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. On February 26, 2024, the IRS made office hours available to help with the pre-registration requirements. The 2023 Form 990-T instructions have been updated to provide guidance for how to claim the credits by filing that Form as well.
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 to 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, 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, CPA, is a director at Sikich, who leads the not-for-profit tax practice. In her leadership role, Jill ensures industry work is targeted and aligned to opportunities for growth and is responsible for the tax engagements of industry clients. She oversees the team of internal individuals that have received specialized training in this area of tax and compliance.
