SolarCity Corp (NASDAQ:SCTY) has come under the scrutiny of federal investigators as it seeks another $14.6 million in federal assistance. Authorities will spend the next eight months analyzing the books of two SolarCity subsidiaries to figure out whether they overvalued sales contracts to claim millions more in federal tax incentives.

SolarCity SCTY FSLT TAN

SolarCity received $244 million in federal assistance

The federal action comes after SolarCity Corp (NASDAQ:SCTY)’s two subsidiaries, Sequoia Pacific Solar and Eiger Lease Co., filed a lawsuit. Notably, the San Mateo-based company has already received about $244 million in federal assistance. In their lawsuit, the SolarCity units claimed that the Feds shortchanged them $14.6 million.

Both sides will scrutinize each others’ evidence. Federal investigators will review SolarCity Corp (NASDAQ:SCTY)’s 4,204 grant applications, reports Tori Richards of the California Watchdog. SolarCity is already being investigated by the IRS and U.S. Treasury over the same thing: did the company inflated the cost of products to cash in on the federal grant program? Last month, a California judge said both sides have until December to complete the discovery process.

The outcome will have a huge impact on SolarCity Corp (NASDAQ:SCTY) and other solar energy companies that benefit from the Treasury’s 1603 program. The two subsidiaries of the Elon Musk-backed company said that the Treasury doesn’t have expertise in making cost basis determinations. They also accuse the government of improperly changing rules. Under the 1603 program, owners of solar and other renewable energy projects receive a cash grant equal to 30% of their investments. Since SolarCity retains ownership of the systems it leases to homeowners, businesses and other clients, it enjoys the investment tax credit.

SolarCity accused of issuing false SEC filings and media releases

The Treasury Department and the IRS investigations began in late 2013 after a Barron’s expose on inflated contract values. Moreover, a class-action lawsuit filed March 28 has accused SolarCity Corp (NASDAQ:SCTY) and two of its executives of issuing false media releases and SEC filings. It misled shareholders into believing that the company was in a lot better financial shape than it actually was. At the heart of the complaint was the company’s decision to delay earnings due to accounting errors.

SolarCity Corp (NASDAQ:SCTY) shares plummeted 8.41% to $54.11 at 1:50 PM EDT.