IRS, DOE Release Additional Guidance on IRA Provisions, Including Low-Income Community ITC Bonus

Wednesday, May 31, 2023 - 10:45am

The Internal Revenue Service (IRS) and the U.S. Department of Energy (DOE) today released additional guidance on provisions in the Inflation Reduction Act of 2022 (IRA) concerning investment in underserved communities and hard-hit coal communities. Included in the guidance is a notice of proposed rulemaking for the investment tax credit (ITC) bonus for low-income communities. The proposed rule supplements February guidance released in Notice 2023-17. It provides definitions of terms, including energy storage technology and “financial benefits” for low-income residential buildings. Comments on the notice of proposed rulemaking are due by June 30.

Today’s IRS guidance also includes Notice 2023-44, which provides more information on the Qualifying Advanced Energy Project Credit–an ITC of up to 30% for clean energy manufacturing and recycling, industrial decarbonization and critical materials processing, refining and recycling. Of the $10 billion available from the IRA, initial funding will include $4 billion, with approximately $1.6 billion for projects in communities with closed coal mines or retired coal-fired project plants. Taxpayers can submit concept papers describing their proposed projects during the period June 30-July 31. Those that receive a favorable review will be encouraged to submit a full application.

A Notes from Novogradac blog post earlier this month provided insight on the IRS notice for how taxpayers can qualify for the domestic content bonus credit included in the IRA.