IRS issues FAQs regarding registration for clean fuel production credit

The IRS today issued “frequently asked questions” (FAQs)—FS-2024-25—related to which entities must apply for registration for the clean fuel production credit.

The IRS release—IR-2024-184—explains that the FAQs address which entity must apply for registration pursuant to Notice 2024-49, including if the entity producing the clean fuel is a disregarded entity, and also which entity will be able to claim the credit when the registrant is a disregarded entity.

Background

The “Inflation Reduction Act of 2022” (IRA) added a new income tax credit for clean fuel production, available beginning January 1, 2025. To claim a clean fuel production credit, the taxpayer must be registered as a producer of clean fuel at the time of production.

Notice 2024-49 provides guidance on the registration procedures for the clean fuel production credit, including how to apply for registration and what information a clean fuel producer must submit with its application. Read TaxNewsFlash

FAQs

Full text of the FAQs provided in FS-2024-25 are provided below.

Q1. Which entity must apply for registration for purposes of the Clean Fuel Production Credit pursuant to Notice 2024-49? (added July 10, 2024)

A1. Each business unit that has, or is required to have, a separate employer identification number (EIN) and is a producer of clean fuel is treated as a separate person for registration purposes. Thus, two related business units, each of which has a separate EIN, are two persons, and each must separately apply for registration using Form 637 if they are each producers of clean fuel.

Q2. Does a disregarded entity have to register pursuant to Notice 2024-49? (added July 10, 2024)

A2. A disregarded entity for income tax purposes that is a producer of clean fuel is not treated as a disregarded entity for purposes of registration for the Clean Fuel Production Credit. Instead, such entity must separately apply for registration using Form 637 if it is a producer of clean fuel.

Q3. May an entity that is not registered for purposes of the Clean Fuel Production Credit, but that owns a disregarded entity that is registered pursuant to Notice 2024-49, still claim the Clean Fuel Production Credit? (added July 10, 2024)

A3. Yes. An owner of a disregarded entity that is registered for the Clean Fuel Production Credit pursuant to Notice 2024-49, but that is not itself registered, would be able to claim the Clean Fuel Production Credit using the registration number of the disregarded entity.