Bulletin No. 2022–43

HIGHLIGHTS

OF THIS ISSUE





Bulletin No. 2022–43

October 24, 2022

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

ADMINISTRATIVE

Rev. Proc 2022-31, page 339.

General Rules and Specifications for Substitute Forms

and Schedules. This procedure provides guidelines and

general requirements for the development, printing,

and approval of the 2022 substitute tax forms. This

procedure will be reproduced as the next revision of

Publication 1167. Rev. Proc. 2021-42 is superseded.

Rev. Proc 2022-37, page 377.

This procedure publishes the amounts of unused housing credit carryovers allocated to qualified states under

section 42(h)(3)(D) of the Code for calendar year 2022.

INCOME TAX

Notice 2022-41, page 304.

This notice expands the application of the permitted

change-in-status rules for health coverage under a section 125 cafeteria plan (cafeteria plan). In particular,

this notice addresses the situation in which, during a

period of coverage (typically a plan year), a cafeteria

plan participant may wish to revoke the employee’s

election under the cafeteria plan for other-than-self-only

(family) coverage under a group health plan (other than

a flexible spending arrangement) in order to allow one

or more family members to enroll in a Qualified Health

Plan through a Health Insurance Exchange in the individual market.

Notice 2022-46, page 306.

Following enactment of Public Law 117-169, 136 Stat.

1818 (August 16, 2022), commonly known as the Inflation Reduction Act of 2022 (IRA), this notice requests

Finding Lists begin on page ii.

comments related to the clean vehicles provisions

under §§ 25E and 30D of the Internal Revenue Code.

Comments received in response to this notice will help

to inform development of guidance implementing §§

30D and 25E.

Notice 2022-47, page 312.

This notice requests comments on issues concerning

§§ 45X and 48C, as amended or added by Public Law

117-169, 136 Stat. 1818 (August 16, 2022), commonly known as the Inflation Reduction Act of 2022

(IRA).

Notice 2022-48, page 316.

Following enactment of Public Law 117-169, 136 Stat.

1818 (August 16, 2022), commonly known as the Inflation Reduction Act of 2022 (IRA), this notice requests

comments regarding the provisions of §§ 25C, 25D,

45L and 179D of the Internal Revenue Code. Comments received in response to the notice will help to

inform the development of guidance implementing §§

25C, 25D, 45L and 179D.

Notice 2022-49, page 321.

The notice requests comments on issues concerning §§

45, 48, 45U, 45Y, and 48E, as amended or added by

Public Law 117-169, 136 Stat. 1818 (August 16, 2022),

commonly known as the Inflation Reduction Act (IRA).

Notice 2022-50, page 325.

The notice requests comments on the elective payment

provisions under § 6417 and the elective credit transfer provisions under § 6418 of the Internal Revenue

Code, as added by § 13801 of Public Law 117-169,

136 Stat. 1818 (August 16, 2022), commonly known

as the Inflation Reduction Act of 2022.

Notice 2022-51, page 331.

This notice requests comments on issues concerning

§§ 30C, 45, 45L, 45Q, 45U, 45V, 45Y, 45Z, 48, 48C,

48E, and 179D, as amended or added by Public Law

117-169, 136 Stat. 1818 (August 16, 2022), commonly known as the Inflation Reduction Act (IRA) relating to the prevailing wage, apprenticeship, domestic

content, and energy community requirements for

increased or bonus credit or deduction amounts under

those sections.

Notice 2022-52, page 337.

The Department of the Treasury and the Internal Revenue

Service are issuing this notice to modify and amplify provisions of Notice 2022–05, 2022–5 I.R.B. 457, by providing additional temporary relief from certain requirements

under § 42 of the Internal Revenue Code for qualified

low-income housing projects. This additional temporary

relief is provided due to unavoidable labor and supply-chain

disruptions delaying the construction, rehabilitation, and

restoration of properties throughout the United States.

The IRS Mission

Provide America’s taxpayers top-quality service by helping

them understand and meet their tax responsibilities and

enforce the law with integrity and fairness to all.

Introduction

The Internal Revenue Bulletin is the authoritative instrument

of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service

and for publishing Treasury Decisions, Executive Orders, Tax

Conventions, legislation, court decisions, and other items of

general interest. It is published weekly.

It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application

of the tax laws, including all rulings that supersede, revoke,

modify, or amend any of those previously published in the

Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of

internal practices and procedures that affect the rights and

duties of taxpayers are published.

Revenue rulings represent the conclusions of the Service

on the application of the law to the pivotal facts stated in

the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices,

identifying details and information of a confidential nature are

deleted to prevent unwarranted invasions of privacy and to

comply with statutory requirements.

Rulings and procedures reported in the Bulletin do not have the

force and effect of Treasury Department Regulations, but they

may be used as precedents. Unpublished rulings will not be

relied on, used, or cited as precedents by Service personnel in

the disposition of other cases. In applying published rulings and

procedures, the effect of subsequent legislation, regulations,

court decisions, rulings, and procedures must be considered,

and Service personnel and others concerned are cautioned

against reaching the same conclusions in other cases unless

the facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.

This part includes rulings and decisions based on provisions

of the Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation.

This part is divided into two subparts as follows: Subpart A,

Tax Conventions and Other Related Items, and Subpart B,

Legislation and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.

To the extent practicable, pertinent cross references to these

subjects are contained in the other Parts and Subparts. Also

included in this part are Bank Secrecy Act Administrative

Rulings. Bank Secrecy Act Administrative Rulings are issued

by the Department of the Treasury’s Office of the Assistant

Secretary (Enforcement).

Part IV.—Items of General Interest.

This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative index

for the matters published during the preceding months. These

monthly indexes are cumulated on a semiannual basis, and are

published in the last Bulletin of each semiannual period.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

October 24, 2022 

Bulletin No. 2022–43

Part III

Additional Permitted

Election Changes for

Health Coverage under

Section 125 Cafeteria

Plans

Notice 2022-41

PURPOSE

This notice expands the application

of the permitted change-in-status rules

for health coverage under a section 125

cafeteria plan (cafeteria plan). In particular, this notice addresses the situation in

which, during a period of coverage (typically a plan year), a cafeteria plan participant may wish to revoke the employee’s

election under the cafeteria plan for other-than-self-only (family) coverage under

a group health plan (other than a flexible

spending arrangement (FSA)) in order

to allow one or more family members to

enroll in a Qualified Health Plan (QHP)

through a Health Insurance Exchange

(Exchange) in the individual market.

Under this notice, the employee will be

able to elect out of family coverage and

into self-only coverage (or family coverage including one or more already-covered related individuals) under that health

plan prospectively during a period of coverage, provided specific conditions are

satisfied.

The Department of the Treasury and

the Internal Revenue Service intend to

modify the Income Tax Regulations under

section 125 of the Internal Revenue Code

(Code) consistent with the provisions of

this notice. Taxpayers may rely on the

guidance in this notice for plan amendments allowing elections effective on or

after January 1, 2023.

This notice is being issued in conjunction with regulations under section 36B,

which provide that the affordability of

an offer of group health plan coverage

for a related individual is based on the

employee’s cost to cover the employee and

the employee’s related individuals. See

§ 1.36B-2(c)(3)(v)(A)(2); 87 FR 61979

(Oct. 13, 2022).

BACKGROUND

Section 125(d)(1) defines a cafeteria plan as a written plan maintained by

an employer under which all participants

are employees and under which all participants may choose among two or more

benefits consisting of cash and qualified

benefits. Section 125(f) generally defines

a qualified benefit as any benefit which,

with the application of section 125(a), is

not includable in the gross income of the

employee by reason of an express provision of the Code (with certain exceptions).

Qualified benefits include employer-provided accident and health plans excludable

from gross income under sections 106 and

105(b), but exclude long term care insurance and certain QHPs.

Consistent with longstanding rules for

cafeteria plans, a written cafeteria plan

generally must provide that elections

are irrevocable, except to the extent that

the optional change-in-status rules in

§ 1.125-4 have been included in the cafeteria plan.1 Section 1.125-4 provides rules

on the circumstances in which a cafeteria plan may permit changes to elections

under the plan. Cafeteria plans are not

required to allow any of the changes permitted under § 1.125-4.

Section 1.125-4(c) permits a cafeteria

plan to allow an employee to revoke an

election during a period of coverage with

respect to coverage under an accident or

health plan as defined in § 1.105-5 and

make a new election for the remaining

portion of the period if, under the facts

and circumstances, (i) a change in status occurs, and (ii) the election change

satisfies the consistency requirements of

§ 1.125-4(c)(3). A change in status for this

purpose includes a change in employment

status as described in § 1.125-4(c)(2)(iii).

A change in employment status for this

purpose includes only a change in an individual’s employment status that results

in a change in the individual’s eligibility

for coverage under the group health plan.

Thus, under the regulations, a change in

employment status that does not result in

an employee or a related individual either

becoming or ceasing to be eligible for coverage under the group health plan is not

a change in status for which a plan may

allow the employee to revoke an election

of health coverage under the cafeteria plan

during a period of coverage.

Even if the change in status results in

a change in eligibility for coverage under

the group health plan, any revocation of

an election must satisfy the consistency

requirements of § 1.125-4(c)(3)(i) and

(iii). Those requirements provide that if

an employee’s change in status results in

an individual covered by a group health

plan due to the individual’s relationship to

the employee ceasing to satisfy eligibility

requirements for coverage, the employee

is not permitted to elect to revoke an

election of coverage under the cafeteria

plan for any individual who did not lose

eligibility. Similarly, if a change in status

results in an individual gaining eligibility

for coverage under a second group health

plan, an employee’s election to cease or

decrease coverage for that individual

under the cafeteria plan is permitted only

if the individual enrolls in the coverage for

which the individual is newly eligible.

