IRS notices: Requests for comments on upcoming clean energy tax guidance that could benefit exempt organizations
Requests for comments on different aspects of extensions and enhancements of energy tax benefits in the “Inflation Reduction Act of 2022”
Upcoming clean energy tax guidance that could benefit exempt organizations
The IRS today issued six notices asking for comments on different aspects of extensions and enhancements of energy tax benefits in H.R. 5376 (commonly called the “Inflation Reduction Act of 2022” (IRA)):
- Notice 2022-46 [PDF 130 KB] requests comments on credits for clean vehicles.
- Notice 2022-47 [PDF 125 KB] requests comments on energy security tax credits for manufacturing.
- Notice 2022-48 [PDF 143 KB] requests comments on incentive provisions for improving the energy efficiency of residential and commercial buildings.
- Notice 2022-49 [PDF 146 KB] requests comments on certain energy generation incentives.
- Notice 2022-50 [PDF 123 KB] requests comments on elective payment of applicable credits and transfer of certain credits.
- Notice 2022-51 [PDF 148 KB] requests comments on prevailing wage, apprenticeship, domestic content, and energy communities requirements.
Specific questions raised in the notices directed at tax-exempt organizations, include:
- How would clean vehicles acquired and used by a tax-exempt entity be treated for purposes of section 30D?
- What criteria should Treasury and the IRS consider in providing rules to determine the person that is “primarily responsible for designing” energy efficient commercial building property for tax-exempt organizations under section 179D(3)(A)?
- What additional guidance is necessary regarding tax-exempt “applicable entities” making “direct pay” elections under section 6417 to effectively render certain applicable credits refundable?
- What additional guidance would be helpful in determining how to calculate a reduction in certain energy generation credits for tax-exempt bond financing?
Notice 2022-46 provides that the publication of the notice is not publication of proposed guidance with resect to the critical mineral and battery component under section 30D(e). Similarly, Notices 2022-47, -48, -49 and -51 all provide that the publication of those notices is not proposed guidance with respect to the prevailing wage and apprenticeship requirements under sections 30C, 45, 45L, 45Q, 45U, 45V, 45Y, 45Z, 48, 48C, 48E, and 179D, and it is not relevant in determining whether the prevailing wage and apprenticeship requirements are satisfied under those sections.
According to the accompanying IRS release—IR-2022-172 (October 5, 2022)—the IRS requests that those interested in providing feedback to the questions in the notices follow the instructions in the notices to reply by November 4, 2022.
Treasury also released a fact sheet [PDF 150 KB] that includes additional information about the notices and Treasury and the IRS’s implementation process.
Background
President Biden on August 16, 2022, signed into law the “Inflation Reduction Act of 2022”—the budget reconciliation legislation that includes significant law changes related to tax, climate change, energy, and health care.
The legislation does not include provisions specifically focused on charities or charitable giving. There are certain measures, however, that could in some ways affect or benefit exempt organizations.
For instance, one provision concerns a book minimum tax on corporations with average annual adjusted financial statement income of more than $1 billion. For tax-exempt corporations, only unrelated business income will be taken into account for purposes of the $1 billion threshold.
Other provisions concern clean energy tax credits—measures that could benefit exempt organizations making investments in clean energy technologies.
For instance, the new law expands access to various energy tax credits, including by making them available to certain tax-exempt and governmental entities—specifically by providing a “direct pay” election under which these organizations can receive a cash refund for the amount of the credit determined. Under prior law, these tax credits had certain limitations for projects owned by exempt organizations. Read TaxNewsFlash
For more information, contact a tax professional with KPMG’s Washington National Tax practice:
Ruth Madrigal | ruthmadrigal@kpmg.com
Preston Quesenberry | pquesenberry@kpmg.com
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.