showing the right to the claimed deduction is on the taxpayer" (INDOPCO, Inc. v. Commissioner, 503 U.S. 79 (1992)). Courts apply the identical rule to credits—a credit is, if anything, even more squarely a creature of statute.

What that means in practice is that you keep records good enough to prove the credit (IRC § 6001), and you produce them when challenged. For an energy credit, the proof package has five parts:

Proof you paid—the installer's paid invoice or contract, plus cancelled checks, bank or credit-card statements, or financing/loan records.
Proof the item was qualified property—the manufacturer's certification statement (a written statement the manufacturer issues, usually a free PDF on its website, certifying that the specific model qualifies for the credit—it is separate from the product's Energy Star rating and from the PIN), the Energy Star or CEE documentation, and (for § 25C 2025) the PIN/QMID.
The correct dollar amount—with non-creditable costs (a re-roof, for example) separated out.
The placed-in-service year—the utility's permission-to-operate letter, the final-inspection sign-off, the interconnection date.
Ownership (§ 25D only)—the purchase or financing contract showing you own the system, not a lease or PPA.

A word on estimates. Courts can sometimes approximate a deductible amount when a taxpayer proves some qualifying expense but can't pin the exact figure (Cohan v. Commissioner, 39 F.2d 540 (2d Cir. 1930)). But Cohan has hard limits here: it needs a reasonable basis to estimate from, and it cannot cure the yes/no questions that decide energy-credit cases. Did you own the system, or lease it? Was it placed in service in the year you claimed? Does the product meet the standard? Did you report a valid PIN? Those aren't estimable—an approximation is no help. For the broader substantiation toolkit, see How To Prove Your Business Expenses to the IRS.

How Bad Is It? The Full Exposure

Size the whole dispute before deciding how hard to fight—because the disallowed credit is only the first layer.

The dollar-for-dollar tax. This is the part to internalize. A disallowed $1 of deduction costs you cents (the dollar times your rate). A disallowed $1 of credit costs you the full dollar. And if part of a § 25D credit was carried forward and used in a later year, the IRS reverses that too—which can mean a second notice for that later year.

The accuracy penalty. On top of the tax, the IRS often adds a 20% accuracy-related penalty under IRC § 6662—for negligence or a "substantial understatement." For an energy credit, "substantial" carries its ordinary meaning: an understatement greater than the larger of 10% of the correct tax or $5,000. (The lower 5% threshold you may have read about is QBI-specific and does not apply to energy credits.) The penalty-defense toolkit is in How To Fight the IRS Accuracy Penalty.

The interest—the leg people underestimate. Interest runs on the deficiency from the original due date of the return until you pay, at the IRS underpayment rate—recently around 7–8%, compounded daily—and it runs on the penalty too. On an older year, it has been compounding the entire time. See How Interest Works on Your IRS Tax Debt.

A possible refund penalty. Both credits are nonrefundable, but they routinely drive a refund—they zero out your tax and you get your withholding back. If a disallowed credit means a refund you received was excessive, the IRS can assert the § 6676 erroneous-claim-for-refund penalty—20% of the excessive amount, "unless . . . due to reasonable cause." The rough rule for which penalty applies: § 6662 reaches the extra tax you still owe once the credit comes off; § 6676 reaches the part of a refund you already received that the credit shouldn't have produced. The two don't stack on the same dollars, but together they can cover the whole picture.

A Worked Example: A $9,000 Solar Credit Disallowed (2022 § 25D)

These figures are illustrative, not authority.

Item	Amount
Added tax (dollar-for-dollar—a $9,000 credit reversed is $9,000 of tax)	$9,000
§ 6662 accuracy penalty (20% of the underpayment, if it applies)	up to ≈ $1,800
Interest (≈ 7–8%/yr, compounded daily, ≈ 3–4 years on a 2022 deficiency)	≈ $2,500+
Realistic total exposure	≈ $13,000+

The interest leg is the one taxpayers leave out. A 2022 deficiency assessed in 2026 has been running roughly three to four years; very roughly, $9,000 at about 8% over about 3.5 years is $2,500 or more, and compounding pushes it higher—plus interest runs on the penalty. Pull your account transcript and the IRS's published quarterly underpayment rates (the IRS announces them in a news release each quarter) for the exact figure.

For a § 25C dispute the math is the same shape but smaller—say a $1,200 disallowance plus the 20% penalty plus interest. And remember: because § 25C does not carry forward, a § 25C reduction is a pure cash loss with no future year to absorb it.

Verify the IRS's Numbers Before You Fight

A large share of these "disputes" dissolve once you check the IRS's work against the right documents. Every step here is something you can do yourself.

