Feb 22 -- This document corrects a notice of proposed rulemaking (REG–132569–17) published in the Federal Register on November 22, 2023, containing proposed regulations that would amend the regulations relating to the energy credit for the taxable year in which eligible energy property is placed in service. The comment period for REG–132569–17 (88 FR 82188, November 22, 2023) is reopened, and additional written or electronic comments must be received by March 25, 2024.
The notice of proposed rulemaking (REG–132569–17) that is the subject of this correction proposes regulations under section 48 of the Internal Revenue Code (Code) (Proposed Regulations) addressing the energy credit determined under section 48 for purposes of sections 38 and 46 of the Code. The Proposed Regulations address the treatment of certain gas upgrading equipment in a manner that warrants a correction.
FRN:
https://www.federalregister.gov/d/2024-03632
1) Nov 22 -- The Internal Revenue Service (IRS), Treasury, invites comment by January 22, 2024 on a proposed rule regarding Definition of Energy Property and Rules Applicable to the Energy Credit, A public hearing on these proposed regulations is scheduled to be held on February 20, 2024, at 10 a.m. ET. Requests to speak and outlines of topics to be discussed at the public hearing must be received by January 22, 2024.
This document contains proposed regulations that would amend the regulations relating to the energy credit for the taxable year in which eligible energy property is placed in service. This document also withdraws and reproposes, for additional clarity, portions of previously proposed regulations regarding the increased energy credit amount available if prevailing wage and registered apprenticeship requirements are met. In connection with the Inflation Reduction Act of 2022, the proposed regulations would: update the types of energy property eligible for the energy credit, including additional types of energy property added by that law; clarify the application of new credit transfer rules to the energy credit recapture rules applicable to failures to satisfy the prevailing wage requirements, including notification requirements for eligible taxpayers; and include qualified interconnection costs in the basis of some lower-output energy properties.
The proposed regulations would also provide additional requirements and rules generally applicable to energy property, such as rules regarding: functionally interdependent components; property that is an integral part of an energy property; application of an “80/20 Rule” to retrofitted energy property; dual use property; separate ownership of components of an energy property; property that could be eligible for multiple Federal income tax credits; and the election to treat qualified facilities eligible for the renewable electricity production credit instead as property eligible for the energy credit. The proposed regulations would impact taxpayers who invest in energy property eligible for the energy credit.
This notice of proposed rulemaking consists of several proposed amendments to the existing Income Tax Regulations (26 CFR part 1) under section 48 of the Internal Revenue Code (Code) addressing the energy credit determined under section 48 (section 48 credit) for purposes of sections 38 and 46 of the Code (proposed regulations). This notice of proposed rulemaking also withdraws and reproposes portions of another notice of proposed rulemaking (REG–100908–23) proposing regulations under section 48 that were published in the Federal Register (88 FR 60018) on August 30, 2023. This notice of proposed rulemaking would also propose additional regulations under section 6418 of the Code to supplement a notice of proposed rulemaking (REG–101610–23) published in the Federal Register (88 FR 40496) on June 21, 2023.
Section 38 allows certain business credits against the Federal income tax imposed by chapter 1 of the Code (chapter 1). Among the credits allowed by section 38 are the investment credit determined under section 46, which includes the energy credit determined under section 48. See sections 38(b)(1) and 46(2). Section 48(a)(1) generally provides that the energy credit for any taxable year is the energy percentage of the basis of each energy property placed in service during such taxable year. For most types of energy property, eligibility for the section 48 credit and, in some cases, the amount of the section 48 credit for which energy property is eligible, are dependent upon meeting certain deadlines for beginning construction of the energy property and for placing the energy property in service.
Section 48 was originally enacted by section 2 of the Revenue Act of 1962, Public Law 87–834, (76 Stat. 960, 963) to spur economic growth by encouraging investments in various capital projects across many industries including energy, transportation, and communications. Section 48 has been amended many times since its enactment, most recently by section 13102 of Public Law 117–169, 136 Stat. 1818 (August 16, 2022), commonly known as the Inflation Reduction Act of 2022 (IRA). The IRA amended section 48 in several ways, including by making additional types of energy property eligible for the section 48 credit, providing a special rule to allow certain lower-output energy properties to include qualified interconnection costs in the basis of associated energy property, and providing an increased credit amount for energy projects that satisfy prevailing wage and apprenticeship requirements, a domestic content bonus credit amount, and an increase in credit rate for energy communities.
The current Income Tax Regulations at § 1.48–9, which provide definitions and eligibility rules for determining whether property is energy property eligible for the section 48 credit, were published on January 23, 1981 (T.D. 7765, 46 FR 7287). Those regulations were amended on July 21, 1987 (T.D. 8147, 52 FR 27336), to provide rules for dual use property, but have not been updated since 1987, before many of the current types of energy property became eligible for the section 48 credit.
