U.S. Department of the Treasury, IRS Announce Major Milestone in Implementation of Key Provisions to Expand the Reach of Clean Energy Tax Credits

More than 1000 Projects Registered for New Direct Pay and Transferability Credit Monetization Provisions

WASHINGTON – Today the U.S. Department of the Treasury and Internal Revenue Service (IRS) announced reaching a major milestone in implementation of key provisions in the Inflation Reduction Act to expand the reach of the clean energy tax credits and help build projects more quickly and affordably, with more than 1,000 projects registered through the new IRS Energy Credits Online (ECO) portal and able to benefit from these new provisions.

The Inflation Reduction Act created two new credit delivery mechanisms—elective pay (otherwise known as “direct pay”) and transferability—that enable state, local, and Tribal governments; non-profit organizations, U.S. territories; and other entities to take advantage of clean energy tax credits. Until the Inflation Reduction Act introduced these new credit delivery mechanisms, governments, many types of tax-exempt organizations, and even many businesses could not fully benefit from tax credits like those that incentivize clean energy construction.

“Increased access to clean energy credits is acting as a force multiplier so that more clean energy projects are built quickly and affordably, and more communities benefit from the growth of the clean energy economy,” said Deputy Secretary of the Treasury Wally Adeyemo. “Making it easy to access these credits also underscores the connection between realizing the economic and climate goals of the Inflation Reduction Act and modernizing the IRS. The IRS has quickly delivered modern technology with IRS Energy Credits Online, making it easier for eligible companies who do business in the United States, and state and local governments, to take advantage of clean energy incentives.”

“The IRS is working hard to put in place tools that can help taxpayers and the wider tax community, and this important new online tool reflects our progress in this area. We have surpassed a major milestone with more than 1,000 facility registrations through the tool,” said IRS Commissioner Danny Werfel. This new tool helps key groups with these clean energy credits as well as improves communication and reduces compliance issues. This effort is part of our larger transformation effort underway across the IRS as our efforts continue to accelerate.”

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IRS And Inflation Reduction Act

New milestones in Paperless Processing Initiative: 225 times more forms scanned than in 2022, 51 additional forms and letters available for online response

New improvements to customer callback option to better serve taxpayers during high call volume, customer callback option will now be available for up to 95% of callers seeking live assistance
WASHINGTON — One year into its modernization efforts under the Inflation Reduction Act, the IRS has made significant progress toward its goals of delivering world-class service, upgrading its technology and ensuring high-income taxpayers, large corporations and complex partnerships pay taxes owed.

As the IRS marks the anniversary of the Inflation Reduction Act, it is announcing two new milestones as part of its Paperless Processing Initiative: Scanning 225 times more forms than in 2022 and enabling taxpayers to reply to an additional 51 forms and letters online.

In addition, the IRS has met its targets to further improve its customer callback option, so taxpayers do not need to wait on hold during periods of high call volume. The customer callback option will now be available for up to 95% of callers seeking live assistance.

Dramatically improved service in filing season 2023
Thanks to Inflation Reduction Act resources, the IRS delivered dramatically improved service in Filing Season 2023. IRS achieved an 87% Level of Service on its main taxpayer help line.

Through the end of Filing Season 2023, IRS answered 3 million more calls, cut phone wait times to three minutes from 28 minutes, served 140,000 more taxpayers in-person, digitized 80 times more returns than in 2022 through the adoption of new scanning technology, cleared the backlog of unprocessed 2022 individual tax returns with no errors, launched two new digital tools and enabled a new direct-deposit refund option for taxpayers with amended returns.
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Inflation Reduction Act Signed Into Law, Extends And Expands Energy-Efficient Tax Incentives

EPAct 179D and 45L have been part of the tax code since 2006.  The Inflation Reduction Act of 2022 (IRA) was signed into law August 16, 2022.  The Act includes several major updates to federal energy-efficiency tax incentives that may be of interest to Capstan clients.  The following provisions take effect 1/1/2023, unless otherwise indicated.   

EPAct 179D Tax Deduction

Created as part of the Energy Policy Act of 2005, the EPAct 179D tax deduction was made permanent by the Consolidated Appropriations Act of 2021 (CAA).  The federal deduction may be applied to ground-up energy-efficient construction projects as well as to energy-efficient retrofits.  179D applies to all types of energy-efficient commercial buildings (EECB) and to residential rental buildings that are a minimum of four stories high.  

Clauses in the IRA will increase and expand the utility of 179D as follows:  

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Key Tax Provisions Of The Inflation Reduction Act Of 2022

The Inflation Reduction Act (IRA), signed into law on August 16, 2022, includes tax provisions affecting businesses, individuals, the clean-energy industry, healthcare, and more. Let’s take a look:


Sec. 461(l) Business Loss Limitation. The pass-through tax deduction for small business owners (sole proprietorships, some limited liability companies, partnerships, and S-corporations) was enacted under tax reform (TCJA of 2017). The tax break limited individuals from taking more than $250,000 ($500,000 for married taxpayers filing jointly) of business losses to offset nonbusiness income. In effect for tax years 2021 through 2026, it has been extended through 2028.

Research Credit Against Payroll Taxes. For tax years beginning after December 31, 2022, the limitation amount increases by $250,000 to $500,000 for the Sec. 41(h) research credit against payroll tax for small businesses . The first $250,000 of the credit limitation will be applied against the FICA payroll tax liability. The second $250,000 of the limitation will be applied against the employer portion of Medicare payroll tax liability.

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