April 25, 2024

Treasury Department and IRS Release Final Regulations on the Transfer of IRA Tax Credits

Holland & Knight Alert
Nicole M. Elliott | Amish Shah | Brad M. Seltzer | Roger David Aksamit | Kenneth W. Parsons | Bryan Marcelino | Mary Kate Nicholson | Eli Brander | Joshua David Odintz | Daniel Graham Strickland | Rachel T. Provencher

As provided in the Inflation Reduction Act (IRA), eligible taxpayers may make a yearly election to transfer all (or any portion) of an eligible credit to an unrelated taxpayer under Section 6418 of the Internal Revenue Code, provided that consideration for such a transfer is paid in cash. Eligible credits include: Section 30C (alternative fuel vehicle refueling), Section 45 (PTC), Section 45Q (carbon oxide sequestration), Section 45U (zero-emission nuclear), Section 45V (clean hydrogen), Section 45X (advanced manufacturing), Section 45Y (technology neutral PTC), Section 45Z (clean fuels), Section 48 (ITC), Section 48C (qualifying advanced energy project) and Section 48E (technology neutral ITC).

The U.S. Department of the Treasury and IRS on April 25, 2024, released final regulations regarding the transfer of tax credits under Section 6418. The final regulations adopt the proposed regulations issued in June 2023, with changes, and remove the temporary regulations. (See Holland & Knight's previous alerts, "Inflation Reduction Act: Answers to Key Questions on Direct Pay and Transferability," June 26, 2023, and "Inflation Reduction Act Direct Pay and Transfer Pre-Filing Registration Is Open for Business," Feb. 6, 2024.)

The rules finalize definitions and the conditions for making a transfer election, which requires, inter alia, preregistration with the IRS. The Holland & Knight Energy Tax Team is reviewing the regulations and will provide additional analysis. To be sure you receive this forthcoming analysis, please subscribe to our alerts.

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