The IRS has opened the portal for taxpayers to register to elect to transfer or receive refundable payments for energy credits under the Inflation Reduction Act (IRA).
The IRS created new monetization options, allowing 11 energy credits to be sold and transferred to other taxpayers for cash. Three of these credits are also effectively refundable for five years (as is the CHIPS tax credit under Section 48D). Tax-exempt entities can generally elect to receive all 11 as refundable direct payments, plus the credit for clean commercial vehicles. For more information on the transfer and direct credit rules, see our prior story.
Taxpayers that want to elect to transfer or receive a refundable credit must register their intention for an elective payment credit or transfer and receive a registration number.
Registration for either a credit claim or transfer cannot be completed earlier than the beginning of the tax year in which the credits will apply. Registration must be completed prior to filing the return making the transfer or refundability elections and the IRS recommends claimants attempt to register at least 120 days before the organization plans to file its taxes.
Grant Thornton Insight
Taxpayers are not required to register 120 days before filing the return but should consider registering as soon as possible and allowable to speed up refunds and avoid processing issues. The IRS says it will handle registration applications in the order they come in and will not expedite reviews.
Taxpayers will need to go through several steps in order to register, including having the individual performing the registration process set up an ID.me account to verify identification. Taxpayers will need to provide significant information through the portal, including:
- Employer Identification Number
- Tax period of the election
- Information about subsidiaries included in a consolidated group of corporations
- Name and address
- Type of entity and types of returns filed
- Bank account information
- Date construction began and was completed
- Facility or property location
- Any joint ownership
- Source of funds
In many cases, the IRS also wants documentation supporting the registration, such as permits, certifications, or evidence of ownership. These requirements will vary depending on the type of credit. Bulk uploads of various facilities are possible, but requests for multiple facilities will be considered one at a time.
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