IRS sets deadline for low-income energy credit applications

 

The IRS has announced a Feb. 29 deadline to apply for a 2023 allocation of enhanced credit rates for solar and wind projects built in certain geographic locations or benefit specific low-income populations.

 

The Low-Income Communities Bonus Credit Program offers an increased credit of either 10% or 20% for solar or wind projects under 5 megawatts in connection with certain low-income communities. Unlike other bonus credit amounts, taxpayers must apply to receive a Section 48(c) allocation and funding is capped at 1.8 gigawatts worth of projects annually for 2023 and 2024.

 

Applications are processed on a rolling basis in 30-day periods until the funding allocation runs out. Treasury reported over 46,000 applications for new energy facilities in low-income communities in the first application period and will hold only one more round for 2023. If any categories are oversubscribed, the IRS will hold a lottery to determine which projects receive funding.  

 

Projects that do not receive funding can resubmit in 2024.

 

Last September, the IRS issued final regulations and a revenue procedure (Rev. Proc. 2023-27) establishing the rules and the process for taxpayers to apply for the enhanced credit rates for solar and wind projects, which is done via this Department of Energy dashboard populations.

 

More information from Grant Thornton on the program can be found here.

 

Contacts:

 
 
 
Tax professional standards statement

This content supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “Section,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.

 
 

More tax hot topics