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Federal Tax

IRS Details Roadmap for Qualifying Advanced Energy Project Credits

Thomson Reuters Tax & Accounting  

· 5 minute read

Thomson Reuters Tax & Accounting  

· 5 minute read

The IRS reminded taxpayers of important upcoming dates and eligibility requirements for the Qualifying Advanced Energy Project Credit Allocation Program under Code Sec. 48C(e) by the Inflation Reduction Act (PL 117-169). (Fact Sheet 2023-16)

The program will allocate $10 billion in credits, and the IRS provided initial guidance in February (Notice 2023-18) and subsequent guidance in late May (Notice 2023-44). Per the guidance released so far, the credits will be allocated in two rounds, approximately $4 billion for the first round.

“The program provides incentives for clean energy property manufacturing and recycling, industrial decarbonization, and critical materials processing, refining and recycling,” read the fact sheet. “The base credit rate is 6% of the taxpayer’s qualified investment, which increases to 30% if the project satisfies the prevailing wage and apprenticeship requirements.”

A total $4 billion will be reserved for projects in Section 48C(e) Energy Communities Census Tracts where no pre-inflation bill qualified advanced energy projects were located, and have closed or retired coal mines or coal-fired power plants.

“In addition, the Department of Energy is aiming to leverage credit allocations in the first round to support a diverse portfolio of investments, including in the small- and medium-sized manufacturers that form the backbone of local and regional economies and supply chains,” read an Energy Department (DOE) blog accompanying the newer guidance.

Taxpayers wishing to apply must use the DOE’s eXCHANGE portal to submit concept papers detailing the energy projects and why credits should be awarded. “The 48C eXCHANGE portal is live in the sense that you can download all of the materials you need to start working on your concept papers,” a DOE official said at a June 27 webinar. “Come June 30th, you will be able to register yourself as a user and subsequently start submitting your concept papers.”

Concept papers are due July 31, noon Eastern time. “After review of the concept paper, DOE will encourage or discourage the taxpayer to submit an application,” the IRS explained. “All taxpayers who submit timely concept papers are eligible to submit an application, regardless of DOE’s response to their concept paper. DOE will begin the acceptance process for a taxpayer’s application seven days after the date of the letter of encouragement or discouragement. The application must be submitted no later than 45 days after DOE begins the acceptance process for the taxpayer’s application.”

According to the fact sheet, letters of determinations will be issued no later than March 31, 2024. Denied applicants may seek to debrief with the DOE for more information as to why the application was rejected.

For more information on the allocation program, see Checkpoint’s Federal Tax Coordinator ¶L-16465.


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