Tax Tip 2023-94: Certain energy credits under the Inflation Reduction Act are elective pay eligible

IRS Tax Tips July 25, 2023
Useful Links: IRS.gov Help For Hurricane Victims News Essentials What's Hot News Releases IRS - The Basics IRS Guidance Media Contacts Facts & Figures Around The Nation e-News Subscriptions The Newsroom Topics Multimedia Center Noticias en Español Radio PSAs Tax Scams/Consumer Alerts The Tax Gap Fact Sheets IRS Tax Tips Armed Forces Latest News IRS Resources Contact Your Local IRS Office Filing Your Taxes Forms & Instructions Frequently Asked Questions Taxpayer Advocate Service Where to File IRS Social Media	Issue Number: Tax Tip 2023-94 Certain energy credits under the Inflation Reduction Act are elective pay eligible Elective pay allows applicable entities, including tax-exempt and governmental entities that would otherwise be unable to claim certain credits because they do not owe federal income tax, to benefit from some clean energy tax credits. By choosing this election, the amount of the credit is treated as a payment of tax and any overpayment will result in a refund. Applicable entity eligibility Applicable entities can use elective pay. Applicable entities include: Tax-exempt organizations such as public charities, private foundations, social welfare organizations, labor organizations, business leagues and others States and political subdivisions such as local governments or Indian tribal governments U.S. territories and their political subdivisions Agencies and instrumentalities of state, local, tribal and U.S. territorial governments Alaska Native corporations The Tennessee Valley Authority Rural electric cooperatives How to receive the elective payment For an eligible entity to receive an elective payment, they need to take the following steps: Identify the project or activity they are pursuing and satisfy all requirements for the applicable credit. Determine the correct tax year, which determines the due date of the tax return. Complete the pre-filing registration process with the IRS. More information about this process will be available later in 2023. After the pre-filing registration process is complete and the requirements for the applicable credit have been satisfied, the eligible entity can claim and receive an elective payment by choosing the election on their annual tax return along with any form required to claim the relevant tax credit. Applicable entities need their own Employee Identification Number (EIN) or Tax Identification Number (TIN) to complete the pre-filing registration process. Applicable entities that don't otherwise have a filing requirement cannot use or borrow the EIN of a related entity. Eligible credits: Production Tax Credit for Electricity from Renewables Clean Electricity Production Tax Credit Investment Tax Credit for Energy Property Clean Electricity Investment Tax Credit Low-Income Communities Bonus Credit Credit for Carbon Oxide Sequestration Zero-Emission Nuclear Power Production Credit Advanced Energy Project Credit Advanced Manufacturing Production Credit Credit for Qualified Commercial Clean Vehicles Alternative Fuel Vehicle Refueling Property Credit Clean Hydrogen Production Tax Credit Clean Fuel Production Credit More information: Elective Pay Overview, Publication 5817 Elective Pay Clean Energy Credits, Publication 5817-G Back to top           Thank you for subscribing to IRS Tax Tips, an IRS e-mail service. For more information on federal taxes please visit IRS.gov. This message was distributed automatically from the IRS Tax Tips mailing list. Please Do Not Reply To This Message.

 

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