![]() ![]() ![]() There are a variety of energy credits that qualify, including the familiar production tax credit for renewables under Section 45 and the investment tax credit for alternative energy property under Section 48 as well as a number of newer energy tax credits.īecause the credit amount will be treated as a direct payment against tax, the benefit under Section 6417 will presumably flow to the applicable entity as a tax refund. Section 6417(a) provides that an applicable entity can elect to treat a wide range of energy credits as direct payments against tax. The government requested comments in October 2022 on additional guidance necessary to implement the regime, and US Treasury Department officials recently indicated that guidance is anticipated by this summer. Layering on all the various incentives could result in applicable tax-exempt organizations receiving payments from the government ranging from 30% up to 70% of the cost of a qualifying energy project. The Act includes increasing incentives for projects in low-income communities, using domestic content in projects, and/or utilizing workers that meet prevailing wage and apprenticeship standards. Section 6418 of the Code further creates a market for these clean energy credits by permitting tax-exempt organizations to transfer these credits to non-exempt taxpayers in exchange for cash and treats those payments as nontaxable to the exempt organization. Section 6417 of the Internal Revenue Code (the Code) now permits tax-exempt organizations to effectively receive cash payments from the government in lieu of claiming certain energy tax credits. ![]() The Inflation Reduction Act of 2022 (the Act) created new opportunities for tax-exempt organizations to participate in the benefits of various energy credits. Further guidance on the credit regime is anticipated in the coming months, which should help organizations determine the benefits of clean energy projects. The Inflation Reduction Act of 2022 opened up many energy credit opportunities for tax-exempt organizations. ![]()
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