1. Find the exact adjusted line and the stated reason. On the Form 4549 (the examination report), the CP2000, or the Notice of Deficiency, identify which credit moved—§ 25D (Form 5695 Part I) or § 25C (Part II)—which dollar figure changed, and why. The examiner's explanation tells you whether the issue is no support, wrong year, a cap applied, ownership, or a missing PIN. The stated reason dictates your entire response.

2. Pull your transcripts. Get your account transcript (what was assessed and refunded) and your wage-and-income transcript (to confirm withholding and the third-party data the IRS holds). Both are taxpayer-accessible through IRS.gov. See How To Get and Read Your IRS Transcripts.

3. Re-run Form 5695. Recompute Part I (§ 25D, pulling any prior-year carryforward from the prior year's Form 5695) or Part II (§ 25C, applying the annual caps line by line) and compare your number to the IRS's. Very often the IRS is right on the cap but wrong on whether the item qualified—separate the two, concede the first, and fight the second.

4. Build the proof package to the stated reason. Assemble the paid invoice, proof of payment, manufacturer's certification statement, Energy Star/CEE docs, the § 25C PIN/QMID (2025), the § 25D ownership proof (purchase/financing, not a lease/PPA), and the placed-in-service date (utility permission-to-operate letter, final inspection). Address it to the exact reason the IRS gave.

The Path: From Notice to Tax Court

A residential-energy-credit adjustment travels the same road as other deduction and credit adjustments.

It surfaces as a CP2000 (automated matching, when a claimed amount has no support on file) or—more commonly for a substantiation issue—a correspondence or desk exam.
The exam produces an examiner's report (Form 4549) and a 30-day letter proposing the disallowance.
The 30-day letter offers a protest to the IRS Independent Office of Appeals—a separate office, staffed by people who did not run your audit, that can settle a documentary dispute with no filing fee and no court. For a clean records issue, it is often the cheapest place to win. See How To Request an IRS Appeals Conference.
If Appeals doesn't resolve it (or the 30-day window lapses), the IRS issues a Notice of Deficiency—the 90-day letter.

The Notice of Deficiency is your ticket to Tax Court. Under IRC § 6213, you have 90 days from the date on the notice (150 days if it's addressed outside the US) to file a petition. This deadline cannot be extended. See You Just Got a 90-Day Letter From the IRS and How To File Your Tax Court Petition.

Which Notice Am I Holding?

Before anything else, identify your notice, because only one of them starts a clock you cannot extend.

A CP2000, an examination report (Form 4549), or a 30-day letter is a proposed change. There is no 90-day Tax Court clock yet. Respond by the deadline printed on the letter—usually about 30 days—with your corrected Form 5695 and your records. This is the cheapest place to win. See How To Respond to an IRS Audit.
A Notice of Deficiency (often Letter 3219; it will say "Notice of Deficiency" and give a last date to petition the Tax Court) is the 90-day letter. The clock is running, and that deadline is firm.

If you're not sure which you have, look for the words "Notice of Deficiency" and a stated last date to petition. If they're not there, you're almost certainly still at the audit stage—respond on the merits and try to keep the case out of court.

What Happens in Tax Court

A single-home energy-credit deficiency is almost always far under the $50,000 small-case threshold, so these qualify for the simplified small ("S") case procedure—informal, plain-English, no rigid rules of evidence (the trade-off: an S-case decision is final and sets no precedent). The filing fee is $60, with a waiver available. Most (76%) of Tax Court cases close by settlement, and more than 99% resolve without a trial; cases typically take typically takes 6-18 months. See Small Case or Regular Case: Which Should You Choose.

The burden is on you. In Tax Court the IRS's determination is presumed correct, and credits are a matter of legislative grace—you have to prove you qualify (Tax Court Rule 142(a); Welch, above). IRC § 7491 can shift that burden to the IRS on a factual issue, but only if you produced credible evidence, substantiated, and cooperated—rarely met in a substantiation-failure case. One piece does stay with the IRS: a § 6662 penalty is invalid unless the examiner's immediate supervisor approved it in writing before assessment (IRC § 6751(b); a final regulation, T.D. 10017 of December 2024, sets a bright-line deadline for that approval). It's an independent defense worth checking—if the IRS can't prove timely written approval, the penalty can fall on that ground alone.

If the 90 days lapse: audit reconsideration is the fallback—asking Examination to reopen on the documents you can now produce. It's discretionary, but it works well for a documentary issue like this.