Prior to proposing amendments to the existing regulations under section 48, the Treasury Department and the IRS have twice requested comments on issues to be addressed. On October 26, 2015, the Treasury Department and the IRS published Notice 2015–70, 2015–43 I.R.B. 604, to request comments regarding statutory updates to section 48 preceding those made by the IRA. On October 24, 2022, in response to the passage of the IRA, the Treasury Department and the IRS published Notice 2022–49, 2022–43 I.R.B. 321, to request general as well as specific comments on issues arising under section 48, among other sections, that were amended or added by the IRA. After consideration of comments submitted in response to Notice 2015–70 and Notice 2022–49, and after consultation with the Department of Energy, the Treasury Department and the IRS propose the revisions to the existing regulations under section 48 contained in this notice of proposed rulemaking.
On August 30, 2023, the Treasury Department and the IRS published in the Federal Register (88 FR 60018) a notice of proposed rulemaking (REG–100908–23) proposing rules regarding the increased credit amount available for taxpayers satisfying prevailing wage and registered apprenticeship requirements established by the IRA (August Proposed Regulations). The August Proposed Regulations provided rules addressing the recapture under section 48(a)(10)(C) of increased credit amounts from only initially satisfying the prevailing wage requirements under section 48(a)(10)(A) and (B). Comments were requested and a public hearing has been scheduled for November 21, 2023. This notice of proposed rulemaking withdraws certain portions of the August Proposed Regulations and reproposes regulations that would provide additional guidance on the prevailing wage and apprenticeship requirements under section 48, including the statutory exception for energy projects with a maximum output of less than one megawatt (MW) and the recapture rules under section 48(a)(10)(C) related to the prevailing wage requirements.
Although this notice of proposed rulemaking withdraws certain portions of the August Proposed Regulations, the Explanation of Provisions section in the preamble to the August Proposed Regulations generally remains relevant. Therefore, to the extent not inconsistent with the Summary of Comments and Explanation of Provisions section of this preamble, the Explanation of Provisions section of the August Proposed Regulations is incorporated by reference in this notice of proposed rulemaking. This notice of proposed rulemaking does not address written comments that were submitted in response to the regulations proposed in the August Proposed Regulations. Any comments received in response to this notice of proposed rulemaking, including comments on the reproposed regulations, will be addressed in the Treasury Decision adopting these regulations as final regulations. This notice of proposed rulemaking does not extend the comment period or affect the scheduled hearing for the August Proposed Regulations.
On June 21, 2023, the Treasury Department and the IRS published in the Federal Register (88 FR 40496) a notice of proposed rulemaking (REG–101610–23) proposing rules concerning the election under section 6418 of the Code established by the IRA to transfer certain Federal income tax credits, including the section 48 credit (June Proposed Regulations). The June Proposed Regulations provided proposed rules addressing notification requirements and the impact of credit recapture rules under sections 50(a), 49(b), and 45Q(f)(4) of the Code in proposed § 1.6418–5. Comments were requested and a public hearing on the June Proposed Regulations was held on August 23, 2023. This document amends those June Proposed Regulations to add guidance to proposed § 1.6418–5 that describes the recapture rules relating to failing to satisfy the prevailing wage and apprenticeship requirements under section 48(a)(10) and (11), including the statutory exception for energy projects with a maximum output of less than 1 MW in section 48(a)(9)(B)(i), and the recapture rules under section 48(a)(10)(C) related to the prevailing wage requirements. This notice of proposed rulemaking does not address written comments that were submitted in response to the regulations proposed in the June Proposed Regulations. Any comments received in response to this notice of proposed rulemaking, including the amendments to the June Proposed Regulations, will be addressed in the Treasury Decision adopting these regulations as final regulations. This notice of proposed rulemaking does not otherwise extend the comment period for the June Proposed Regulations. . . .
FRN:
https://www.federalregister.gov/d/2023-25539 [36 pages]
Corrections FRN Jan 12 --
https://www.federalregister.gov/d/2024-00496
2) Nov 17 [press release] -- Today, the U.S. Department of the Treasury and Internal Revenue Service (IRS) released guidance on the Investment Tax Credit (ITC) under Section 48 of Internal Revenue Code to spur the investment boom ushered in by President Biden’s Inflation Reduction Act. Today’s guidance provides the private sector with additional clarity and certainty in making investment decisions for clean energy projects. Given the new and expanded incentives created by the Inflation Reduction Act, this clarity is critical as companies secure financing for clean energy projects, create good-paying jobs in communities across the United States, and strengthen our nation’s energy security. . . .
https://home.treasury.gov/news/press-releases/jy1920