IRS, Treasury Update Notice 2023-29 Related To Energy Community Bonus Credit Amounts Under The Inflation Reduction Act

WASHINGTON — The Internal Revenue Service issued Notice 2023-45PDF, which updates Notice 2023-29PDF, that describes certain rules that the IRS intends to include in forthcoming proposed regulations for determining what constitutes an energy community for the production and investment tax credits.

Notice 2023-45 addresses the update to Notice 2023-29PDF that occurred on April 7, 2023, which added to Section 4.01(2), Special Rule for Beginning of Construction, clarifying that this guidance applies to taxpayers that begin construction on or after Jan. 1, 2023.

Notice 2023-45 also adds an additional clarification pertaining to the brownfield site safe harbor under Section 5.02(3). Specifically, for projects with a nameplate capacity of not greater than 5MW (AC), it is required that a Phase I Assessment identify the presence or potential presence on the site of a hazardous substance or a pollutant or contaminant.

Also, the IRS posted frequently asked questions today related to the increased amount of credit for energy communities. These FAQs provide detail on how areas may qualify as an energy community, how to determine whether a project is in an energy community, and brownfield sites for purposes of the energy community bonus credit.
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The Inflation Reduction Act

Webinar Is Today! You Can Still Register As Webinar Begins In Less Than One Hour
Date: April 26th
Time: 12:00PM EST
Webinar Title:The Inflation Reduction Act of 2022: Transforming 179D and 45L
CPE Credit For Attendees: 1 CPE Credit
Field of Study: Taxes
Program Level: Beginner/Intermediate
Cost: Compliments Of Capstan Tax, Complimentary Education

The passage of the Inflation Reduction Act of 2022 (IRA) has transformed energy-efficient tax incentives for commercial real estate. The IRA will alter and amplify both the 179D Deduction and the Section 45L Tax Credit. In this all-new webinar, we will compare the current version of each incentive to the “IRA Version” of the incentive, addressing changes to reference standards, calculation of incentives, documentation procedures, and more. New exciting initiatives including utility sales tax recovery, C-PACE, and more will also be discussed. Numerous real-life case studies will be reviewed, and a variety of reference tables will be provided.

Learning Objectives:
• Compare the requirements for claiming the 179D deduction under both the old and new laws
• Understand how the 179D deduction is calculated under the Legacy Program and under the IRA
• Recognize other changes to 179D under the IRA, including the elimination of partial deductions and theestablishment of deduction reset
• Compare the requirements for claiming the 45L Tax Credit under both the old and new laws, and theassociated differences for single-family and multifamily dwelling units
• Become familiar with solar energy incentives, the benchmarking process, and C-PACE
• Learn about NYC’s Carbon Emissions Bill, and recognize potential implications in New York and beyond
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Observations on the Inflation Reduction Act of 2022

On August 16 President Biden signed the Inflation Reduction Act of 2022 (P.L. 117-169; H.R. 5376). This was enacted via the budget reconciliation process so only 51 votes were needed to pass this in the Senate. And there are various restrictions on what can go in the bill and it can’t lose revenue in the 11th year out and beyond. So the numerous energy credits added or expanded in this law generally end expire 12/31/32. And this law’s official name is “an act to provide for reconciliation pursuant to title II of S. Con. Res. 14” due to the required process (has to have the word reconciliation in it). The unofficial name that you’ll hear is Inflation Reduction Act of 2022 or IRA (which might be confusing).

Single-spaced, this act is 273 pages with 128 pages – or 47% related to tax law changes (these are in Title I of the Act but a lot of these pages are in Subtitle B on prescription drug pricing reform (which tax-wise only includes a minor change to IRC §223 on health savings accounts and a new drug excise tax at §5000D).

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