IRS Issues Notice of Proposed Rulemaking for Low Income Community Bonus Credit Program

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The Internal Revenue Service (IRS) has released a proposed rulemaking notice for the Low Income Community Bonus Credit Program. They will be holding tribal consultation on June 26th with a comment period open now and closing on June 30. Comments can be submitted to tribal.consult@treasury.gov.

Tribal Consultation: 48(e) Additional Guidance
Jun 26, 2023, at 1:00 PM in Eastern Time

From the IRS Federal Register Notice:

“This document contains proposed rules concerning the low income communities bonus energy investment credit program established pursuant to the Inflation Reduction Act of 2022. Applicants investing in certain solar and wind powered-electricity generation facilities may apply for an allocation of environmental justice solar and wind capacity limitation to increase the amount of an energy investment credit for the taxable year in which the facility is placed in service. This document describes proposed definitions and requirements that would be applicable for the program allocating the calendar year 2023 capacity limitation, which also would inform guidance applicable for future program years. The proposed rules would affect applicants seeking allocations of environmental justice solar and wind capacity limitation.”

 

According to Notice 2023-17, released Feb. 13, 2023, under the Low Income Community Bonus Credit Program the Secretary has allocated the statutory 1.8 GW Capacity Limitation for qualified solar and wind facilities between the following categories:

Category 1: Located in a Low-Income Community – 700 megawatts.
Category 2: Located on Indian Land – 200 megawatts.
Category 3: Qualified Low-Income Residential Building (to include tribal) Project – 200 megawatts.
Category 4: Qualified Low-Income Economic Benefit Project – 700 megawatts.

As part of the consultation for this rulemaking notice, Treasury has requested assistance on the following questions:

A. As described above on page 1 of this DTLL, the NPRM provides guidance on a series of definitions. What questions and/or comments do Tribal governments have with regard to the definitions contained in Number 1-4 above?

  • i. With regard to Number 4, what questions and/or comments do Tribal governments have regarding the definition of “located in” and the Nameplate Capacity test for relevant geographic criteria, which includes Indian Lands?


B. As described above on page 1, the NPRM also covers administrative requirements that address process and compliance. What questions and/or comments do Tribal governments have with regard to the guidance contained in Numbers 8,9, and 10 of this DTLL?

C. The Additional Selection Criteria, described above, provides for Tribal inclusion and reserves 50 percent of Capacity Limitation in each facility category for qualifying governments and entities.

  • i. With regard to Ownership Criteria, this section also defines an eligible Tribal Enterprise as follows:

     “Tribal Enterprise” for purposes of the Ownership Criteria is an entity that (1) an Indian Tribal government (as defined in section 30D(g)(9)) owns at least a 51 percent interest in, either directly or indirectly (through a wholly owned corporation created under its Tribal laws or through a section 3 or section 17 Corporation), and (2) the Indian Tribal government has the power to appoint and remove a majority (more than 50 percent) of the individuals serving on the entity’s board of directors or equivalent governing board.

What questions and/or comments do Tribal governments have with regard to the Additional Selection Criteria, including the definition of Tribal Enterprise?

  • ii. The Additional Section Criteria also includes Geographic Criteria as described above. Should this criteria apply on Indian lands under Category 2?

D. What other questions or comments, if any, do Tribal governments have regarding the NPRM?

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