If the IRS Is Actually Right

Run the analysis honestly first. If you leased the panels or signed a PPA, the § 25D ownership rule really does deny the credit. If the system wasn't energized until the next year, the placed-in-service rule really does move it. If your § 25C improvement went into new construction or a rental, or your 2025 claim has no valid PIN, or your claim simply exceeds the statutory cap—the IRS may be right. When the credit is correctly disallowed, don't burn the dispute litigating a losing fight. Pivot to where you can still help yourself:

Fight the penalty, not the tax. Even when the deficiency is right, the accuracy penalty can often be removed for reasonable cause and good faith under IRC § 6664(c)—an honest, reasonable misreading of these genuinely complex (and recently changed) rules is a real argument—or knocked out on the § 6751(b) approval defense. See How To Request IRS Penalty Abatement.
Deal with what you owe. If you can't pay, you have options: a monthly installment agreement, currently not collectible status if paying would leave you unable to cover basic living costs, or—if you qualify—an offer in compromise. The overview is in How To Resolve Your IRS Tax Debt.

What the Cases Tell Us

Be candid about the precedent: the modern, IRA-era § 25D and § 25C credits are too new to have generated directly-on-point, citable Tax Court merits opinions on the homeowner issues here—ownership, placed-in-service, the PIN, the caps. There is no body of taxpayer-favorable energy-credit case law to point to, and you should be wary of any source that implies otherwise. What governs these disputes is the durable burden-of-proof and legislative-grace law that applies to every credit fight—the trio of Welch, New Colonial Ice, and INDOPCO above, plus Cohan's limits on estimation. In all of those, the taxpayer carried the burden—and that is the posture you are in.

One cautionary footnote, often misread. In Olsen v. Commissioner, 52 F.4th 889 (10th Cir. 2022), investors in a "solar energy lens" arrangement claimed business energy credits (under § 48, not § 25D) and depreciation; the Tax Court disallowed the benefits and the Tenth Circuit affirmed, because the activity lacked a profit motive and the equipment was never placed in service. The taxpayers were represented and they lost. It is not § 25D residential authority and must not be read as such—but it is a reminder that "placed in service" is a real, litigated gate even for solar.

Get Help: LITCs and Professionals

A free Low-Income Taxpayer Clinic can represent qualifying taxpayers in exactly these disputes—but eligibility here is genuinely income-dependent in a way it isn't for some other credits. Because § 25D and § 25C have no income limit, many solar homeowners earn above the LITC ceiling of 250% of the poverty line. The dispute amount will be fine—an energy-credit deficiency is far under the $50,000 LITC dispute cap—but check the income limit before counting on this route.

Around 89% of Tax Court petitioners represent themselves, and a documentary energy-credit dispute can suit it. Be candid about the odds, though—the represented win rate is higher (about 12% pro se versus about 23% represented in the most recent data)—and a larger solar dispute, where a $9,000-plus credit is on the line, can justify paid help. See When To Get Professional Help With Your Tax Dispute.

What To Do Now

If you have a Notice of Deficiency disallowing an energy credit and the 90 days clock is running:

Calendar the deadline date on the face of the notice. It cannot be extended.
Confirm which year's rules apply—§ 25D at 30% for 2022–2025; § 25C at 30%/annual caps for 2023–2025 (old 10%/$500-lifetime for 2022 and earlier).
Find the exact adjusted line and the IRS's stated reason on the Form 4549 / CP2000 / NOD.
For § 25D: assemble proof of ownership (purchase/financing, not lease/PPA), the placed-in-service date (interconnection/final inspection), the creditable cost (excluding any re-roof), and the install labor.
For § 25C: assemble proof of principal residence + existing home, the Energy Star/CEE certification, the annual-cap math, and—for 2025—the PIN/QMID from a qualified manufacturer.
Gather proof of payment plus the manufacturer's certification statement for each item.
Recompute Form 5695 and compare to the IRS's figure—concede a correct cap reduction, fight a wrong item-denial.
Pull your IRS account transcript to confirm what was actually assessed.
Decide whether to petition. A timely petition preserves your prepayment forum; filing is $60, with a waiver available, and these are almost always small cases.
Raise § 6664(c) reasonable cause and § 6751(b) approval on any penalty—and consider an LITC if your income qualifies.

Resources

Statute and guidance:

IRS pages and forms:

Cases cited:

Welch v. Helvering, 290 U.S. 111 (1933)
New Colonial Ice Co. v. Helvering, 292 U.S. 435 (1934)
INDOPCO, Inc. v. Commissioner, 503 U.S. 79 (1992)
Cohan v. Commissioner, 39 F.2d 540 (2d Cir. 1930)
Olsen v. Commissioner, 52 F.4th 889 (10th Cir. 2022) — a § 48 business solar-credit / profit-motive case, cited only as a cautionary illustration; not § 25D residential authority

Companion articles on TaxCourtHelp:

This article is for informational purposes only and does not constitute legal or tax advice. For advice specific to your situation, consult a qualified tax professional or attorney.