IRS issues guidance on energy communities' eligibility for Bonus Credit Program under IRA
Eligible applicants: *, Applications are due: NA
Announcement Type: Notice of Proposed Rulemaking
Opportunity: Energy Community Bonus Credit Amounts
Overview and Eligible Uses: The Treasury Department and IRS plan to propose regulations for energy community bonus credits under the Inflation Reduction Act, including defining different categories of energy communities for determining eligibility for certain tax credits related to energy production and investment. These categories are:
Brownfield Category: This includes real property sites that may have complications in expansion, redevelopment, or reuse due to the presence or potential presence of hazardous substances, pollutants, or contaminants.
Statistical Area Category: This includes Metropolitan Statistical Areas (MSAs) or non-MSAs that meet certain criteria related to employment and tax revenues from fossil fuel extraction, processing, transport, or storage, as well as unemployment rates.
Coal Closure Category: This includes census tracts, or adjacent census tracts, in which a coal mine has closed after December 31, 1999, or a coal-fired electric generating unit has been retired after December 31, 2009.
Amount:The increased credit amount available for meeting the requirements of the energy community provisions is generally 10% for the production tax credit and up to 10 percentage points for the investment tax credit.
Award Type: Credit
Eligible Applicants: The Treasury Department and the IRS intend to issue a listing identifying the sites, census tracks, MSAs and non-MSAs that qualify in the Statistical Area Category based on Fossil Fuel Employment and update it annually. The first listing will apply to the period beginning on January 1, 2023, and subsequent updates will be issued annually in May based on the availability of data. The same approach is likely to be followed for Fossil Fuel Tax Revenue as well.
Key Dates: Proposed regulations expected to apply after April 4, 2023, with interim rules provided in the notice.
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