Inflation Reduction Act

Tax season is here. As a result, many companies may be seeking to claim the increased tax credits and deductions available under the Inflation Reduction Act (the “IRA”). As we discussed in previous posts you can read here and here, many of the IRA’s tax credits and deductions for various clean energy projects are available only to taxpayers whose projects complied with nuanced and complex prevailing wage and apprenticeship requirements (the “PWA Requirements”). These requirements must be met before a taxpayer files a return claiming credits and deductions under the IRA.Continue Reading Claiming Inflation Reduction Act Tax Credits and Deductions on Your 2024 Return? Make Sure You Complied with the Prevailing Wage and Apprenticeship Requirements

On February 13, 2023, the Internal Revenue Service (“IRS”) issued its “initial guidance”[1] regarding the Low-Income Communities Bonus Credit Program (the “Program”) established by the Inflation Reduction Act of 2022 (the “IRA”)[2] and codified under new Section 48(e) of the Internal Revenue Code (“IRC”) concerning “special rules for certain solar and wind facilities placed in service in connection with low-income communities.” The guidance makes strides to implement the Program required by the IRA, but it also leaves some gaps to be addressed in more guidance to come. Continue Reading IRS Issues Guidance for Inflation Reduction Act Low-Income Bonus Tax Credits

For years, domestic content requirements have been a point of pain and frustration for government contractors. Historically, these regimes typically come in the form of the proverbial stick – that is, provide products and/or services that meet these country of origin requirements, or risk severe consequences (the billions in False Claims Act Trade Agreements Act settlements speak for themselves). But through the Inflation Reduction Act of 2022, Congress has taken a unique approach by authorizing the Department of Treasury to use country of origin as a carrot – offering certain energy facilities bonus tax credits for meeting specified “domestic content” requirements. To create this new carrot, Congress relied heavily on the Government’s prior experience with domestic content regimes – pulling predominantly from the Federal Transit Authority’s (“FTA”) “Buy America” regulations, but with a Buy American Act twist. In doing so, Congress has left the renewable energy industry with more questions than answers on the applicability of the bonus tax credit to their facilities.Continue Reading Domestic Content Requirements of the Inflation Reduction Act: Basic Requirements, Qualification Analysis, and Lingering Questions

As previously discussed in our blog Inflation Reduction Act: Wage and Apprenticeship Requirements, the Inflation Reduction Act (the “IRA”) restructured the tax credit system associated with qualified clean energy projects. In particular, to receive the full value of various tax credits, companies must now pay the prevailing wage rates and employ a certain number of registered apprentices in the construction, alteration, and/or repair of qualified clean energy facilities or projects as defined under the Code.Continue Reading Inflation Reduction Act: Prevailing Wage and Apprenticeship Requirement FAQs and Key Takeaways from the Initial Guidance from the Treasury and IRS