IRS helps clean energy producers with domestic content exceptions guidance.

The Treasury Department and the Internal Revenue Service (IRS) have released guidance for clean energy producers who may not meet the domestic content requirements for renewable energy projects. Notice 2024-9 provides procedures for claiming a statutory exception to the phaseouts for elective payment projects that fail to satisfy the domestic content requirements of the Inflation Reduction Act. The Inflation Reduction Act of 2022 aims to incentivize the production of green energy in the US by providing rules for bonus tax credits for satisfying domestic content requirements. The notice is open for public comment until February 26, 2024.

According to the rules, projects that produce one or more megawatts of electricity and fail to satisfy the domestic content requirement will be subject to phaseouts for elective payment. However, the statute provides for a statutory exception in certain cases. The Treasury Department and the IRS are seeking feedback on the number of facilities that will be impacted by the phaseouts, factors affecting construction costs, and any documentation or substantiation requirements. Written comments can be submitted electronically or by mail.

Many companies have struggled to meet the domestic content requirements, as the US manufacturing base relies on foreign sources for raw materials and components. The notice seeks to address these concerns and develop future proposed regulations.

Key points:

• The IRS has issued guidance for clean energy producers who may not meet domestic content requirements for renewable energy projects.
• Notice 2024-9 provides procedures for producers to claim a statutory exception to the phaseouts for elective payment projects.
• The Treasury Department and the IRS are seeking feedback on the impact of phaseouts, construction costs, and documentation requirements.
• Many US companies struggle to meet domestic content requirements due to reliance on foreign sources for materials and components.

Overall, this guidance from the IRS provides relief and clarity for clean energy producers who may not meet the domestic content requirements for their renewable energy projects. By offering a statutory exception to the phaseouts for elective payment projects, the IRS acknowledges the challenges faced by companies in meeting these requirements. The notice also demonstrates the government’s commitment to incentivize the production of green energy in the US and provides a platform for public feedback to inform future proposed regulations.