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Silence.

Hello and welcome to today’s presentation.

This webinar is hosted by the Office of Indian Tribal Governments.

The content of this video is current as of the date of the recording.

My name is Stan Wiatros and I am with the IRS office of Indian Tribal Governments.

Today’s topic is Clean Energy Credits and the Elective Payment Elections added by the Inflation Reduction Act of 2022.

Elective pay may also be informally referred to as direct pay.

Applicable entities can use elective pay for certain clean energy credits.

Special rules added by the Inflation Reduction Act allow certain applicable entities, which may otherwise not have to file an income tax return, to take advantage of certain credits.

These applicable entities can treat the credits they qualify for as a payment of tax and receive a refund (direct payment) for the amount of any overpayment.

As mentioned on the previous slide, Applicable Entities include governmental entities.

Governmental entities include Indian tribal governments, political subdivisions, agencies and instrumentalities.

For this purpose, “Indian tribal government” means: - the recognized governing body of any Indian or Alaska Native tribe, band, nation, pueblo, village, community, component band, or component reservation, - individually identified (including parenthetically), - in the most recent list published in the Federal Register by the Department of the Interior under the Federally Recognized Indian Tribe List Act of 1994, - In other words, we are referring to what are commonly referred to as federally recognized tribes.

If an applicable entity is an owner, either directly or indirectly, of a disregarded entity that holds an applicable credit property, the applicable entity may make an elective payment election for the applicable credits determined with respect to the applicable credit property held directly by the disregarded entity.

To receive a payment, you will identify and pursue the quality project or activity.

You will need to know what applicable credit you intend to earn and use the elective pay for.

Determine your tax year, if not already known: Your tax year will determine the due date for your tax return.

Complete pre-filing registration with the IRS: This will include providing information about yourself, which applicable credits you intend to earn, and each eligible project/property that will contribute to the applicable credit and other information required.

Upon completing this process, the IRS will provide you with a registration number for each applicable credit property.

You will need to provide that registration number on your tax return as part of making the elective pay election.

Complete pre-filing registration in sufficient time to have a valid registration number at the time you file your tax return.

More information about this pre-filing registration process will be available by late 2023.

Satisfy all eligibility requirements for the tax credit and any applicable bonus credits, for a given tax year.

For example, you would need to place the project in service and have the documentation necessary to properly substantiate any underlying tax credit, including bonus amounts that increase the credit, before making an elective payment election.

Finally, file the required annual tax return by the due date (or extended due date) and make a valid elective payment election.

For applicable entities, including Indian tribal governments, that don’t normally file an income tax return, the taxable year is the organization's established annual accounting period.

If the applicable entity has no established accounting period, file the return on the calendar-year basis.

Each entity making an elective payment election should have a unique Employer Identification Number or EIN to avoid potential issues.

A registration number must be obtained using a pre-filing registration process being established by the IRS.

This registration number will be required when the elective payment election is made on the Form 990-T.

For applicable entities not normally required to file an annual income tax return, the applicable entity would be required to file Form 990-T, Exempt Organization Business Income Tax Return, (or its successor), or any other form provided in further guidance, also a completed Form 3800 (or its successor) along with any required completed source credit form(s) with respect to the applicable credit property, and any additional information, including supporting calculations, required in instructions to the relevant forms.

Form 990-T - Exempt Organization Business Income Tax Return.

Tribes will only need to complete limited parts of this form. Electronic filing is recommended.

Form 3800 – General Business Credit form also must be included and any form required to claim the relevant credit should be included.

Applicable entities that want to elect the elective payment of applicable credit must register with the IRS through an IRS electronic portal in advance of the applicable entity filing the return on which the election under section 6417 is made.

The IRS will provide a submission portal as previously mentioned to complete the Pre-file Registration process.

This will include providing information about yourself, which applicable credits you intend to earn, and each eligible project/property that will contribute to the applicable credit as well as other information required.

Upon completing this process, the IRS will provide you with a registration number for each applicable credit property.

You will need to provide that registration number on your tax return as part of making the elective payment election.

Complete pre-filing registration in sufficient time to have a valid registration number at the time you file your tax return.

The IRS will provide this submission portal to complete the Pre-file Registration process.

You must provide: certain information about the entity, a list of all credits you intend to earn, a list of all energy projects or properties involved, and certain other information requested by the portal.

The IRS will use this information to assign a registration number that will be needed when completed the returns used to make the elective payment election.

The IRS will issue a separate registration number for each applicable credit property for which the applicable entity or electing taxpayer provided sufficient verifiable information, as provided in guidance.

A registration number is valid only for the taxable year for which it is obtained.

Be aware that the registration should be submitted far enough in advance of the filing due date (with extensions), and that registration is not complete until a registration number is received.

The return due date is based on your taxable year, as determined on the previous slide.

The due date for Form 990-T is the 15th day of the 5th month (4 ½ months) after the close of the taxable period.

For example: May 15 for a calendar year; or February 15 for a September 30 fiscal year end.

There is an automatic six-month extension available. Tribes will not be required to file a form to request this extension for at least the first year.

“Subject to issuance of guidance that specifies the manner in which an entity for which no Federal income tax return is required under sections 6011 or 6033(a) of the Code could request an extension of time to file, an automatic paperless six-month extension from the original due date is deemed to be allowed.” This is per regulations provided under Section 6417.

An elective payment election may only be made on an original, timely filed return (including any extensions that are applicable).

This means the deadline is the due date (including extensions of time) for the tax return for the taxable year for which the election is made. The election can not be made on a late-filed return; or, an amended return filed after the due date (including extensions).

Here is a listing of the twelve eligible credits.

More information on each credit can be found in Publication 5817g, Clean Energy Tax Incentives, Credit Title and Tax Code Reference.

Assume a tribal government makes a clean energy investment that qualifies for the investment tax credit in 2023.

In late 2023 or early 2024, the tribe should complete the pre-filing registration.

The government can file form 990-T with the IRS to claim elective pay for the full value of the tax credit after the tribe satisfies the specific requirements for the credit.

Because the tribal government would owe no other federal income tax, the IRS would make a refund payment in the amount of the credit to the tribal government.

Depending on the credit being claimed, a tribe will attach one of these credit specific forms to the form 990-T and form 3800.

Alaska Native Corporations may also make an elective payment election.

Any Alaska Native Corporation (as defined in section 3 of the Alaska Native Claims Settlement Act (43 U.S.C. 1602(m)) is eligible, meaning any Regional Corporation, any Village Corporation, any Urban Corporation, and any Group Corporation, which is organized under the laws of the State of Alaska.

These resources are available on the ITG website – IRS.gov/tribes To help you stay current on tax changes that affect tribes or tribal entities, we also provide an ITG Newsletter which you can subscribe to, through our GovDelivery service.

From the ITG website home page (irs.gov/tribes), on the right side, under Stay Current, you can click on the link for “Sign up for Newsletter” to automatically receive our newsletter and any other News Blast we make regarding ITG issues, including for example the publication of this video to IRS.gov/videos.

As part of our efforts to improve our customer service, we would like to hear your feedback on the session you attended today.

You can go to www.irs.gov/tegesurvey or scan the QR shown here on this slide to complete a brief online survey to share your thoughts.

The survey should take about five minutes to complete.

This webinar will be archived on irsvideos.gov, so if there’s anything you missed today, you can always watch it there again.

We appreciate your feedback and thank you for your time.

From all of us in the Office of Indian Tribal Governments, thank you for attending!