Defines the meaning of qualifying advanced energy project, specified advanced energy property, eligible property, the placed in service date, industrial facility, manufacturing facilities, and recycling facility
Establishes a prevailing wage and apprenticeship requirements, along with remediation options
Explains the timeline and the steps applicants must follow
Application and Certification Process
Round 1 of the application period begins on May 31, 2023. The IRS expects to allocate $4 billion in credit in this round, including $1.6 billion to projects in energy communities. Interested taxpayers must submit a detailed concept paper by July 31, 2023, certifying under perjury penalties that they did not claim a credit under several other Code Sections for the same investment.
Within two years after the IRS accepts an allocation application, evidence must be submitted to the Department of Energy (DOE) to establish that it has met all requirements necessary to begin construction. DOE then notifies the IRS, and the IRS certifies the project.
Papers can be submitted to the DOE through their eXHANGE portal. The DOE ranks and recommends projects to the IRS based on its expectation of its commercial viability.
Energy Communities and Progress Expenditures
For purposes of the minimum $4 billion allocation for projects in energy communities, the DOE will determine which projects are in energy community census tracts. Additional guidance is expected to provide a mapping tool that applicants may use to determine if their projects are in energy communities.
Finally, the guidance explains how taxpayers may elect to claim the credit for progress expenditures paid or incurred during the tax year for construction of a qualifying advanced energy project once the certification letter has been received.