Furthermore, § 1.125-4(b) permits a

cafeteria plan to allow an employee to

revoke an election under a group health

plan during a period of coverage and to

make a new election that corresponds

with the special enrollment rights under

section 9801(f).

The Affordable Care Act2 created

the ability to enroll in QHPs through

an Exchange. Special enrollment rights

under section 9801(f) concern rights to

enroll in a group health plan due to loss

of other coverage or certain family events,

but do not include the ability to enroll in

a QHP through an Exchange. The ACA

See, e.g., Prop. Reg. § 1.125-1(c)(1)(iii); 72 FR 43938, 43948 (Aug. 6, 2007).

The Patient Protection and Affordable Care Act, Pub. L. 111–148 (124 Stat. 119 (2010)), and the Health Care and Education Reconciliation Act of 2010, Pub. L. 111–152 (124 Stat. 1029

(2010)), collectively referred to as the Affordable Care Act or ACA.

1

2

October 24, 2022

304

Bulletin No. 2022–43

includes separate provisions regarding

enrollment in QHPs through an Exchange

during open and special enrollment periods. In order to allow employees to enroll

in a QHP through an Exchange if they

would prefer that coverage, Notice 201455 (2014-41 IRB 672) expanded the ability of cafeteria plans to allow employees

to revoke elections for group health plan

coverage in two situations.

The first situation in Notice 2014-55

addresses an employee with a specified

reduction in hours. Specifically, a cafeteria plan may allow that employee to

revoke prospectively an election for group

health plan coverage if (1) the change in

that employee’s status does not result in

the employee ceasing to be eligible under

the group health plan; and (2) the revocation of the election of coverage under the

group health plan corresponds with the

intended enrollment of the employee, and

any related individuals who cease coverage due to the revocation, in another plan

that provides minimum essential coverage, with the new coverage effective no

later than the first day of the second month

following the month that includes the date

the original coverage is revoked.

The second situation in Notice 201455 addresses an employee who is eligible

to enroll in a QHP through an Exchange.

Specifically, a cafeteria plan may allow

an employee to revoke prospectively an

election for group health plan coverage

if (1) the employee is eligible for a special enrollment period to enroll in a QHP

through an Exchange pursuant to guidance issued by the Department of Health

and Human Services3 and any other applicable guidance, or the employee seeks to

enroll in a QHP during the Exchange’s

annual open enrollment period; and (2)

the revocation of the election of coverage under the group health plan corresponds to the intended enrollment of the

employee, and any related individuals

who cease coverage due to the revocation,

in a QHP through an Exchange for new

coverage that is effective beginning no

later than the day immediately following

the last day of the original coverage that is

revoked. However, Notice 2014-55 does

3

4

not allow the revocation of an election

for group health plan coverage when only

related individuals, and not the employee,

become eligible to enroll in a QHP through

an Exchange.

Section 36B allows a premium tax

credit to applicable taxpayers who satisfy

certain eligibility requirements, including

that an individual in the taxpayer’s family

enrolls in a QHP through an Exchange for

one or more months in which the individual is not eligible for employer-sponsored

minimum essential coverage (including

group health plan coverage) or certain

other minimum essential coverage. See

section 36B(c)(2)(B) and § 1.36B-3(c).

Section 36B(c)(2)(C) generally provides

that an individual is not treated as eligible for group health plan coverage if the

coverage offered is unaffordable or does

not provide minimum value. However,

an individual who enrolls in group health

plan coverage is eligible for that coverage,

and therefore ineligible for a premium tax

credit, irrespective of whether it is affordable or provides minimum value.

Previous regulations under section 36B

provided that the affordability of an offer

of group health plan coverage for an individual who may enroll in the coverage

because of a relationship to an employee

of the employer (a related individual) was

based on the employee’s self-only cost

to enroll in the coverage.4 This rule was

changed in recently issued regulations

under section 36B, which provide that the

affordability of an offer of group health

plan coverage for a related individual is

based on the employee’s cost to cover the

employee and the employee’s related individuals. See § 1.36B-2(c)(3)(v)(A)(2);

87 FR 61979 (Oct. 13, 2022). Affordability of an offer of group health plan coverage to an employee, however, continues to

be based on the employee’s self-only cost

to enroll in the coverage.

Interaction with Current Change-inStatus Rules

Under the current change-in-status

rules under § 1.125-4 and Notice 2014-55,

a cafeteria plan is not permitted to allow

an employee to revoke an election of family coverage under a group health plan

during a period of coverage and elect selfonly coverage (or family coverage including one or more already-covered related

individuals) solely to allow one or more

related individuals who had also been

enrolled in the group health plan to instead

enroll in a QHP through an Exchange (or

separate QHPs if there is more than one

related individual). This is the case even

when the related individuals are newly

eligible to enroll in a QHP through an

Exchange during a special enrollment

period or during the Exchange’s annual

open enrollment period.

In many instances, the current rules

for changes in status would not restrict

employees’ and related individuals’

choices regarding coverage. For a related

individual enrolled in a calendar year

group health plan through the cafeteria

plan offered to an employee, the employee

may revoke the related individual’s coverage under the plan during the plan’s

annual open season at the end of the plan

year so that the related individual generally may immediately begin coverage the

next calendar year under a QHP, enrolling

during the Exchange’s annual open enrollment period. However, a related individual enrolled through a cafeteria plan in

a group health plan with a non-calendar

plan year might not be able to synchronize

the change in coverage to avoid either an

overlapping period of coverage or a gap

in coverage because the existing cafeteria

plan change-in-status rules do not allow

the revocation of coverage when only

related individuals, and not the employee,

become eligible to enroll in a QHP through

an Exchange.

In addition, under § 1.125-4(b), a cafeteria plan may allow an employee to

revoke an election under a group health

plan during a period of coverage and to

make a new election that corresponds

with special enrollment rights under section 9801(f). However, special enrollment

rights under section 9801(f) relate only to

enrollment in group health plan coverage,

not a right to enroll in a QHP through an

Exchange.

See 45 CFR § 155.420(d).

See 78 FR 7264 (Feb. 1, 2013).

Bulletin No. 2022–43

305

October 24, 2022

Finally, there are some circumstances

in which a related individual may become

eligible for a special enrollment period

during a plan year and newly eligible to

enroll in a QHP through an Exchange, and

a premium tax credit under section 36B

may be allowed for the QHP coverage

of the related individual (for example, if

a related individual relocates to another

state). See 45 CFR § 155.420(d). Under the

current change-in-status rules, however,

an employee would be unable to revoke

family coverage in a group health plan to

allow any related individuals to enroll in

a QHP through an Exchange while at the

same time the employee elects to enroll

in self-only coverage (or family coverage

including one or more already-covered

related individuals) under the group health

plan.

As noted previously, under § 1.36B2(c)(3)(v)(A)(2), affordability of an offer

of group health plan coverage for a related

individual is based on the employee’s cost

to cover the employee and the employee’s related individuals. Consequently, an

employee may wish to revoke the election

of group health plan coverage for one or

more related individuals so the related

individuals may enroll in a QHP through

an Exchange and be allowed a premium

tax credit for the related individual’s QHP

coverage. In the case of group health plan

coverage elected through a non-calendar

year cafeteria plan, however, or in situations in which a premium tax credit would

be allowed for a related individual during

the plan year if the related individual was

enrolled in a QHP through an Exchange

and not in the group health plan coverage,

current rules require the employee to delay

this change until the plan’s annual open

enrollment period, even if the employee

would prefer to make the change sooner.

GUIDANCE

In addition to the situations described

in Notice 2014-55, a non-calendar year

cafeteria plan may allow an employee to

revoke prospectively an election of family

coverage under a group health plan that is

not a health FSA and that provides minimum essential coverage (as defined in

5

section 5000A(f)(1)) provided the following conditions are satisfied:

(1) One or more related individuals are

eligible for a special enrollment period to

enroll in a QHP through an Exchange pursuant to guidance issued by the Department of Health and Human Services5 and

any other applicable guidance, or one

or more already-covered related individuals seeks to enroll in a QHP during

the Exchange’s annual open enrollment

period; and

(2) The revocation of the election of

coverage under the group health plan corresponds to the intended enrollment of the

related individual or related individuals

in a QHP through an Exchange for new

coverage that is effective beginning no

later than the day immediately following

the last day of the original coverage that is

revoked. If the employee does not enroll

in a QHP through an Exchange as set forth

in Notice 2014-55, the employee must

elect self-only coverage (or family coverage including one or more already-covered related individuals) under the group

health plan.

A cafeteria plan may rely on the reasonable representation of an employee

that the employee and/or related individuals have enrolled or intend to enroll in a

QHP through an Exchange for new coverage that is effective beginning no later

than the day immediately following the

last day of the original coverage that is

revoked.

EFFECTIVE DATE AND PLAN

AMENDMENTS

The guidance in this notice is effective

for elections effective on or after January 1, 2023. Taxpayers may rely on the

guidance in this notice pending further

guidance.

To allow the new permitted election

changes under this notice, an employer

must amend a cafeteria plan to provide for

these election changes. An employer must

adopt the amendment on or before the last

day of the plan year in which the elections

are allowed, and the amendment may be

effective retroactively to the first day of

that plan year, provided that the cafeteria

plan operates in accordance with the guidance under this notice and the employer

informs participants of the amendment,

and provided further that an employer

may amend a cafeteria plan to adopt the

new permitted election changes for a plan

year that begins in 2023 at any time on or

before the last day of the plan year that

begins in 2024. However, in no event may

an employer amend a cafeteria plan to

allow an election to revoke coverage on a

retroactive basis.

EFFECT ON OTHER

DOCUMENTS

Notice 2014-55 is amplified.

