IRS Releases Notices and Guidance to Clarify Eligibility for Bonus ITC, PTC in Energy Communities with Fossil Energy Industry Decline
The Internal Revenue Service (IRS) today released two notices to clarify and update information stemming from last year’s passage of the Inflation Reduction Act (IRA) for communities that qualify for a bonus investment tax credit (ITC) and production tax credit (PTC) bonus credit of 10% due to fossil energy industry decline, particularly hard-hit coal communities. Notice 2023-45 clarifies a section of Notice 2023-29, released in April, that describes requirement for a brownfield site safe harbor for projects with a nameplate capacity of 5 megawatts (MW) or less in alternating current and a special rule for beginning construction. Notice 2023-47 publishes information for taxpayers updated with 2022 unemployment data to use to determine if they meet certain requirements under the statistical area category or the coal closure category in Notice 2023-29. Notice 2023-47 also has Appendix 1, Appendix 2 and Appendix 3, which provide lists of communities that qualify for energy community bonus credit amounts or rates. The U.S. Department of Energy’s energy communities map is now updated to reflect all eligible areas.
The Novogradac Renewable Energy Working Group provides an opportunity to give feedback to the IRS on guidance and keep updated on the latest developments around clean energy.