Proposed Regulations for EV Charging & Alternative Fuel Revealed
TL/DR –
The US Department of Treasury and the Internal Revenue Service issued regulations and a notice regarding the Alternative Fuel Vehicle Refueling Property Credit under section 30C of the Internal Revenue Code of 1986. The regulations provide guidance to taxpayers about claiming a credit for up to 30% of the cost of qualified “alternative fuel vehicle refueling property” installed between 2022 and 2033. They also correct technical issues related to mapping tools used to identify eligible census tracts for the credit, and outline details around what property qualifies for this credit, how single items of property are defined for the purpose of the credit, and the conditions for eligible census tracts.
Amended 30C Credit Regulations Released by Treasury and IRS
On September 18, 2024, the Department of Treasury and the Internal Revenue Service released proposed regulations and Notice 2024-64. These documents provide guidance on the Alternative Fuel Vehicle Refueling Property Credit (“30C Credit”) under section 30C of the Internal Revenue Code of 1986, and correct certain technical issues related to mapping tools for identifying eligible census tracts for the 30C Credit.
Details of Alternative Fuel Vehicle Refueling Property Credit
The Inflation Reduction Act of 2022 expanded the 30C Credit. It now allows taxpayers to claim a credit for up to 30% of the cost of qualified “alternative fuel vehicle refueling property” (“30C Property”) installed between 2022 and 2033. This act increased the general business credit limitation from $30,000 to $100,000 per location for any single item of 30C Property. The credit is only available for property placed in service in an eligible low-income or non-urban area census tract.
30C Property typically refers to property used for the storage or dispensing of clean-burning fuel or for the recharging of electric motor vehicles. The proposed regulations offer detailed guidance and several examples regarding the 30C Credit and invite taxpayer feedback.
Notable Items in the Proposed Regulations
30C Property includes property that is functionally interdependent and directly attributable to the single item of 30C Property. Bidirectional charging equipment may be classified as 30C Property, but components located within a motor vehicle are excluded to prevent credit duplication. The proposed regulations also provide an apportionment rule for property traceable to more than one item of 30C Property.
For the purpose of the $100,000 cap, a single item of 30C Property refers to each charging port, fuel dispenser, or storage property. The IRS will periodically publish lists of specific low-income or non-urban census tracts, along with instructions on how taxpayers can identify their census tract numbers.
Requirements and Regulations for the 30C Credit
To be eligible for the full 30C Credit amount, various requirements must be met, including prevailing wage and apprenticeship conditions. The proposed regulations state that a seller of 30C Property must comply with the recordkeeping requirements. The credit is not available for 30C Property located in a US territory. The Treasury and IRS invite comments on how mobile charging equipment can satisfy the eligible census tract requirement.
Credit Recapture Conditions
Recapture only occurs if, within three years of installation, the taxpayer modifies the property so it no longer qualifies as 30C Property. A sale of the 30C Property generally does not trigger recapture unless the taxpayer knows the property will cease to qualify post-sale. A property is not subject to recapture solely because it is placed in a location that later ceases to be a qualified census tract.
2015 census tract boundaries and 2020 census tract boundaries can be found on the Census Bureau’s website. Comments and requests for a public hearing on the proposed regulations are due by November 18.
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