DRAFTING INFORMATION

The principal author of this notice is

Jennifer Friedman of the Office of Associate Chief Counsel (Employee Benefits,

Exempt Organizations, and Employment

Taxes). For further information regarding

this notice, contact Jennifer Friedman at

(202) 317-5500 (not a toll-free number).

Request for Comments on

Credits for Clean Vehicles

Notice 2022-46

SECTION 1. PURPOSE

The Department of the Treasury (Treasury Department) and the Internal Revenue

Service (IRS) plan to issue guidance under

§ 30D and § 25E of the Internal Revenue

Code (Code), as amended by §§ 13401 and

13402, respectively, of Public Law 117-169,

136 Stat. 1818 (August 16, 2022), commonly known as the Inflation Reduction Act

of 2022 (IRA). This notice requests general

comments on questions under § 25E and the

amendments to § 30D, as well as specific

comments involving questions described in

section 3 of this notice. Comments received

in response to this notice will help to inform

development of guidance implementing

§§ 30D and 25E.

See 45 CFR § 155.420(d).

October 24, 2022

306

Bulletin No. 2022–43

SECTION 2. BACKGROUND

.01 Section 30D, Clean Vehicle Credit

Section 30D of the Code was originally enacted by § 205(a) of the Energy

Improvement and Extension Act of 2008,

Division B of Public Law 110-343, 122

Stat. 3765, 3835 (October 3, 2008), to

provide a credit for purchasing and placing in service of new qualified plug-in

electric drive motor vehicles. Section 30D

of the Code has been amended several

times since its enactment, most recently

by § 13401 of the IRA. In general, the

amendments made by § 13401 of the

IRA to § 30D of the Code apply to vehicles placed in service after December 31,

2022, except as provided in § 13401(k)(2)

through (5) of the IRA.

Section 13401(a) of the IRA amends

§ 30D(b) of the Code to provide a maximum credit of $7,500 per vehicle, consisting of $3,750 in the case of a vehicle that

meets certain critical minerals requirements and $3,750 in the case of a vehicle that meets certain battery components

requirements. The amendments made by

§ 13401(a) of the IRA are applicable to

vehicles placed in service after the date on

which the Secretary of the Treasury or her

delegate (Secretary) issues proposed guidance described in new § 30D(e)(3)(B) of

the Code (proposed battery guidance date)

relating to new critical minerals requirements described in new § 30D(e)(1)(A)

and new battery components requirements

described in new § 30D(e)(2)(A). See

§ 13401(k)(3) of the IRA.

Section 13401(b) of the IRA amends

§ 30D(d) of the Code by adding new

§ 30D(d)(1)(G) and new § 30D(d)(5)

applicable to vehicles sold after the date

of enactment of the IRA (that is, August

16, 2022). See § 13401(k)(2) of the IRA.

Section 30D(d)(1)(G) requires any vehicle eligible for the credit under § 30D to

undergo final assembly in North America.

For purposes of new § 30D(d)(1)(G), new

§ 30D(d)(5) defines “final assembly” as

the process by which a manufacturer produces a new clean vehicle at, or through

the use of, a plant, factory, or other place

from which the vehicle is delivered to a

dealer or importer with all component

parts necessary for the mechanical operation of the vehicle included with the vehicle, whether or not the component parts

Bulletin No. 2022–43

are permanently installed in or on the

vehicle.

Section 13401(c) of the IRA further

amends § 30D(d) of the Code by making

the credit applicable to “new clean vehicles,” instead of “new qualified plug-in

electric drive motor vehicles,” for vehicles placed in service after December 31,

2022. As amended by § 13401(c) and (g)

(2) of the IRA, § 30D(d)(1) of the Code

defines a “new clean vehicle” as a motor

vehicle that satisfies the following eight

requirements set forth in § 30D(d)(1)(A)

through (H) of the Code:

(A) The original use of the motor vehicle must commence with the taxpayer.

(B) The motor vehicle must be acquired

for use or lease by the taxpayer and not for

resale.

(C) The motor vehicle must be made

by a qualified manufacturer.

(D) The motor vehicle must be treated

as a motor vehicle for purposes of title II

of the Clean Air Act.

(E) The motor vehicle must have a

gross vehicle weight rating of less than

14,000 pounds.

(F) The motor vehicle must be propelled to a significant extent by an electric motor which draws electricity from

a battery that has a capacity of not less

than 7 kilowatt hours, and is capable of

being recharged from an external source

of electricity.

(G) The final assembly of the motor

vehicle must occur within North America.

(H) The person who sells any vehicle

to the taxpayer must furnish a report to the

taxpayer and to the Secretary containing

the following six items:

(i) The name and taxpayer identification number of the taxpayer.

(ii) The vehicle identification number

of the vehicle, unless, in accordance with

any applicable rules promulgated by the

Secretary of Transportation, the vehicle is

not assigned such a number.

(iii) The battery capacity of the vehicle.

(iv) Verification that original use of the

vehicle commences with the taxpayer.

(v) The maximum credit under § 30D

allowable to the taxpayer with respect to

the vehicle.

(vi) In the case of a taxpayer who

makes an election to transfer the credit

under § 30D(g)(1) (described below),

any amount described in § 30D(g)(2)(C)

307

which has been provided to such taxpayer.

The Secretary may prescribe the time and

manner of the report.

Section 13401(c) of the IRA further

amends § 30D(d)(3) of the Code to replace

the term “manufacturer” with “qualified manufacturer” applicable to vehicles placed in service after December 31,

2022. As amended by the IRA, § 30D(d)

(3) of the Code defines a “qualified manufacturer” as any manufacturer (within

the meaning of the regulations prescribed

by the Administrator of the Environmental Protection Agency for purposes of the

administration of title II of the Clean Air

Act (42 U.S.C. 7521 et seq.)) that enters

into a written agreement with the Secretary

under which such manufacturer agrees to

make periodic written reports to the Secretary (at such times and in such manner

as the Secretary may provide) providing

vehicle identification numbers and such

other information related to each vehicle

manufactured by such manufacturer as the

Secretary may require.

Section 13401(c) of the IRA adds new

§ 30D(d)(6) to the Code, which includes

in the definition of the term “new clean

vehicle” applicable to vehicles placed

in service after December 31, 2022, any

“new qualified fuel cell motor vehicle”

(as defined in § 30B(b)(3)) that meets

the requirements under § 30D(d)(1)(G)

and (H). Section 13401(c) of the IRA

also makes conforming amendments to

§ 30D(a) and (b)(1) of the Code to allow

a credit for the taxable year with respect

to each “new clean vehicle” placed in service by a taxpayer during the taxable year

and after December 31, 2022.

Section 13401(d) of the IRA eliminates

the manufacturer limitation on the number

of vehicles eligible for the § 30D credit

by striking former § 30D(e) applicable to

vehicles sold after December 31, 2022.

See § 13401(k)(5) of the IRA.

Section 13401(e) of the IRA provides

new critical minerals requirements and

new battery components requirements in

new § 30D(e) applicable to vehicles placed

in service after the proposed battery guidance date. New § 30D(e)(1)(A) provides

that the critical minerals requirement with

respect to the battery from which the electric motor of a vehicle draws electricity is

satisfied if the percentage of the value of

the applicable critical minerals (as defined

October 24, 2022

in § 45X(c)(6)) contained in such battery

that were (i) extracted or processed in

the United States, or in any country with

which the United States has a free trade

agreement in effect, or (ii) recycled in

North America, is equal to or greater than

the applicable percentage (as certified by

the qualified manufacturer, in such form

or manner as prescribed by the Secretary).

The applicable percentage for the critical minerals requirement is set forth in

§ 30D(e)(1)(B)(i) through (v) of the Code

and varies based on when the vehicle is

placed in service. In the case of a vehicle

placed in service after the proposed battery guidance date and before January 1,

2024, the applicable percentage is 40 percent. In the case of a vehicle placed in service during calendar year 2024, 2025, and

2026, the applicable percentage is 50 percent, 60 percent, and 70 percent, respectively. In the case of a vehicle placed in

service after December 31, 2026, the

applicable percentage is 80 percent.

Section 13401(e) of the IRA amends

§ 30D(e)(2)(A) of the Code applicable to

vehicles placed in service after the proposed battery guidance date to provide

that the battery components requirement

with respect to the battery from which

the electric motor of a vehicle draws electricity is satisfied if the percentage of the

value of the components contained in

such battery that were manufactured or

assembled in North America is equal to

or greater than the applicable percentage

(as certified by the qualified manufacturer,

in such form or manner as prescribed by

the Secretary). The applicable percentage for the battery components requirement is set forth in § 30D(e)(2)(B)(i)

through (vi) of the Code and varies based

on when the vehicle is placed in service.

In the case of a vehicle placed in service

after the proposed battery guidance date

and before January 1, 2024, the applicable percentage is 50 percent. In the case

of a vehicle placed in service during calendar year 2024 or 2025, the applicable

percentage is 60 percent. In the case of a

vehicle placed in service during calendar

year 2026, 2027, and 2028, the applicable

percentage is 70 percent, 80 percent, and

90 percent, respectively. In the case of a

vehicle placed in service after December

31, 2028, the applicable percentage is 100

percent.

October 24, 2022

New § 30D(e)(3)(A) of the Code

authorizes the Secretary to issue such

regulations or other guidance as the Secretary determines necessary to carry out

the purposes of new § 30D(e), including

regulations or other guidance which provides for requirements for recordkeeping

or information reporting for purposes

of administering the new critical minerals requirements and new battery components requirements of new § 30D(e).

New § 30D(e)(3)(B) of the Code requires

the issuance of proposed guidance with

respect to the new critical minerals

requirements and new battery components

requirements under new § 30D(e) not later

than December 31, 2022.

