Additional Guidance Clarifies Rules for Energy Credit Allocations

IRS provides additional guidance for advanced energy projects

May 31, 2023

WASHINGTON — The Department of the Treasury and the Internal Revenue Service today issued Notice 2023-44 to provide more details for applicants seeking section 48C credit allocations in the qualifying advanced energy project credit allocation program under the Inflation Reduction Act.

On Feb. 13, 2023, the Treasury Department and the IRS issued Notice 2023-18 to establish the section 48C(e) program to allocate $10 billion in credits not less than $4 billion of which will be allocated to projects located in certain energy communities census tracts. The notice also provided initial program guidance and announced that the Treasury Department and the IRS would issue additional program guidance by May 31, 2023. The guidance is primarily of interest to owners of clean energy manufacturing and recycling projects, greenhouse gas emission reduction projects, and critical material projects.

Notice 2023-44 updates the earlier version of Appendix A, defining qualifying advance energy projects, with clearer definitions and examples, and updates the earlier version of Appendix B, providing the Department of Energy application process, by adding technical review criteria and application content requirements. This notice also provides the process for submitting concept papers and joint applications for DOE recommendations and for IRS § 48C(e) certifications and clarifies the selection criteria used to evaluate whether a project merits a DOE recommendation.

Additionally, Notice 2023-44 defines the term “facility” for purposes of sections 45X and 48C, provides the procedure for informing DOE and IRS of a significant change to the project plan, includes information regarding the disclosure of certain information, and clarifies that eligible property that is placed in service before being awarded an allocation of section § 48C credits is ineligible for the § 48C(e) program. Finally, the guidance provides information regarding section 48C(e) energy communities census tracts, including new Appendix C, which contains a list of those census tracts.

More information about IRA guidance may be found on the Inflation Reduction Act of 2022 page on IRS.gov.