Final semiconductor manufacturing credit guidance released


The IRS released final regulations (TD 9899) for making an election to claim the Section 48D advanced manufacturing tax credit for semiconductor production as a refundable payment.


The credit, established by the 2022 CHIPS Act (Public Law 117-167) is valued at 25% of the qualified investment in equipment used for semiconductor or semiconductor manufacturing equipment production. The property must be placed into service after 2022, and construction on planned property must begin before Jan. 1, 2027, to qualify.


The rules, released on March 5, allow taxpayers to elect to treat the amount of the credit they qualify for under 48D(a) as a refundable payment against their federal taxes owed. Under the election, if the credit amount exceeds taxes owed, the remainder is treated as an overpayment and paid out to the taxpayer, essentially making the credit fully refundable for some taxpayers.


To claim the credit and elect for refundability, a taxpayer must pre-file through the IRS’s registration portal and receive a registration number for the qualified investment in an advanced manufacturing facility for semiconductors. Registration requires detailed information, including a list of each qualified investment relevant to 48D claims and supporting documentation. Each investment must have its own IRS registration number for credit claims, which are valid for a year, requiring re-registration for each investment claimed annually. The election generally must be made on a timely filed original return.


The final regulations include detailed rules for pass-through entities seeking to claim the credit. Partnerships and S corporations cannot elect for the refundable payment but can claim a credit worth up to and equal to the amount of taxes owed. Partners and shareholders in the entities that made the investment cannot claim the credit themselves.


The regulations are applicable for tax years ending after they are published in the Federal Register. 



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