As amended by § 13401(e) of the IRA,

§ 30D(d)(7) of the Code excludes, after

certain specified dates, vehicles placed in

service with batteries containing certain critical minerals or battery components from

a foreign entity of concern from the definition of the term “new clean vehicle.” In

particular, amended § 30D(d)(7) provides

that the term “new clean vehicle” does not

include (A) any vehicle placed in service

after December 31, 2024, with respect to

which any of the applicable critical minerals

contained in the battery of such vehicle (as

described in § 30D(e)(1)(A)) were extracted,

processed, or recycled by a foreign entity of

concern (as defined in § 40207(a)(5) of the

Infrastructure Investment and Jobs Act (42

U.S.C. 18741(a)(5))), or (B) any vehicle

placed in service after December 31, 2023,

with respect to which any of the components

contained in the battery of such vehicle (as

described in § 30D(e)(2)(A)) were manufactured or assembled by a foreign entity of

concern (as so defined).

Section 13401(f) of the IRA adds

four new special rules under § 30D(f)

applicable to vehicles placed in service

after December 31, 2022. New § 30D(f)

(8) provides that the § 30D credit is only

allowed once with respect to a vehicle, as

determined based upon the vehicle identification number of a vehicle, including

any vehicle with respect to which the taxpayer elects the application of § 30D(g)

(described below). New § 30D(f)(9)

provides that no credit is allowed with

respect to any vehicle unless the taxpayer

includes the vehicle identification number

of such vehicle on the return of tax for the

taxable year.

308

New § 30D(f)(10)(A) provides that no

credit is allowed for any taxable year if

(i) the lesser of (I) the modified adjusted

gross income of the taxpayer for such

taxable year, or (II) the modified adjusted

gross income of the taxpayer for the

preceding taxable year, exceeds (ii) the

threshold amount. New § 30D(f)(10)(B)

provides that the threshold amount shall

be (i) in the case of a joint return or a

surviving spouse (as defined in § 2(a) of

the Code), $300,000, (ii) in the case of a

head of household (as defined in § 2(b)

of the Code), $225,000, and (iii) in the

case of any other taxpayer, $150,000.

New § 30D(f)(10)(C) defines “modified

adjusted gross income” as adjusted gross

income increased by any amount excluded

from gross income under § 911, 931,

or 933.

New § 30D(f)(11)(A) provides that

no credit is allowed for a vehicle with a

manufacturer’s suggested retail price in

excess of the applicable limitation. New

§ 30D(f)(11)(B) provides that the applicable limitation for each vehicle classification is as follows: in the case of a van,

$80,000; in the case of a sport utility vehicle, $80,000; in the case of a pickup truck,

$80,000; and in the case of any other

vehicle, $55,000. New § 30D(f)(11)(C)

authorizes the Secretary to prescribe such

regulations or other guidance as the Secretary determines necessary to determine

vehicle classifications using criteria similar to that employed by the Environmental

Protection Agency and the Department of

the Energy to determine size and class of

vehicles.

Section 13401(g) of the IRA amends

§ 30(D)(g) of the Code applicable to vehicles placed in service after December

31, 2023, to provide that, subject to such

regulations or other guidance as the Secretary determines necessary, a taxpayer

may elect under § 30D(g) to “transfer” a

§ 30D credit with respect to a new clean

vehicle to an eligible entity (transfer election). If the taxpayer who acquires a new

clean vehicle makes a transfer election

under § 30D(g) with respect to such vehicle, the § 30D credit that would otherwise

be allowed to such taxpayer with respect

to such vehicle is allowed to the eligible

entity specified in such election (and not

the taxpayer). Section 30D(g)(2) defines

an “eligible entity” with respect to the

Bulletin No. 2022–43

vehicle for which the credit is allowed as

the dealer that sold such vehicle to the taxpayer and that satisfies the following four

requirements set forth in § 30D(g)(2)(A)

through (D):

(A) The dealer, subject to § 30D(g)(4),

must be registered with the Secretary for

purposes of § 30D(g)(2), at such time, and

in such form and manner, as the Secretary

prescribes.

(B) The dealer, prior to the transfer

election and not later than at the time of

sale, must have disclosed to the taxpayer

purchasing such vehicle (i) the manufacturer’s suggested retail price, (ii) the value

of the credit allowed and any other incentive available for the purchase of such

vehicle, and (iii) the amount provided by

the dealer to such taxpayer as a condition

of the transfer election.

(C) The dealer, not later than at the time

of sale, must have paid the taxpayer (whether

in cash or in the form of a partial payment

or down payment for the purchase of such

vehicle) an amount equal to the credit otherwise allowable to such taxpayer.

(D) The dealer with respect to any incentive otherwise available for the purchase

of a vehicle for which a credit is allowed

under § 30D, including any incentive in

the form of a rebate or discount provided

by the dealer or manufacturer, must have

ensured that (i) the availability or use of

such incentive does not limit the ability of

a taxpayer to make a transfer election and

(ii) such election does not limit the value

or use of such incentive.

Amended § 30D(g)(3) provides that

any transfer election cannot be made by

the taxpayer any later than the date on

which the vehicle for which the § 30D

credit is allowed is purchased. Amended

§ 30D(g)(4) provides that upon determination by the Secretary that a dealer has

failed to comply with the requirements

described in § 30D(g)(2), the Secretary

may revoke the dealer’s registration.

Amended § 30D(g)(5) provides that

with respect to any payment described in

§ 30D(g)(2)(C), such payment (A) is not

includible in the gross income of the taxpayer, and (B) with respect to the dealer,

is not deductible under the Code. Section

30D(g)(6) provides that, in the case of

any transfer election with respect to any

vehicle (A) the requirements of § 30D(f)

(1) and (2) apply to the taxpayer who

Bulletin No. 2022–43

acquired the vehicle in the same manner

as if the § 30D credit determined with

respect to such vehicle were allowed

to such taxpayer, (B) § 30D(f)(6) does

not apply, and (C) the requirement of

§ 30D(f)(9) is treated as satisfied if the

eligible entity provides the vehicle identification number of such vehicle to the

Secretary in such manner as the Secretary may provide.

Amended § 30D(g)(7)(A) provides for

the establishment of a program to make

advance payments to any eligible entity in

an amount equal to the cumulative amount

of the credits allowed with respect to any

vehicles sold by such entity for which a

transfer election described in § 30D(g)

(1) has been made. Amended § 30D(g)(7)

(B) details that rules similar to the rules

of § 6417(d)(6) apply for purposes of any

excessive payments.

Amended § 30D(g)(8) defines the term

“dealer” as a person licensed by a State,

the District of Columbia, the Commonwealth of Puerto Rico, any other territory

or possession of the United States, an

Indian tribal government, or any Alaska

Native Corporation (as defined in § 3 of

the Alaska Native Claims Settlement Act

(43 U.S.C. 1602(m)) to engage in the sale

of vehicles.

Amended § 30D(g)(9) defines the term

“Indian tribal government” as the recognized governing body of any Indian or

Alaska Native tribe, band, nation, pueblo,

village, community, component band, or

component reservation, individually identified (including parenthetically) in the list

published most recently as of the date of

enactment of § 30D(g) (that is, August 16,

2022) pursuant to § 104 of the Federally

Recognized Indian Tribe List Act of 1994

(25 U.S.C. 5131).

Amended § 30D(g)(10) provides that

in the case of any taxpayer who has made

a transfer election with respect to a new

clean vehicle and received a payment

from an eligible entity, if the §30D credit

would otherwise (but for § 30D(g)) not

be allowable to such taxpayer pursuant

to the application of § 30D(f)(10), the

income tax imposed on such taxpayer

under chapter 1 of the Code for the taxable year in which such vehicle was

placed in service must be increased by

the amount of the payment received by

such taxpayer.

309

Amended § 30D(h) provides that no

credit is allowed with respect to any vehicle placed in service after December 31,

2032.

Section 13401(k) of the IRA provides

the effective date for the amendments to

§ 30D of the Code. As noted above, except

as provided in § 13401(k)(2) through

(5) of the IRA, the amendments made

by § 13401 of the IRA apply to vehicles

placed in service after December 31, 2022.

Section 13401(k)(2) of the IRA provides

that the amendments made by § 13401(b)

of the IRA relating to final assembly apply

to vehicles sold after the date of enactment of the IRA (August 16, 2022). Section 13401(k)(3) of the IRA provides that

the amendments made by § 13401(a) and

(e) of the IRA relating to the per vehicle

dollar limitation and related requirements

apply to vehicles placed in service after

the date on which the proposed guidance

described in new § 30D(e)(3)(B) is issued

by the Secretary. Section 13401(k)(4) of

the IRA provides that the amendments

made by § 13401(g) of the IRA relating

to transfers of the § 30D credit apply to

vehicles placed in service after December 31, 2023. Section 13401(k)(5) of the

IRA provides that the amendment made

by § 13401(d) of the IRA eliminating the

manufacturer limitation applies to vehicles sold after December 31, 2022.

Section 13401(l) of the IRA provides

a transition rule for a taxpayer who purchased or entered into a written binding contract to purchase a new qualified

plug-in electric drive motor vehicle (as

defined in § 30D(d)(1) of the Code, as in

effect on the day before the date of enactment of the IRA (August 15, 2022)) after

December 31, 2021 and before the date of

enactment of the IRA (August 16, 2022),

and placed such vehicle in service on or

after the date of enactment of the IRA.

The transition rule provides that such a

taxpayer may elect (at such time, and in

such form and manner as the Secretary

may prescribe) to treat such vehicle as

having been placed in service on the day

before the date of enactment of the IRA.

