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March 5, 2024

IRS releases final rules and other guidance on direct pay elections for certain energy credits

Treasury and the IRS have released final regulations (TD 9988) on the direct-pay elections for certain energy credits under IRC Section 6417, added by the Inflation Reduction Act, which treat the credits as a payment against federal income tax liabilities. The final regulations describe the rules for making these elections and clarify the IRS pre-filing registration requirements. The final regulations adopt the proposed regulations with some modifications (see Tax Alert 2023-1102). In addition, new proposed regulations (REG-101552-24) would except from the partnership rules certain unincorporated organizations to allow them to make elective payment elections. The IRS also updated frequently asked questions (FAQs) on the elections and issued Notice 2024-27 asking for comments on situations in which an elective payment election could be made for a credit that was purchased in a transfer. A Tax Alert is forthcoming.

Published by NTD’s Tax Technical Knowledge Services group; Andrea Ben-Yosef, legal editor