IRS opens free IRA and CHIPS Pre-filing Registration Tool for organizations to register to monetize clean energy credits
Announcement Type: Press Release
Opportunity: Elective Payment and transfer election opportunities for eligible tax credits from Inflation Reduction Act and the Creating Helpful Incentives to Produce Semiconductors Act
Overview and Eligible Uses: The IRA and CHIPS Act allow taxpayers to take advantage of certain manufacturing investment, clean energy investment, and production tax credits through elective pay or transfer.
The taxpayer must complete the pre-file registration process to receive a registration number for each eligible project. 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 reasonably practicable during the tax year; the current recommendation is to submit the pre-filing registration at least 120 days prior to when the organization or entity plans to file its tax return on which it will 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.
Eligible tax credits include:
30C. Alternative Fuel Infrastructure Tax Credit
45. Production Tax Credit for Electricity from Renewables
45Q. Credit for Carbon Oxide Sequestration
45U. Zero-Emission Nuclear Power Production Credit
45V. Clean Hydrogen Production Tax Credit
45W. Credit for Qualified Commercial Clean Vehicles
45X. Advanced Manufacturing Production Credit
45Y. Clean Electricity Production Tax Credit (2025 onwards)
45Z. Clean Fuel Production Credit (2025 onwards)
48. Investment Tax Credit for Energy Property
48C. Advanced Energy Project Credit
48E. Clean Electricity Investment Tax Credit
48D. Advanced Manufacturing Investment Credit
Amount: The amount varies by credit and project depending on varying factors. Meeting Prevailing Wage and Apprenticeship requirements and domestic content requirements may provide for bonuses to specific credits, and projects in energy communities may be eligible as well.
Please see the IRS publication, “Clean Energy Tax Incentives: Elective Pay Eligible Tax Credits” for more information on these bonuses and credit amounts.
Award Type: Tax credit(s)
Eligible Applicants:
Eligible entities for direct pay include states; U.S. territories; political subdivisions including cities, counties, municipalities, townships, and villages; agencies and instrumentalities of state, local, or territorial governments, including water districts, school districts, economic development agencies, and certain public universities and hospitals; federally recognized Tribal governments, their subdivisions and agencies; Alaska Native Corporations; Rural Energy Cooperatives; Tennessee Valley Authority; 501(c)(3) organizations such as public charities, private foundations, schools, hospitals, houses of worship, and others; religious or apostolic 501(d) organizations; and all other organizations exempt under section 501(a) of the tax code.
Key Dates: The Department of Treasury will be hosting a webinar on January 9, 2024 at 2:00 PM ET on Direct Pay and to provide an overview of the pre-filing registration process; registration for the webinar is available here.
The current recommendation is to submit the pre-filing registration at least 120 days prior to when the organization or entity plans to file its tax return on which it will make its election.
Key Links:
Registration for January 9 webinar hosted by Department of Treasury
IRS press release on opening of pre-filing registration tool
White House, Direct Pay through the Inflation Reduction Act
“Clean Energy Tax Incentives: Elective Pay Eligible Tax Credits”
The Nowak Metro Finance Lab, in collaboration with Accelerator for America and the Local Infrastructure Hub has produced case stories on early implementation strategies for direct pay in Denver, CO and Madison, WI.
The Local Infrastructure Hub has additional resources for cities on using Direct Pay to promote clean energy projects and clean vehicles available online.
For a full list of currently available grant programs under the Infrastructure Law and other helpful tools, take a look at our Helpful Resources page.
This tracker will continue to send updates when new funding opportunities are announced.