.02 Section 25E, Previously Owned

Clean Vehicles

New § 25E of the Code was enacted by

§ 13402 of the IRA. Section 25E(a) provides that in case of a qualified buyer who

during a taxable year, places in service

October 24, 2022

a previously-owned clean vehicle, an

income tax credit is allowed for the taxable year equal to the lesser of (1) $4,000,

or (2) the amount equal to 30 percent of

the sale price with respect to such vehicle

(§ 25E credit).

Section 25E(b)(1) sets a limitation

based on modified adjusted gross income

and provides that no credit is allowed for

any taxable year if (A) the lesser of (i) the

modified adjusted gross income of the

taxpayer for such taxable year, or (ii) the

modified adjusted gross income of the

taxpayer for the preceding taxable year,

exceeds (B) the threshold amount. The

threshold amount is set forth in § 25E(b)

(2) and varies based on a taxpayer’s filing status. In the case of a taxpayer filing a joint return or who is a surviving

spouse (as defined in § 2(a) of the Code),

the threshold amount is $150,000. In the

case of a taxpayer who is a head of household (as defined in § 2(b) of the Code),

the threshold amount is $112,500. In the

case of any other taxpayer, the threshold

amount is $75,000. Section 25E(b)(3)

defines modified adjusted gross income

as adjusted gross income increased by

any amount excluded from gross income

under § 911, 931, or 933.

Section 25E(c) defines certain terms

for purposes of the § 25E credit. Section

25E(c)(1) defines “previously-owned

clean vehicle” as, with respect to a taxpayer, a motor vehicle that satisfies the

following four requirements set forth in

§ 25E(c)(1)(A) through (D) of the Code:

(A) The model year of the motor vehicle is at least 2 years earlier than the calendar year in which the taxpayer acquires

such vehicle.

(B) The original use of the motor vehicle commences with a person other than

the taxpayer.

(C) The motor vehicle is acquired by

the taxpayer in a qualified sale.

(D) The motor vehicle (i) meets the

requirements of § 30D(d)(1)(C), (D),

(E), (F), and (H) (except for § 30D(d)

(1)(H)(iv)), or (ii) is a motor vehicle

which (I) satisfies the requirements under

§ 30B(b)(3)(A) and (B), and (II) has a

gross vehicle weight rating of less than

14,000 pounds.

Section 25E(c)(2) defines a “qualified

sale” as a sale of a motor vehicle (A) by

a dealer (as defined in § 30D(g)(8)),

October 24, 2022

(B) for a sale price which does not exceed

$25,000, and (C) which is the first transfer

since the date of enactment to a qualified

buyer other than the person with whom the

original use of such vehicle commenced.

Section 25E(c)(3) defines “qualified

buyer” as, with respect to a sale of a motor

vehicle, a taxpayer (A) who is an individual, (B) who purchases such vehicle for use

and not for resale, (C) with respect to whom

no deduction is allowable with respect to

another taxpayer under § 151, and (D) who

has not been allowed a credit under § 25E

for any sale during the 3-year period ending on the date of the sale of such vehicle.

Section 25E(c)(4) defines “motor vehicle” and “capacity” to have the meaning

given such terms in § 30D(d)(2) and (4),

respectively. Section 25E(d) provides

that no credit is allowed under § 25(a)

with respect to any vehicle unless the taxpayer includes the vehicle identification

number of such vehicle on the return of

tax for the taxable year. Section 25E(e)

and (f) provide that rules similar to the

rules of § 30D(f) (without regard to paragraph (10) or (11) thereof) and the rules

of § 30D(g) apply for purposes of § 25E.

Section 25E(g) provides that no credit

is allowed with respect to any vehicle

acquired after December 31, 2032.

Section 13402(e) of the IRA provides

the effective date for the amendments

made by § 13402 of the IRA. In general,

except as provided in § 13402(e)(2) of the

IRA, the amendments made by § 13402 of

the IRA apply to vehicles acquired after

December 31, 2022. The amendments

made by § 13402(b) of the IRA relating to

transfers of the § 25E credit apply to vehicles placed in service after December 31,

2023.

SECTION 3. REQUEST FOR

COMMENTS

The Treasury Department and the IRS

request comments on any questions arising from the IRA amendments to § 30D

and the enactment of § 25E that should be

addressed in guidance. Commenters are

encouraged to specify the issues on which

guidance is needed most quickly as well

as the most important issues on which

guidance is needed. In addition to general

comments regarding these provisions, the

Treasury Department and the IRS request

310

comments that address the following specific questions:

.01 Clean Vehicles (§ 30D)

(1) Definitions. Section 30D(d)(1)(B)

of the Code defines a “new clean vehicle,” in part, as a motor vehicle which is

acquired for use or lease by the taxpayer

and not for resale. As used in this definition, what, if any, guidance is needed as

to the meaning of the terms “acquired,”

“use,” and “lease?”

(2) Critical Minerals. Section 30D(e)

(1) provides the new critical minerals

requirements, including the applicable

percentage requirements to be phased in

over several years.

(a) What factors and definitions should

be considered to determine the place of

extracting or processing such critical

minerals, and, in particular, to determine

whether extracting or processing occurred

in the United States or in any country with

which the United States has a free trade

agreement in effect?

(b) What factors and definitions should

be considered to determine the place of

recycling such critical minerals and, in

particular, to determine whether recycling

occurred in North America?

(c) What factors and definitions should

be considered to determine (i) the total

value of the critical minerals contained in

a vehicle’s battery, and (ii) the percentage

of that total value attributable to critical

minerals (I) extracted or processed in the

United States or a country with which the

United States has a free trade agreement in

effect, or (II) recycled in North America?

(3) Battery Components. Section

30D(e)(2) provides the new battery

component requirements, including the

applicable percentage requirements to be

phased in over several years.

(a) What factors should be considered

in defining the components of a battery of

a clean vehicle?

(b) What factors and definitions should

be considered to determine the place of

manufacture or assembly of the components

of a battery of a clean vehicle and, in particular, to determine whether manufacture or

assembly occurred in North America?

(c) What factors and definitions should

be considered to determine (i) the total

value of the components contained in the

battery of a clean vehicle, and (ii) the percentage of that total value attributable to

Bulletin No. 2022–43

components that were manufactured or

assembled in North America?

(4) Applicable Values. The new critical

mineral and battery component requirements in § 30D(e) are based on value.

What existing battery technology supply

chain tracking methodologies or regulatory frameworks should be considered in

determining applicable values?

(5) Foreign Entity of Concern. Section 30D(d)(7) provides that some vehicles are excluded from the availability

of the credit, including when any of the

applicable critical minerals contained in

the battery were extracted, processed, or

recycled by a foreign entity of concern

(defined in 42 U.S.C. 18741(a)(5)), or if

any of the components contained in the

battery of such vehicle were manufactured or assembled by a foreign entity of

concern.

(a) Is guidance needed to clarify the

definition of “foreign entity of concern”?

(b) What existing regulatory or guidance frameworks for recordkeeping

requirements or supply chain tracking

methodologies may be useful for qualified

manufacturers to verify that its vehicles

are not excluded under § 30D(d)(7)?

(6) Recordkeeping and Reporting.

(a) In addition to VIN numbers, what

additional information should a qualified

manufacturer provide to the Secretary to

be considered a qualified manufacturer

with respect to a particular vehicle, per

§ 30D(d)(3)?

(b) What existing regulatory or guidance frameworks for recordkeeping

requirements or information reporting or

existing battery technology supply chain

tracking methodologies may be useful for

developing guidance for qualified manufacturers under § 30D(e)(3)?

(c) What information should be

included in the report furnished by the

seller of the vehicle to the taxpayer and

the Secretary under § 30D(d)(1)(H),

including the election to transfer the credit

under § 30D(g)?

(7) Tax-exempt Entities. Section 30D(f)

(3) is stricken by § 13401(g) of the IRA

with respect to vehicles placed in service

after December 31, 2023. How should

clean vehicles acquired and used by a

tax-exempt entity after this statutory

change becomes effective be treated for

purposes of § 30D?

Bulletin No. 2022–43

(8) Registered Dealer and Eligible

Entity.

(a) What guidance, if any, is needed to

determine who is a licensed dealer who

can be registered with the Secretary for

purposes of the transfer of the credit under

§ 30D(g)(2), (7), and (8)?

(b) What guidance, if any, is needed

regarding what circumstances may lead to

the revocation of such registration under

§ 30D(g)(4)?

(9) Final Assembly Requirement. Is

guidance needed to clarify the definition of

the term “final assembly” in § 30D(d)(5) or

the area included in the term “North America” for purposes of § 30D(d)(1)(G)?

(10) Vehicle Classifications.

(a) What, if any, guidance is needed

to define how vehicles are classified as

vans, sport utility vehicles, pickup trucks,

or other designations of vehicles for purposes of the manufacturer’s suggested

retail price limitation in § 30D(f)(11)?

(b) What criteria employed by the

Environmental Protection Agency and

Department of Energy, or other factors

(for example, Department of Transportation motor vehicle type classification)

should be considered in determining the

designation of such vehicles?

(c) Is guidance needed to clarify how

the manufacturer’s suggested retail price

is calculated?

(11) Election to Transfer and Advance

Payments.

(a) What factors should be considered

in determining the time and manner of

the taxpayer’s election under § 30D(g)

to transfer the § 30D credit to an eligible

entity?

(b) Is guidance needed regarding the

definition of “taxpayer,” such as whether

non-individual taxpayers are eligible for

the credit under § 30D?

(c) If an election to transfer the credit is

made by the taxpayer, what issues should

be considered regarding the transfer of the

§ 30D credit?

(d) What considerations and factors

should be taken into account in determining the time and manner of advance payments made pursuant to §30D(g)(7)(A)?

