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.

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.

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.

Last night, after weeks of negotiations, Senators Manchin and Schumer reached a deal on an energy and healthcare bill titled the Inflation Reduction Act of 2022 (the “Act”).  The Act includes extensive provisions relating to a range of green energy tax incentives.  While these provisions largely track the corresponding provisions in the previously released Build Back Better Act, a preliminary review of the Act suggests that there are a number of material differences. 

A more detailed analysis of the Act will follow, but key provisions include:

  • Extension of the solar investment tax credit (“ITC”) and renewable electricity production tax credit (“PTC”) for projects that begin construction before January 1, 2025.
  • Reduced ITC and PTC for projects that fail to satisfy prevailing wage and apprenticeship requirements; but deemed satisfaction of such requirements for projects that begin construction prior to the date that is 60 days before Treasury issues guidance related to these provisions.
  • Bonus ITC and PTC for projects that satisfy certain domestic content requirements.
  • ITC expanded to standalone storage and certain interconnection property.
  • Direct pay option for certain tax-exempt entities.
  • Option for taxable entities to transfer the ITC and PTC to unrelated parties.
  • 3-year carryback period for the PTC (but only for projects that are placed in service after December 31, 2022) and the ITC.
  • A 15% minimum tax on corporate taxpayers with adjusted financial statement income in excess of $1 billion; however, the ITC and PTC may be applied to reduce the minimum tax but not below 25% of the taxpayer’s net income tax in excess of $25,000.

On April 14, 2022, the US Internal Revenue Service (IRS) published a notice that provides the inflation-adjustment factor and reference price for the calculation of renewable electricity production tax credits (PTCs) under Internal Revenue Code (IRC) section 45 for calendar year 2022, as well as the amount of the PTC for 2022 as adjusted for inflation.

On May 5, 2022, the IRS issued corrections to this notice, revising the inflation-adjustment factor from the initially released 1.8012 to 1.7593 and reducing the PTC amounts accordingly.

Continue Reading UPDATED: IRS Releases 2022 Section 45 Production Tax Credit Amounts