The Internal Revenue Service and the Treasury continue to release guidance and tools around the clean energy tax credits included in the Inflation Reduction Act and other legislation.
Businesses, tax-exempt organizations or entities such as state, local and Indian tribal governments can now register for associated tax credits using the IRS
The IRA and the Creating Helpful Incentives to Produce Semiconductors, or CHIPS, Act allows taxpayers to take advantage of certain manufacturing investment, clean energy investment and production tax credits through elective pay or transfer. Elective payment and the transfer election create alternative ways for applicable entities and eligible taxpayers who have earned one of the IRA clean energy or the CHIPS credits to get the benefit of the credit even if they ncannot use the credit to offset their tax liability.
Taxpayers who intend to make an elective payment or credit transfer election must make a tax credit investment or undertake tax credit production activities to earn a credit that qualifies for the elective payment election or can be transferred. They also must complete the pre-file registration process to receive a registration number to include on the annual return for making a valid election.
They should complete and submit the pre-filing registration request no earlier than the beginning of the tax year in which the taxpayer who will earn the credit it wishes to monetize with an elective payment election or transfer election.
Even though registration is not possible prior to the beginning of the tax year in which the credit will be earned, the IRS recommends that taxpayers register as soon as possible during the tax year. The current recommendation is to submit the pre-filing registration at least 120 days before the organization/entity plans to file its tax return and make its election.
If the elective payment amount, together with other tax payments and refundable credits, exceeds the taxpayer's income tax liability, it will be treated as an overpayment of tax, which can be refunded or credited to estimated tax for the next tax year.
Clean hydrogen
The Treasury and the IRS also issued
The IRA provides a production credit for each kilogram of qualified clean hydrogen produced by a taxpayer at a qualified clean hydrogen production facility.
The proposed regulations provide definitions and procedures for administering and claiming this credit, including guidance for determining the lifecycle greenhouse gas emissions rate resulting from hydrogen production. The credit amount depends on the emissions intensity of the hydrogen production process and the taxpayer's compliance with
The guidance also provides procedures for petitioning the IRS for a provisional emissions rate, requirements for verifying the production and sale or use of hydrogen, and requirements for modifying an existing hydrogen production facility to obtain a new original placed-in-service date for purposes of the credit.
Critics have expressed
