The White House today released a new resource titled Building a Clean Energy Economy: A Guidebook to the Inflation Reduction Act’s Investments in Clean Energy and Climate Action, which it describes as “provid[ing] clear descriptions of the law’s tax incentives and funding programs to build a clean energy economy, lower energy costs, tackle climate change, and reduce harmful pollution.” Here is in link to the Guidebook.
IRS Guidance on Electric Vehicles
IRS and Treasury today issued Revenue Procedure 2022-42, which includes procedures for manufacturers of electric vehicles eligible for tax credits under Section 30D, Section 25E and Section 45W. Here is a link to the Notice.
More on Prevailing Wage & Apprenticeship
As noted in yesterday’s post, the IRS published Notice 2022-61 regarding the prevailing wage & apprenticeship requirements. In addition, the Department of Labor yesterday issued two Frequently Asked Question (FAQ) documents: one on prevailing wage and the other one on apprenticeships. You’ll need to scroll down and click on the “+” signs to expand and see each FAQ.
The Clock Starts Now: IRS Issues Prevailing Wage & Apprenticeship Guidance under the IRA
The IRS has published a notice that will start the clock on the 60-day period respect to the applicability of the prevailing wage and apprenticeship requirements under numerous provisions of the Inflation Reduction Act of 2022 (the IRA). For a taxpayer to avoid application of the prevailing wage and apprenticeship requirements of the IRA, it must begin construction of a project before the 60th day after the issuance of such guidance (that is, within 59 days of the issuance of such guidance).
The Notice sets forth rules on how to satisfy the prevailing wage requirements and the apprenticeship requirements. It also describes the beginning of construction rules and extends existing rules to other credits. Stay tuned for a more fulsome update.
The Notice can be found at this link.
IRS Announces New PTC Rate under Section 45
The IRS today released Announcement 2022-23, which sets forth the new rate for the production tax credit (PTC) under Section 45 for facilities that are placed in service after December 31, 2021. The rate is 2.75 cents per kWh for a wind facility (i) with a maximum net output of less than 1 MW, (ii) that satisfies the prevailing wage and apprenticeship requirements, or (iii) the construction of which began before the date that is 60 days after Treasury publishes guidance on the prevailing wage and apprenticeship requirements. The announcement was necessary because the Inflation Reduction Act of 2022 changed the manner in which the PTC is calculated. The rate previously announced in Notice 2022-20, which is 2.6 cents per kWh for a wind facility, remains unchanged for facilities that were placed in service before January 1, 2022. Here is a link to Announcement 2022-23.
IRS Requests Comments on Additional Aspects of Energy Tax Credits
On November 3, 2022, the U.S. Internal Revenue Service (IRS) issued three additional notices requesting public input on key aspects of climate and clean energy tax provisions in the Inflation Reduction Act. Here is list of, and links to, these three notices.
- Notice 2022-56 requests comments related to the qualified commercial clean vehicles provisions under Section 45W and the alternative fuel vehicle refueling property under Section 30C.
- Notice 2022-57 requests comments related to the credit for carbon capture under Section 45Q.
- Notice 2022-58 requests comments related to the credit for the production of clean hydrogen under Section 45V and the clean fuel production credit under Section 45Z.
IRS Requests Comments on Various Aspects of Energy Tax Credits
On October 5, 2022, the U.S. Internal Revenue Service (IRS) issued six notices requesting comments on various aspects of extensions and enhancements of energy tax benefits in the Inflation Reduction Act. Here is list of, and links to, the notices.
- Notice 2022-46 requests comments on credits for clean vehicles.
- Notice 2022-47 requests comments on energy security tax credits for manufacturing.
- Notice 2022-48 requests comments on incentive provisions for improving the energy efficiency of residential and commercial buildings.
- Notice 2022-49 requests for comments on certain energy generation incentives.
- Notice 2022-50 requests comments on elective payment of applicable credits and transfer of certain credits.
- Notice 2022-51 requests comments on prevailing wage, apprenticeship, domestic content, and energy communities requirements.
Tax Credits for Electric Vehicles: What’s Changed with the IRA
Anyone considering buying an electric vehicle, for personal or commercial use, should take note of new and expanded tax credits for clean vehicles under the Inflation Reduction Act of 2022. This Legal Update authored by my partner Dan Kiely and me provides details on the tax credits, including their requirements and limitations.
US Inflation Reduction Act of 2022: Carbon Capture Use and Sequestration Provisions
My Mayer Brown colleagues and I have authored this Legal Update on the key provisions regarding carbon capture use and sequestration in the Inflation Reduction Act of 2022.
The Inflation Reduction Act, Solar and REITs
The Inflation Reduction Act of 2022 (the “IRA”), which was signed into law on Tuesday, August 16, 2022, includes an investment of over $369 billion in energy security and climate change. There has been a lot of discussion about the extension of the investment tax credit (“ITC”) for solar and the provision that allows the transfer of the ITC. However, there has not been a lot of discussion about a subtle change that could benefit a real estate investment trust (“REIT”) interested in owning a distributed solar facility. Read about it in this Mayer Brown Legal Update.