More than 500 Entities Have Registered 45,500 Projects for New Elective Pay and Transferability Credit Monetization Provisions
WASHINGTON – Today, the U.S. Department of the Treasury and Internal Revenue Service (IRS) announced reaching a new milestone in implementation of key provisions in the Inflation Reduction Act to expand the reach of the clean energy tax credits and help build projects more quickly and affordably, with more than 45,500 projects requesting registration numbers through the new IRS Energy Credits Online (ECO) portal as of March 8, 2024.
The Inflation Reduction Act created two new credit delivery mechanisms—elective pay (also known as “direct pay”) and transferability—that enable state, local, and Tribal governments; non-profit organizations, U.S. territories; and other entities to take advantage of clean energy tax credits. Until the Inflation Reduction Act introduced these new credit delivery mechanisms, governments, many types of tax-exempt organizations, and even many businesses could not fully benefit from tax credits like those that incentivize clean energy construction.
“Before the Inflation Reduction Act, it was more challenging for companies to access tax incentives to finance projects and deploy new clean power. The law included two new mechanisms to fix this and translate credits into financing, ensuring more clean energy projects are built quickly and affordably, and more communities benefit from the growth of the clean energy economy,” said U.S. Deputy Secretary of the Treasury Wally Adeyemo. “Meeting our economic and climate goals depends on the ability of companies to finance capital-intensive projects like building new factories, and initial data is encouraging. Increasing access to credits also underscores the connection between the economic and climate goals of the Inflation Reduction Act and our work to create a modernized IRS. The IRS has quickly delivered new technology that allows companies investing in the United States to take advantage of clean energy incentives and move projects forward.”
To facilitate taxpayers receiving an elective payment, transferring a clean energy credit, or claiming a CHIPS credit, the IRS built ECO for taxpayers to complete the pre-file registration process and receive a registration number. The registration number must be included on the taxpayer’s annual return when making an elective pay or transfer election for a clean energy credit. The registration process helps prevent improper payments to fraudulent actors and provides the IRS with basic information to ensure that any taxpayer that qualifies for these credit monetization mechanisms can readily access these benefits upon filing a return. This followed a rapid effort to develop both the proposed guidance and systems necessary for taxpayers to use elective pay and transferability, including testing prior to the December launch.
For the IRS ECO elective pay, transferability, and CHIPS functionality, as of March 8, 2024, around 500 entities have registered and requested registration numbers for more than 45,500 total facilities or projects.
- More than 98% of these facilities or projects are pursuing transferability.
- Of the registered entities, approximately 50% are applicable entities that are able to use elective pay and 50% are generally considered taxable entities that would use primarily use transferability. A wide variety of credits are being used, including:
- Investment Tax Credit (48)
- Production Tax Credit (45)
- Commercial Clean Vehicle Credit (45W)
- Alternative Fuel Vehicle Refueling Property Credit (30C)
- Credit for Carbon Oxide Sequestration (45Q)
- CHIPS Investment Tax Credit (48D)
- Advanced Manufacturing Production Credit (45X).
- Of the projects and facilities requesting registration numbers: More than 80% are under the clean energy Investment Tax Credit (Section 48), and more than 15% are under the clean energy Production Tax Credit (Section 45). These projects are primarily related to solar and wind facilities.
- Around 50 projects have requested registration numbers under the Advanced Manufacturing Production Credit (45X).
These figures include submitted requests for registration numbers and not work that may be saved in progress. Registration numbers, which speed return processing, are being issued by the IRS on a rolling basis. Entities can also file for extensions and, in general, entities that file by the due date of their return and appropriately claim elective pay can anticipate a payment within 45 days of the due date of their annual return. In some cases, payment may take less or more time. Treasury and the IRS have conducted a robust and wide-ranging educational campaign on these new provisions to benefit taxpayers, including dozens of webinars and convenings that have attracted thousands of attendees.
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