On November 19, 2024, Treasury and IRS released final rules providing clarity that co-owned clean energy projects may qualify for direct pay, a mechanism created by IRA section 13801 that provides entities lacking federal tax liability the opportunity to realize the benefits of clean energy tax credits. The final rules provide that where one or more project co-owners qualify for direct pay, they may take advantage of elective payment for the portion of the project they own. The guidance allows tax exempt entities to partner with for-profit entities or multiple other tax-exempt entities and maintain direct pay eligibility.
Treasury will host a webinar for tribal entities on December 13, 2024 at 2:00 p.m. ET focusing on how the rules allow tribes to benefit from direct pay when developing clean energy projects in joint ownership arrangements. Register for the webinar here.
Opportunities for Participation and Additional Resources:
- Press release: https://home.treasury.gov/news/press-releases/jy2718
- Final Rule: https://www.federalregister.gov/documents/2024/11/20/2024-26944/election-to-exclude-certain-unincorporated-organizations-owned-by-applicable-entities-from
- IRS Elective Payment Registration Portal: https://www.irs.gov/credits-deductions/register-for-elective-payment-or-transfer-of-credits