IRS Section 48C
Advanced Energy Project Transferable Tax Credit

Summary:

The Advanced Energy Project Transferable Tax Credit incentivizes taxpayers to create new clean energy projects tied to manufacturing which increase material reuse, and greenhouse gas recycling. More specifically, the tax credit supports clean energy facilities and technologies which reduce greenhouse gas emissions in the U.S. The credit is also designed to incentivize low cost energy storage, reduce air pollutants, and reduce overall greenhouse emissions from production. The credit sets aside 35% of funding for specific geographies that the Treasury selects who have a history of fossil fuel businesses.

Date in Effect:

Tied to an application process that the Treasury oversees, and makes allotments for projects with a max of $10 billion over the lifetime of the credit. Once the funds run out, the credit is no longer available. It is not tied to any specific date, rather dates set by the Treasury for application.

The first application deadline – July 31, 2023 awarding $4 billion

Calculation Details:

The transferable tax credit has a base credit of 6% with a 5x multiplier or a 30% tax credit if prevailing wage and apprenticeship requirements are met. In order to qualify and claim the credit, the taxpayer must first receive approval for allocation from the Treasury.

=IF[(Wage and Apprenticeship = Met, THEN(project cost * 30%), ELSE(project cost * 6%)]

*Assumes approval has been received from the Treasury*

Filing Requirements:

• Must submit a Concept Paper to the Department of Energy (“DOE”). They will respond with input and favorable determination, which then moves to the next phase.

• Must submit application to the Treasury for approval of funds in order to claim the credit

• Register and obtain unique identifier number from the Internal Revenue Service

• File tax return for self, or if transferring the credit for cash, then reflect the sale of both buyer and seller’s tax return

• Complete from 3468

Direct Pay:

Direct Pay is an election that allows the taxpayer to sell directly to the Internal Revenue Service. Section 48C transferable tax credits allow the following entities to make this election:

• Tax-exempt organizations

• States

• Political subdivisions

• The Tennessee Valley Authority

• Indian Tribal governments

• Alaska Native Corporations

• Rural electricity co-ops.

Miscellaneous:

• The first round of funding allocation was July 31, 2023. The next round has yet to be announced as of August 2023.