(e) For purposes of § 30D(g), what

guidance, if any, is needed regarding a

determination by an eligible entity regarding whether a credit is allowable to the

taxpayer?

311

(12) Recapture.

(a) Is guidance needed to coordinate

the application of the excess payment

provision under § 30D(g)(7)(B) and the

recapture provision under § 30D(g)(10) as

between the transferors and transferees of

the credit under § 30D(g)?

(b) In the event of a recapture event,

how should recapture be reported by the

taxpayer?

(13) Please provide comments on any

other terms that may require definition or

additional guidance.

.02 Previously Owned Cleans Vehicle

(§ 25E)

(1) What, if any, guidance is needed to

address how a taxpayer can verify that a

vehicle qualifies as a “previously-owned

clean vehicle” as defined in § 25E(c)(1)?

(2) Section 25E(e) provides that rules

similar to the rules of § 30D(f) (without

regard to paragraph (10) or (11) thereof)

apply for purposes of the § 25E credit.

What rules of § 30D(f) should be applied

under § 25E(e) without any modification?

What rules of § 30D(f) should be applied

in modified form for purposes of § 25E

and in what way should they be modified?

(3) Section 25E(f) provides that rules

similar to the rules of § 30D(g) apply for

purposes of the § 25E credit. What rules

of § 30D(g) should be applied under

§ 25E(f) without any modification? What

rules of § 30D(g) should be applied in

modified form for purposes of § 25E and

in what way should they be modified?

(4) Please provide comments on any

other terms that may require definition or

additional guidance.

SECTION 4. SUBMISSION OF

COMMENTS

.01 Written comments should be submitted by Friday, November 4, 2022. Consideration will be given, however, to any written

comment submitted after Friday, November

4, 2022, if such consideration will not delay

the issuance of guidance. The subject line

for the comments should include a reference

to Notice 2022-46. Comments may be submitted in one of two ways:

(1) Electronically via the Federal

eRulemaking Portal at www.regulations.

gov (type IRS-2022-0046 in the search

field on the regulations.gov homepage to

find this notice and submit comments).

October 24, 2022

(2) Alternatively, by mail to: Internal Revenue Service, CC:PA:LPD:PR

(Notice 2022-46), Room 5203, P.O. Box

7604, Ben Franklin Station, Washington,

D.C., 20044.

.02 All commenters are strongly

encouraged to submit comments electronically. The Treasury Department and the

IRS will publish for public availability

any comment submitted electronically

and on paper to its public docket on regulations.gov.

SECTION 5. RELIANCE ON

NOTICE 2009-89

Notice 2009-89, 2009-48 I.R.B. 714

was modified Notice 2016-51, 2016-37

I.R.B. 344, by updating section 6.03 of

Notice 2009-89, updating the address to

which a manufacturer (or, in the case of a

foreign manufacturer, its domestic distributor) sends quarterly reports and/or certifications. Taxpayers may rely on Notice

2009-89, as modified by Notice 2016-51,

until additional guidance on these issues

is issued.

SECTION 6. PROPOSED

GUIDANCE FOR CRITICAL

MINERAL AND BATTERY

COMPONENT REQUIREMENTS

For purposes of § 30D(e)(3)(B), the

publication of this notice requesting comments is not the publication of proposed

guidance with respect to the critical mineral

and battery component requirements under

§ 30D(e). The Treasury Department and

the IRS will explicitly identify when they

have published proposed guidance with

respect to the critical mineral and battery

component requirements under § 30D(e).

SECTION 7. DRAFTING

INFORMATION

The principal author of this notice

is the Office of Associate Chief Counsel (Passthroughs & Special Industries).

However, other personnel from the Treasury Department and the IRS participated

in its development. For further information regarding this notice, call the energy

security guidance contact number at (202)

317-5254 (not a toll-free number).

October 24, 2022

Request for Comments on

Energy Security Tax Credits

for Manufacturing Under

Sections 48C and 45X

Notice 2022-47

SECTION 1. PURPOSE

The Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) plan to issue guidance

regarding the advanced manufacturing

production credit under new § 45X (§ 45X

credit) and the qualifying advanced energy

project credit under § 48C (§ 48C credit)

of the Internal Revenue Code (Code),

as added and amended, by §§ 13502

and 13501, respectively, of Public Law

117-169, 136 Stat. 1818 (August 16,

2022), commonly known as the Inflation

Reduction Act of 2022 (IRA). This notice

requests general and specific comments

on questions pertaining to the implementation and administration of §§ 45X and

48C, which will help to inform the development of guidance implementing §§ 45X

and 48C.

SECTION 2. BACKGROUND

.01 Advanced Manufacturing Production Credit (§ 45X)

(1) Overview

Section 13502(a) of the IRA added

new § 45X to the Code to establish the

advanced manufacturing production

credit. Section 45X(a)(1) and (2) provide

that, for purposes of the general business credit under § 38 of the Code, the

advanced manufacturing production credit

for any taxable year is an amount equal to

the sum of the credit amounts determined

under § 45X(b) with respect to each eligible component (as defined in § 45X(c))

produced by the taxpayer and sold by such

taxpayer to an unrelated person, but only

if such production and sale is in a trade or

business of the taxpayer.

Section 45X(a)(3) provides rules regarding the sale of components to an unrelated

person, and generally provides a special rule

that, for purposes of § 45X(a), treats a taxpayer as selling components to an unrelated

person if such component is sold to such

312

person by a person related to the taxpayer.

Under § 45X(a)(3)(B), a taxpayer may

make an election in the form and manner

prescribed by the Secretary of the Treasury

or her delegate (Secretary) to treat a sale of

components by such taxpayer to a related

person as made to an unrelated person. As a

condition of, and prior to, a taxpayer making this election, the Secretary may require

such information or registration as the Secretary deems necessary for purposes of preventing duplication, fraud, or any improper

or excessive credit amount.

(2) Credit amounts

Section 45X(b)(1)(A) through (M)

and § 45X(b)(2)(A) set forth the credit

amounts for each type of eligible component, which amounts, except for purposes

of determining the credit amount with

respect to any applicable critical mineral,

are subject to phase out rules set forth in

§ 45X(b)(3). For any eligible component

sold after December 31, 2029, the credit

amount with respect to such component

equals the product of the amount determined under § 45X(b)(1) with respect to

such component multiplied by the phase

out percentages under § 45X(b)(3)(B)

(i) through (iv). In the case of an eligible component sold during calendar year

2030, 2031, and 2032, the phase out percentages are 75 percent, 50 percent, and

25 percent, respectively. In the case of an

eligible component sold after December

31, 2032, the phase out percentage is 0

percent.

Section 45X(b)(4) prescribes capacity limitations used to compute the credit

amount for eligible battery cells and battery modules under § 45X(b)(1)(K) and

(L), respectively. For purposes of computing the credit for these eligible components, § 45X(b)(4)(A) provides that

the capacity determined with respect to

a battery cell or battery module must not

exceed a capacity-to-power ratio of 100:1.

Section 45X(b)(4)(B) defines the term

“capacity-to-power-ratio” for this purpose

as the ratio of the capacity of a battery cell

or battery module to the maximum discharge amount of such cell or module.

(3) Eligible components

Section 45X(c) sets forth the different types of eligible components. Section

45X(c)(1)(A) provides that the term “eligible component” means any solar energy

component, wind energy component,

Bulletin No. 2022–43

inverter described in § 45X(c)(2)(B)

through (G), qualifying battery component, and applicable critical mineral. Section 45X(c)(1)(B) clarifies that the term

“eligible component” does not include

any property that is produced at a facility

if the basis of any property that is part of

such facility is taken into account for purposes of the qualifying advanced energy

project credit allowed under § 48C after

August 16, 2022 (that is, the date of enactment of the IRA).

Section 45X(c)(2)(A) generally defines

“inverter” as an end product that is suitable to convert direct current electricity

from 1 or more solar modules or certified distributed wind energy systems into

alternating current electricity. Section

45X(c)(2)(B) through (G) define the following different types of eligible inverters: central inverter, commercial inverter,

distributed wind inverter, microinverter,

residential inverter, and utility inverter.

Section 45X(c)(3)(A) defines a “solar

energy component” as photovoltaic cells,

photovoltaic wafers, polymeric backsheets,

solar grade polysilicon, solar modules, and

torque tubes or structural fasteners. Section

45X(c)(3)(B) defines these different types

of eligible solar energy components as well

as the term “solar tracker.”

Section 45X(c)(4)(A) defines “wind

energy component” as blades, nacelles,

towers, offshore wind foundations, and

related offshore wind vessels. Section

45X(c)(4)(B) defines these different types

of eligible wind energy components.

Section 45X(c)(5)(A) defines a “qualifying battery component” as electrode active

materials, battery cells, and battery modules.

Section 45X(c)(5)(B) defines these different

types of qualifying battery components.

Section 45X(c)(6) provides the following list of 50 minerals that when converted

or purified to specified purities are considered an “applicable critical mineral” for

purposes of the § 45X credit: aluminum,

antimony, arsenic, barite, beryllium, bismuth, cerium, cesium, chromium, cobalt,

dysprosium, erbium, europium, fluorspar,

gadolinium, gallium, germanium, graphite, hafnium, holmium, indium, iridium,

lanthanum, lithium, lutetium, magnesium,

manganese, neodymium, nickel, niobium,

palladium, platinum, praseodymium, rhodium, rubidium, ruthenium, samarium,

scandium, tantalum, tellurium, terbium,

thulium, tin, titanium, tungsten, vanadium,

ytterbium, yttrium, zinc, and zirconium.

