Treasury Issues Proposed Guidance on IRA’s Transferability and Elective Pay Mechanism for Clean Energy Tax Credits

Wednesday, June 14, 2023 - 11:45AM

The U.S. Department of the Treasury and Internal Revenue Service (IRS) today issued proposed guidance that will be published in the June 21 Federal Register on transferability and elective pay mechanisms established under the Inflation Reduction Act (IRA). Elective pay will allow states, local governments, nonprofits and other eligible entities access to receive a direct payment from the IRS for clean energy tax credits. Transferability allows other types of entities to sell their credits on the open market. A press release from Treasury said these provisions will expand the reach of clean energy tax credits and help developers build new projects quicker and more affordably. The IRS issued separate guidance for elective pay (which will apply to 12 clean energy tax credits, including the investment tax credit [ITC] and production tax credit [PTC]) and transferability (which will apply to 11 clean energy tax credits). It also released FAQ documents and fact sheets with key information. The Treasury press release included links to register for two stakeholder briefings–one Thursday and one June 29. Comments on the proposed guidance are due Aug. 14 and public hearings will take place Aug. 21 (for direct pay) and Aug. 23 (for transferability).

Keep updated on the latest clean energy tax incentive news with a subscription to the Novogradac Journal of Tax Credits.

June 14 update: Adds second public hearing date for transferability option.



Learn more about Novogradac's expertise and many services