IRS detect pay & transferability guidance released

elective pay (otherwise known as “direct pay”) and transferability

allows tax-exempt and governmental entities to receive elective payments for 12 clean energy tax credits, including the ITC and PTC (Sec. 45 and 48 credits), as well as tax credits for electric vehicles and charging stations

allows businesses to transfer all or a portion of any of 11 clean energy credits to a third-party in exchange for tax-free immediate funds, so that businesses can take advantage of tax incentives if they do not have sufficient tax liability to fully utilize the credits themselves

final rules also lay out the process and timeline to claim and receive an elective payment

entities treated as partnerships for federal tax purposes are not eligible for elective pay

IRS agreed with commenters that existing guidance on making a valid election out of partnership tax treatment for clean energy arrangements was limited, and updates were needed for these arrangements to be more effective

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