Earlier today, the U.S. Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) released their Final Rule on Direct Pay programs. This Final Rule changes the Direct Pay program that was implemented in the Inflation Reduction Act (IRA) of 2022 and represents an important opportunity for tribes to access clean energy tax credits. Treasury will also be holding a stakeholder webinar today at 2 p.m. ET.
In addition to the Direct Pay rules, the Treasury will be holding a consultation session on Direct Pay and Joint Ownership Arrangements on April 5th at 1 p.m. ET. A Dear Tribal Leader letter was sent out today with further information, as well as news of the Notice of Proposed Rulemaking. The Treasury will be accepting written comments until May 10th.
From the Treasury’s announcement:
“Today, as part of the Biden-Harris Administration’s Investing in America agenda, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) released final ruleson elective pay, (otherwise known as “direct pay”).
We invite you to join Treasury and the White House for a stakeholder webinartoday, March 5, 2024, at 2:00 p.m. ET to learn more about the final rules and related guidance. A link to register can be found here.
Elective pay is an important mechanism in the Inflation Reduction Act (IRA) that helps enable state, local, and Tribal governments; non-profit organizations; Puerto Rico and other U.S. territories; and other entities to take advantage of clean energy tax credits. Treasury’s elective pay final rules provide certainty for applicable entities to understand the law’s scope and requirements for eligibility. Some highlights of the final regulations include:
- Definition of “applicable entity”
- Pre-filing registration process
- Determining tax year for entities that do not have a Federal income tax or Form 990 filing obligation
- Special rule on tax-exempt grants and forgivable loans
- Applicable entities that co-own electricity-producing applicable credit property
We encourage you to check out the following elective pay resources:
- Elective Pay Overview, Publication 5817
- Clean Energy Tax Incentives: Elective Pay Eligible Tax Credits, Publication 5817-G
- IRS Elective Pay Frequently Asked Questions
- Treasury.gov/IRS-ResourcesHub
- IRS.gov/ElectivePay
- CleanEnergy.gov/DirectPay
In addition to these final rules, Treasury and the IRS also today released a proposed rulethat is intended to provide further clarity and flexibility for applicable entities that co-own clean energy projects and would like to utilize elective pay.”
Over the next few weeks, the IRS will be holding office hours for Direct Pay applicable entities that have questions regarding the pre-filing registration process. Times and registration information can be found here:
| Date | Time | Registration Link |
| March 6, 2024 | 1-2:30 PM ET | Register Here |
| March 13, 2024 | 1-2:30 PM ET | Register Here |
| March 20, 2024 | 1-2:30 PM ET | Register Here |
| March 27, 2024 | 1-2:30 PM ET | Register Here |
| April 3, 2024 | 1-2:30 PM ET | Register Here |
| April 10, 2024 | 1-2:30 PM ET | Register Here |
| April 17, 2024 | 1-2:30 PM ET | Register Here |
| April 24, 2024 | 1-2:30 PM ET | Register Here |
ADDITIONAL RESOURCES
