Pre-registration for elective payment option to receive tax credits
Safe harbor for “incremental cost” of commercial clean vehicles eligible for tax credit; additional clean energy investment tax credit guidance
Information that may be of note for tax-exempt organizations
- The IRS announced today that qualifying tax-exempt and governmental entities can now access the new IRA/CHIPS Pre-Filing Registration Tool to register take advantage of the elective payment option to receive clean energy investment and production tax credits under provisions of the Inflation Reduction Act (IRA). According to today’s IRS release—IR-2023-249 (December 22, 2023)—tax-exempt and governmental entities must complete the pre-filing registration process to receive registration numbers, which must be included on the taxpayer’s annual return as part of making a valid election. Entities may register after placing an investment property or production facility in service, but no earlier than the beginning of the tax period when the credit is earned. The IRS advises entities to register at least 120 days before the due date (including extensions) for the return on which the credit is reported to allow time for IRS review of submissions. Government entities (including tribal governments) that cannot currently use Form 8868, Application for Extension of Time to File an Exempt Organization Return, to request an extension of the time to file Form 990-T, Exempt Organization Business Income Tax Return, will (at the time they register) receive a paperless automatic six-month extension of the time to file. They do not need to apply for an extension. For more information, read TaxNewsFlash
- The IRS on December 20, 2023, released Notice 2024-5 [PDF 118 KB] providing guidance relating the new credit under section 45W for qualified commercial clean vehicles enacted in the IRA. The guidance provides a safe harbor regarding the incremental cost of certain qualified commercial clean vehicles placed in service in calendar year 2024 for purposes of calculating the new credit, which tax-exempt and governmental entities can access through elective payment. The notice requests comments regarding additional types or classes of vehicles that may be included in the safe harbor in the future. For more information, read TaxNewsFlash
- The IRS in November 2023 released proposed regulations [PDF 263 KB] that would amend existing regulations under section 48 relating to the clean energy investment tax credit (ITC). The proposed regulations provide clarifying definitions for energy property that has been ITC eligible for many decades and also for energy property that became newly eligible for the ITC under IRA, including with respect to solar, fuel cell, geothermal, combined heat and power, and biogas projects. Read TaxNewsFlash as well as a KPMG report [PDF 802 KB]
For more information, contact your usual KPMG tax professional or one of the following Washington National Tax professionals:*
Ruth Madrigal | ruthmadrigal@kpmg.com
Preston Quesenberry | pquesenberry@kpmg.com
* Please note that KPMG offices in the United States will be closed until January 2, 2024.
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