$10 billion in green technology tax credits have been allocated under the Inflation Reduction Act. These fall under Section 48C, which was expanded to include prevailing wage and apprenticeship requirements for those wishing to claim the credits. The IRS and the Treasury released details regarding the allocation of funds for these credits along with initial guidance on what you have to do to qualify for projects in Notice 2023-18.
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Rules for Determining Tax Credits under Section 48C
The notice includes:
- Rules for determining credits under Section 48C
- What qualifies as an advanced energy project
- The allocation process for the credits
Understanding the intricate rules governing tax credits under Section 48C is crucial for navigating the landscape of clean energy projects. These rules outline the criteria and benchmarks that projects must meet to qualify for tax credits. They encompass a range of factors, including project scope, technological innovation, environmental impact, and job creation.
Furthermore, the rules delineate the application process, detailing the necessary documentation and steps required to demonstrate compliance and eligibility. Compliance with prevailing wage and apprenticeship requirements, as stipulated in Notice 2023-18, adds another layer of complexity to the application process. By grasping the intricacies of these rules, stakeholders can position their projects for success and maximize their chances of securing vital tax credits to drive forward the transition towards a sustainable energy future.
Round One Details: How to Apply for Infrastructure Reduction Act Tax Credits
The $10 billion will be allocated in rounds, with round one starting on May 31. This round will include $4 billion, a portion of which is set aside for projects in Energy Communities Census Tracts. These are special areas near former coal mining sites. Read more about energy communities here.
Round one begins on May 31, and to be considered for any of the available credits you have to submit concept papers to the Department of Energy by July 31, 2023. Additional information regarding what you must submit is supposed to be issued on May 31 by the IRS and Treasury.
Funding is Limited
Those interested in taking advantage of these tax credit programs will have to be on their toes since round one and information on how to apply are released on the same day. Since the amount of funding is limited and submissions are being ranked by commercial viability and other factors, getting your submission in early will be important.
You can look for clean energy infrastructure funding opportunities on the Office of the Under Secretary of Infrastructure website and learn more about this round of Infrastructure Reduction Act credits through the following resources.
IRS and Treasury guidance brief
Inflation Reduction Act (IRA)
The material presented here is educational in nature and is not intended to be, nor should be relied upon, as legal or financial advice. Please consult with an attorney or financial professional for advice.
