IRS Requests Comments for Guidance on Energy Tax Credits in the Inflation Reduction Act by November 4

Following the August enactment of the landmark Inflation Reduction Act (IRA), the IRS recently issued six notices with requests for comments to implement modifications to energy tax credits and benefits. Comments will help the agency draft the guidance items “most reflective of the needs of taxpayers entitled to claim energy credits.”

The notices ask for comments related to clean energy generation projects, including the Investment Tax Credit (ITC) and Production Tax Credit (PTC), as well as incentives for electric vehicles, energy efficiency improvements in residential and commercial buildings, manufacturing investments, labor and apprenticeship requirements, and transfer or direct payment of certain tax credits.

Topics for comment that are likely to generate interest include the following:

• For eligible distribution generation (<5 megawatt) projects, the types of interconnection additions or modifications that should be included in costs eligible for tax credits.
• Whether a project claiming the ITC must satisfy all requirements for the ITC (like the requirement that energy be sold to an unrelated person).
• Required documentation to demonstrate compliance with apprenticeship and prevailing wage requirements for higher tax credit.
• How to implement sourcing and domestic content requirements in the IRA for certain bonus tax credits.
• Further clarification of the energy community requirements for certain bonus tax credit amounts, including whether additional clarification of brownfield sites is necessary.

Comments are due by Friday, November 4, 2022. Please contact Kevin Decker or David Littell of our Climate Change Group to discuss the opportunity to file comments, or questions about how the IRA may affect your business or organization.