(4) Special rules

Section 45X(d) prescribes special

rules applicable for the § 45X credit. Section 45X(d)(1) provides that persons are

treated as related to each other if such persons would be treated as a single employer

under the regulations prescribed under the

common control rules of § 52(b) of the

Code. Section 45X(d)(2) provides that

sales of eligible components are taken into

account under § 45X only with respect to

eligible components the production of

which is within the United States (including continental shelf areas described in

§ 638(1) of the Code), or a U.S. territory (including continental shelf areas

described in § 638(2)). Section 45X(d)(3)

directs the Secretary to promulgate regulations adopting rules similar to the rules

of § 52(d) to apportion credit amounts

between estates or trusts and their beneficiaries on the basis of the income of the

estates or trusts allocable to each and passthru any apportioned credit amounts to the

beneficiaries. Section 45X(d)(4) provides

that for purposes of the § 45X credit, a

person is treated as having sold an eligible

component to an unrelated person if such

component is integrated, incorporated, or

assembled into another eligible component which is sold to an unrelated person.

.02 Qualifying Advanced Energy Project Credit (§ 48C)

(1) Overview

Section 48C was originally enacted by

§ 1302(b) of the American Recovery and

Reinvestment Act of 2009, Public Law

111-5, Division B, Title I, Subtitle D, 123

Stat. 115, 345 (February 17, 2009), to

provide an allocated credit for qualified

investments in qualifying advanced energy

projects. For purposes of the investment

tax credit determined for any taxable year

under § 46 of the Code, § 48C generally

allows a qualifying advanced energy

project credit equal to 30 percent of a

taxpayer’s qualified investment for such

taxable year with respect to any qualifying

advanced energy project of the taxpayer.1

The amount treated as the qualified investment for all taxable years with respect to

a qualifying advanced energy project cannot exceed the amount allocated to the

project by the Secretary.

Section 48C has been amended several times, most recently by § 13501 of

the IRA. Section 13501(a) of the IRA

adds new § 48C(e) to the Code to extend

the § 48C credit to provide an additional

credit allocation of $10 billion. Section

13501(b) of the IRA modifies the definition of a “qualifying advanced energy

project” contained in § 48C(c)(1)(A).

Section 13501(c) and (d) of the IRA make

conforming amendments to § 48C(c)(2)

(A) and (f). The amendments made by

§ 13501 of the IRA are effective on January 1, 2023. See § 13501(e) of the IRA.

(2) New § 48C(e)

Section 48C(e)(1) directs the Secretary

to establish a program to consider and

award certifications for qualified investments eligible for § 48C credits to qualifying advanced energy project sponsors.

Section 48C(e)(2) provides that the total

amount of § 48C credits that may be allocated under such program cannot exceed

$10 billion, of which no greater than

$6 billion may be allocated to qualified

investments which (1) prior to August 16,

2022 (the date of enactment of § 48C(e)),

have not received a certification and allocation of credits under § 48C(d), and (2)

are not located within one of the following

census tracts described in § 45(b)(11)(B)

(iii):

a) A census tract in which a coal mine

has closed after December 31, 1999.

b) A census tract in which a coal-fired

electric generating unit has been retired

after December 31, 2009.

c) A census tract directly adjoining

such a census tract described in a) or b).

Section 48C(e)(3)(A) provides that

each applicant for certification must submit an application at such time and containing such information as the Secretary

may require. Section 48C(e)(3)(B) provides that each applicant for certification

has 2 years from the date of acceptance by

Section 48C(e)(4)(A) provides a base credit rate of 6 precent for allocations under § 48C(e). The base credit rate is increased to 30 precent for any project that satisfies the prevailing

wage requirements of § 48C(e)(5)(A) and the apprenticeship requirements of § 48C(e)(6). See Notice 2022-51 requesting comments on prevailing wage and apprenticeship requirements.

1

Bulletin No. 2022–43

313

October 24, 2022

the Secretary of the application to provide

to the Secretary evidence that the requirements of the certification have been met.

Section 48C(e)(3)(C) provides that an

applicant who receives a certification has

2 years from the date of issuance of the

certification to place the project in service

and to notify the Secretary that such project has been so placed in service. If the

project is not placed in service within the

two year period, then the certification is no

longer valid. If any certification is revoked

under § 48C(e)(3), the total amount of

the credits that may be allocated under

§ 48C(e)(2) is increased by the amount of

§ 48C credit with respect to such revoked

certification.

Section 48C(e)(3)(D) provides that in

the case of an applicant which receives a

certification, if the Secretary determines

that the project has been placed in service

at a location that is materially different

than the location specified in the application for such project, the certification is no

longer valid.

Section 48C(e)(7) provides that the Secretary must, upon making a certification

under § 48C(e), publicly disclose the identity of the applicant and the amount of the

§ 48C credit with respect to such applicant.

(3) Amendments to § 48C(c)(1)(A)

As amended by the IRA, § 48C(c)(1)

(A) defines the term “qualifying advanced

energy project” as one of the three following project types, any portion of the qualified investment of which is certified by the

Secretary under § 48C(e) as eligible for a

§ 48C credit:

(i) A project that re-equips, expands, or

establishes an industrial or manufacturing

facility for the production or recycling of

one of the following nine property types:

(I) Property designed to be used to produce energy from the sun, water, wind,

geothermal deposits or other renewable

resources.

(II) Fuel cells, microturbines, or energy

storage systems and components.

(III) Electric grid modernization equipment or components.

(IV) Property designed to capture,

remove, use, or sequester carbon oxide

emissions.

(V) Equipment designed to refine, electrolyze, or blend any fuel, chemical, or

product which is renewable or low-carbon

and low-emission.

October 24, 2022

(VI) Property designed to produce

energy conservation technologies (including residential, commercial, and industrial

applications).

(VII) Light, medium, or heavy-duty

electric or fuel cell vehicles, as well as

technologies, components, or materials

for such vehicles, and associated charging

or refueling infrastructure.

(VIII) Hybrid vehicles with a gross

vehicle weight rating of not less than

14,000 pounds, as well as technologies, components, or materials for such

vehicles.

(IX) Other advanced energy property designed to reduce greenhouse gas

emissions as may be determined by the

Secretary.

(ii) A project that re-equips an industrial or manufacturing facility with equipment designed to reduce greenhouse gas

emissions by at least 20 percent through

the installation of (I) low- or zero-carbon

process heat systems, (II) carbon capture,

transport, utilization, and storage systems,

(III) energy efficiency and reduction in

waste from industrial processes, or (IV)

any other industrial technology designed

to reduce greenhouse gas emissions, as

determined by the Secretary.

(iii) A project that re-equips, expands,

or establishes an industrial facility for the

processing, refining, or recycling of critical materials (as defined in § 7002(a) of the

Energy Act of 2020 (30 USC § 1606(a)).

Section 48C(c)(2)(A) defines “eligible

property” as any property that is necessary

for the production or recycling of property

described in § 48C(c)(1)(A)(i), re-equipping an industrial or manufacturing facility described in § 48C(c)(1)(A)(ii), or

re-equipping, expanding, or establishing

an industrial facility described in § 48C(c)

(1)(A)(iii).

(4) Denial of Double Benefit

As amended by § 13501(c) of the IRA,

§ 48C(f) provides that a § 48C credit is

not allowed for a qualified investment for

which a credit is allowed under §§ 48,

48A, 48B, 48E, 45Q or 45V.

SECTION 3. REQUEST FOR

COMMENTS

The Treasury Department and the IRS

request comments on issues arising from

new § 45X and the amendments made by

314

the IRA to § 48C that should be addressed

in guidance. Commenters are encouraged

to specify the issues on which guidance is

needed most quickly as well as the most

important issues on which guidance is

needed. In addition to general comments,

the Treasury Department and the IRS

request comments that address the following specific issues:

.01 Section 45X Advanced Manufacturing Production Credit.

(1) Section 45X(a)(3)(B)(i) allows

a taxpayer to make an election to treat a

sale of components by such taxpayer to

a related person as made to an unrelated

person. Is guidance needed to clarify the

meaning of the terms “unrelated person”

and “related person”? If so, how should

these terms be clarified?

(2) Section 45X(d)(4) provides that

for purposes of § 45X, a person is treated

as having sold an eligible component to

an unrelated person if such component

is integrated, incorporated, or assembled

into another eligible component which is

sold to an unrelated person. How should

“integrated, incorporated, or assembled”

be determined?

(3) What factors should the Treasury

Department and the IRS consider in determining what information or registration

is necessary for purposes of preventing

duplication, fraud, or any improper or

excessive credit amount, as referenced in

§ 45X(a)(3)(B)?

(4) Is guidance needed regarding the

capacity-to-power ratio in § 45X(b)(4)? If

so, what guidance?

(5) Is additional clarification needed

regarding the definitions of an “eligible

component” in § 45X(c)?

(a) How should the amount of the

§ 45X credit be calculated for components

that could be used in systems of varying

capacities?

(b) In such cases, how should verification of the applicable credit amount be

demonstrated?

(6) Section 45X(c)(4) identifies

“related offshore wind vessels” as one of

the qualifying “wind energy components.”

(a) What should the requirements be

for establishing that a vessel is for offshore wind development?

(b) Where it is uncertain how much a

vessel will be used for offshore wind, how

should such situations be addressed?

Bulletin No. 2022–43

(7) Section 45X(c)(6) identifies “applicable critical minerals,” and includes minimum purity percentages by mass.

(a) How should purity percentages be

determined?

(b) Should an independent third party

be required to verify the results?

(c) If so, what qualifications should

be required of an independent third-party

providing such verification?

(8) Is guidance needed regarding the

definitions of “converted” and “purified”?

(9) Is guidance needed regarding the

apportionment and pass-thru of credit

amounts to beneficiaries of estates or

trusts as provided in § 45X(d)(3)?

