Treasury Releases Proposed Rules for IRA Clean Energy Tax Credits
On June 14, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) released proposed guidance on clean energy tax credits in the Inflation Reduction Act (IRA). Under the law, two new credit delivery mechanisms were created – elective pay (aka direct pay) and transferability – that enable state, local, and Tribal governments; non-profit organizations, U.S. territories; and other entities to take advantage of clean energy tax credits. The elective pay provision applies to 12 of the clean energy tax credits available under the IRA, including those that would support the purchase of clean fleet vehicles and the installation of solar generation. The proposed regulations clarify which entities would be eligible for each credit and lays out the process and timeline to claim and receive an elective payment. With the June 14 release, a 60-day public comment period begins, after which Treasury and the IRS will consider the feedback received before issuing final rules.
Additionally, Treasury and the IRS also released temporary regulations for an electronic pre-filing registration requirement. More information about the pre-registration process is anticipated later this year.
GFOA is in the process of reviewing the proposed guidance and encourages members to review them as well:
- Elective pay (aka direct pay) proposed regulations
- Transferability proposed regulations
- Elective pay/transferability FAQs
- Tax credit fact sheets
Finally, Treasury plans to hold a briefing on June 29 at 3:00 p.m. (Eastern) on the guidance. Interested stakeholders are encouraged to register in advance, here.