US Treasury, IRS Expand Reach of Clean Energy Tax Credits
TL/DR –
The US Department of the Treasury and Internal Revenue Service (IRS) have implemented key provisions of the Inflation Reduction Act, leading to over 1,000 clean energy projects registering via the IRS Energy Credits Online (ECO) portal. These projects can now benefit from new “direct pay” and “transferability” tax credit delivery mechanisms that were unavailable to many organizations and businesses before the Act’s introduction. To simplify direct payment and transfer election for clean energy credits, the IRS developed the ECO portal, which has already seen approximately 145 entities request registration numbers for over 1,290 projects in 40 states and territories.
Over 1000 Projects Register for New Direct Pay and Transferability Credit Monetization Provisions
The U.S. Department of the Treasury and Internal Revenue Service (IRS) have reported reaching a crucial milestone in implementing clean energy tax credits as part of the Inflation Reduction Act. Over 1,000 projects have registered through the new IRS Energy Credits Online (ECO) portal, benefiting from these provisions.
Two new credit delivery mechanisms—elective pay (“direct pay”) and transferability— were created by the Inflation Reduction Act. These mechanisms allow state, local, and Tribal governments, non-profit organizations, U.S. territories, and other entities to benefit from clean energy tax credits. Earlier, these credits were inaccessible to tax-exempt organizations and many businesses.
Deputy Secretary of the Treasury Wally Adeyemo stated, “Increased access to clean energy credits has accelerated the growth of the clean energy economy. The modernized IRS Energy Credits Online makes it easy for eligible companies and state and local governments to benefit from clean energy incentives.”
IRS Commissioner Danny Werfel mentioned, “The new online tool reflects our progress in aiding taxpayers and wider tax community. This tool helps users with clean energy credits and improves communication while reducing compliance issues.”
The IRS developed ECO for taxpayers to complete the pre-file registration process and receive a registration number. This number helps prevent fraud and provides the IRS with necessary information to ensure that eligible taxpayers can access these credits upon filing a return.
As of this week, about 145 entities have requested registration numbers for 1,290 projects or facilities in 40 states and territories. More than 1,170 projects are pursuing transferability and over 110 projects are pursuing direct pay. The tax credit value for these projects will be determined when the credit recipient files their taxes.
These figures only consider submitted requests for registration numbers. Another roughly 180 entities have created accounts through IRS ECO but have not yet formally requested registration numbers. Treasury and the IRS anticipate issuing the first registration numbers later this month. They have conducted a broad educational campaign, including dozens of webinars and a detailed user guide to assist taxpayers in understanding these new provisions.
—
Read More US Economic News