Energy Credits & Not-for-Profits: What You Need To Know

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The Inflation Reduction Act (IRA) of 2022 created and expanded many useful energy-related credits and even included a few ways for not-for-profit organizations to take advantage of them. The Department of Treasury issued additional guidance on the credits in a press release on June 14, 2023. 

The IRA created two new credit delivery mechanisms to allow not-for-profits to take advantage of clean energy tax credits: elective (or direct) pay or transferability. The direct pay option allows qualifying organizations to be paid directly for clean energy credits. Organizations who choose the transferability option can receive tax-free funds from a third party in exchange for use of the credits. 

Organizations that are interested in claiming one of these credits must complete a pre-filing registration process. Temporary regulations are in place for registration, and additional guidance on the pre-registration process is expected to be released later this year. 

Elective pay and transferability can be used for the following tax credits: 

  • Commercial Clean Vehicle Credit (45W), (Form 8936, Part V)  
  • Credit for Alternative Fuel Vehicle Refueling / Recharging Property (30C), (Part 8911, Part II)  
  • Energy Credit (48), (Form 3468, Part VI)  
  • Clean Electricity Investment Credit (48E), (Form 3468, Part V)  
  • Qualifying Advanced Energy Project Credit (48C), (Form 3468, Part III) 
  • Renewable Electricity Production Credit (45), (Form 8835, Part II)  
  • Clean Electricity Production Credit (45Y)  
  • Zero-emission Nuclear Power Production Credit (45U), (Form 7213, Part II)  
  • Advanced Manufacturing Production Credit (45X), (Form 7207)  
  • Clean Hydrogen Production Credit (45V), (Form 7210)  
  • Clean Fuel Production Credit (45Z)  
  • Carbon Oxide Sequestration Credit (45Q), (Form 8933)  

We encourage you to visit the IRS website learn more about these credits and find out whether your organization qualifies. Be sure to reach out to your Sikich tax advisor if you’re unsure which credits may be advantageous or if you have any questions about the process.  

About our Authors

Bridgette Mugge

Bridgette Mugge

Bridgette Mugge, EA, is a tax manager within Sikich’s not-for-profit practice. In her role, she supports not-for-profit organizations in tax planning, consulting and compliance services. She has nearly 15 years of experience in public accounting.

Jill Boyle

Jill Boyle

Jill Boyle, CPA, is a director at Sikich with more than 15 years of experience providing tax and compliance services to a variety of clients. She leads the firm’s not-for-profit tax practice, overseeing all tax engagements in this industry. With a concentration in serving not-for-profit organizations and individual taxpayers, Jill dedicates her time to supporting public charities, private foundations and professional organizations.

This publication contains general information only and Sikich is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or any other professional advice or services. This publication is not a substitute for such professional advice or services, nor should you use it as a basis for any decision, action or omission that may affect you or your business. Before making any decision, taking any action or omitting an action that may affect you or your business, you should consult a qualified professional advisor. In addition, this publication may contain certain content generated by an artificial intelligence (AI) language model. You acknowledge that Sikich shall not be responsible for any loss sustained by you or any person who relies on this publication.

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