A New To-Do List for Energy Credit Guidance
Tax attorney Nicole Elliott and Senior Policy Advisor Beth Viola were quoted in a Tax Notes article about the impact the Inflation Reduction Act (IRA) will have on the Internal Revenue Service (IRS) and U.S. Department of the Treasury (Treasury). The IRA represents major changes in how energy tax credits work, which can be divided up into a handful of new themes. The new rules broadly add bonus credits for meeting prevailing wage and apprenticeship requirements, as well as domestic content requirements. There’s also a boost for some projects in qualified census tracts, such as brownfield sites and low income communities.
The IRA also abates the succession of extenders whose uncertainty plagued energy tax credits. Ms. Viola added that taxpayers will now have greater certainty when financing their projects, as the lapses and reinstatements of credits from previous years will be curtailed.
"For the first time there is a long runway, sometimes 10 years, which is going to allow the industry to deploy new technologies in a way they haven’t had in the past," she said.
Multiple questions require guidance from the IRS, and the agency must answer them while ensuring that computer systems and procedures for implementation are still functioning properly. The Administrative Procedure Act (APA) will loom large over the process. The IRS and Treasury are set to receive voluminous amounts of public comments as they draft new guidance. Ms. Elliott, who oversaw the implementation of the Affordable Care Act (ACA) during her time at the IRS, said the IRS and Treasury must consider many of the same things they worked through for the ACA, including prioritizing the many new guidance projects and coordinating those with the operational side of the IRS to ensure efficiency.
"There are many of the same elements [as in the ACA implementation] — it is a significant law, and there is a short runway for the effective dates," she said.
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