(10) Please provide comments on any

other topics under § 45X that may require

guidance.

.02 Qualifying Advanced Energy Project Credit (§ 48C)

(1) Section 48C(c)(1)(A)(i), as

amended by the IRA, includes additional

types of equipment and property that

may be produced or recycled at a project

that re-equips, expands, or establishes an

industrial or manufacturing facility.

(a) Is guidance needed to define

“equipment designed to refine electrolyze,

or blend any fuel, chemical, or product

which is renewable, or low-carbon and

low-emission”? If so, how should this be

defined?

(b) Is guidance needed to define “property designed to produce energy conservation technologies (including residential,

commercial, and industrial applications)”?

If so, how should this be defined?

(c) What should the Treasury Department and the IRS consider in determining

“other advanced energy property designed

to reduce greenhouse gas emissions”?

(2) Section 48C(c)(1)(A)(ii) adds to the

list of eligible projects any project which

re-equips an industrial or manufacturing

facility with equipment designed to reduce

greenhouse gas emissions by at least 20

percent through the installation of certain

systems, including through the installation of energy efficiency and reduction in

waste from industrial processes.

(a) Is guidance needed to define

“energy efficiency”? If so, how should

this be defined?

(b) Is guidance needed to define “reduction in waste from industrial processes”?

If so, how should this be defined?

Bulletin No. 2022–43

(c) Is guidance needed to define baseline criteria, boundary conditions and/or

timeframe to determine achievement of

the 20 percent threshold?

(3) What should the Treasury Department and the IRS consider in determining

“any other industrial technology designed

to reduce greenhouse gas emissions”? Is

guidance needed to include eligibility of

facilities currently producing industrial

materials for use in the construction or

alteration of buildings and infrastructure

projects (such as concrete, steel, asphalt,

and flat glass) that can be retrofitted to

produce materials that have substantially

lower levels of embodied greenhouse gas

emissions?

(4) How should a qualifying advanced

energy project substantiate its eligibility based on any of the available criteria,

but particularly the criteria provided by

§ 13501 of the IRA?

(a) Are there industry guidelines currently in place that a taxpayer may use to

demonstrate that a project reduces greenhouse gas or other pollutant emissions? If

so, what guidelines?

(b) Are there existing industry guidelines or regulatory practices employed by

local governments or states that a taxpayer

may use to demonstrate that a project

reduces greenhouse gas or other pollutant

emissions, including submittal of environmental product declarations (EPDs) that

include measurements of the embodied

greenhouse gas emissions of the relevant

material or product and conform with

international standards?

(5) Section 48C(e) directs the Secretary to establish a program to consider and

award certifications of qualified investments eligible for the § 48C credit.

(a) What should the Treasury Department and the IRS consider in determining the selection criteria for awarding the

§ 48C credit and to what extent should

the Treasury Department and the IRS rely

on precedent from previous experience

administering the § 48C credit during

previous allocation rounds provided in

Notice 2009-72, 2009-37 I.R.B. 325 and

Notice 2013-12, 2013-10 I.R.B. 543?

(b) What aspects of the previous allocation rounds of the § 48C credit should

the Treasury Department and IRS consider revising in establishing a new § 48C

program and administering it?

315

(6) Section 48C(e)(3)(C) provides, in

part, that if any certification is revoked, the

amount of the limitation under § 48C(e)

(2) must be increased by the amount of

the credit with respect to such revocation.

(a) Is guidance needed on revocation of

certifications? If so, what guidance?

(7) Please provide comments on any

other topics that may require guidance.

SECTION 4. SUBMISSION OF

COMMENTS

.01 Written comments should be submitted by Friday, November 4, 2022. Consideration will be given, however, to any written

comment submitted after Friday, November

4, 2022, if such consideration will not delay

the issuance of guidance. The subject line

for the comments should include a reference

to Notice 2022-47 Comments may be submitted in one of two ways:

(1) Electronically via the Federal

eRulemaking Portal at www.regulations.

gov (type IRS-2022-0047 in the search

field on the regulations.gov homepage to

find this notice and submit comments).

(2) Alternatively, by mail to: Internal Revenue Service, CC:PA:LPD:PR

(Notice 2022-47), Room 5203, P.O. Box

7604, Ben Franklin Station, Washington,

DC 20044.

.02 All commenters are strongly

encouraged to submit comments electronically. The Treasury Department and the

IRS will publish for public availability

any comment submitted electronically,

and to the extent practicable on paper, to

its public docket.

SECTION 5. 60-DAY RULE

NOT EFFECTUATED FOR

THE PREVAILING WAGE

AND APPRENTICESHIP

REQUIREMENTS

For purposes of §§ 30C, 45, 45L, 45Q,

45U, 45V, 45Y, 45Z, 48, 48C, 48E, and

179D, the publication of this notice requesting comments is not the publication of guidance with respect to the prevailing wage and

apprenticeship requirements, and it is not

relevant in determining whether the prevailing wage and apprenticeship requirements

are satisfied under such sections. The Treasury Department and the IRS will explicitly

identify when it has published guidance

October 24, 2022

with respect to the prevailing wage and

apprenticeship requirements that is relevant

for determining whether such requirements

have been satisfied for purposes of §§ 30C,

45, 45L, 45Q, 45U, 45V, 45Y, 45Z, 48, 48C,

48E, and 179D.

SECTION 6. DRAFTING

INFORMATION

The principal author of this notice

is the Office of Associate Chief Counsel (Passthroughs & Special Industries).

However, other personnel from the Treasury Department and the IRS participated

in its development. For further information regarding this notice, call the energy

security guidance contact number at (202)

317-5254 (not a toll-free number).

Request for Comments

on Incentive Provisions

for Improving the Energy

Efficiency of Residential

and Commercial Buildings

Notice 2022-48

SECTION 1. PURPOSE

The Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) plan to issue guidance

regarding the provisions of §§ 25C, 25D,

45L, and 179D of the Internal Revenue

Code (Code), as amended by §§ 13301,

13302, 13304, and 13303, respectively,

of Public Law 117-169, 136 Stat. 1818

(August 16, 2022), commonly known as

the Inflation Reduction Act of 2022 (IRA).

This notice requests general comments on

questions arising because of these amendments, as well as specific comments

involving questions listed in section 3

of this notice. Comments received in

response to this notice will help to inform

the development of guidance implementing §§ 25C, 25D, 45L, and 179D.

SECTION 2. BACKGROUND

.01 Energy Efficient Home Improvement Credit (§ 25C)

October 24, 2022

Section 25C was originally enacted

by § 1333(a) of the Energy Policy Act of

2005, Pub. L. 109-58, 119 Stat. 594, 1026

(August 8, 2005), to provide the nonbusiness energy property credit for the purchase and installation of certain energy

efficient improvements in taxpayers’ principal residences. Section 25C has been

amended several times, most recently

by § 13301 of the IRA, which renamed

this provision the “energy efficient home

improvement credit” (§ 25C credit).

Before the enactment of the IRA, § 25C

had expired after December 31, 2021. Section 13301(a) of the IRA amends § 25C(g)

to make the § 25C credit available through

December 31, 2032.

Section 13301(b) of the IRA amends

§ 25C(a) to allow a credit for 30 percent

of amounts paid or incurred by individual

taxpayers during the taxable year for qualified energy efficiency improvements and

residential energy property expenditures.

As amended by § 13301(c) of the IRA,

the § 25C credit is generally limited to

an annual cap of $1,200, with exceptions

for certain categories of improvements.

The caps and categories of improvements

under these exceptions are as follows:

$600 for qualified energy property; $600

for exterior windows and skylights; $250

for any single exterior door; and $500 in

the aggregate for all exterior doors. Heat

pumps, heat pump water heaters, biomass

stoves, and biomass boilers are allowed an

aggregate annual credit for such improvements of up to $2,000.

Section 13301(d) of the IRA amends

the definition of “energy efficient building envelope components” and “building

envelope component,” terms that help

define the types of improvements that are

qualified energy efficiency improvements.

As amended by the IRA, § 25C(c)(2)

defines “energy efficient building envelope component” as a building envelope

component that meets, (A) in the case of

an exterior window or skylight, Energy

Star most efficient certification requirements, (B) in the case of an exterior door,

applicable Energy Star requirements, and

(C) in the case of any other component,

the criteria for such component established by the most recent International

Energy Conservation Code standard in

effect as of the start of the calendar year

2 years prior to the calendar year in which

316

such component is placed in service. As

amended by the IRA, § 25C(c)(3) defines

“building envelope component” as (A)

any insulation material or system, including air sealing material or system, which

is specifically and primarily designed to

reduce the heat loss or gain of a dwelling

unit when installed in or on the dwelling

unit, (B) exterior windows (including skylights), and (C) exterior doors.

Section 13301(e) of the IRA amends the

definitions of “residential energy property

expenditures” and “qualified energy property.” As amended by the IRA, § 25C(d)

(1) defines “residential energy property

expenditures” as expenditures made by the

taxpayer for qualified energy property that

is (A) installed on or in connection with a

dwelling unit located in the United States

and used as a residence by the taxpayer,

and (B) originally placed in service by the

taxpayer, including labor costs properly

allocable to onsite preparation, assembly,

or original installation of the property. As

amended by the IRA, § 25C(d)(2) defines

“qualified energy property” as:

(A) Any of the following that meet

or exceed the highest efficiency tier (not

including any advanced tier) established

by the Consortium for Energy Efficiency

that is in effect as of the beginning of the

calendar year in which the property is

placed in service: (i) an electric or natural

gas heat pump water heater, (ii) an electric

or natural gas heat pump, (iii) a central air

conditioner, (iv) a natural gas, propane, or

oil water heater, or (v) a natural gas, propane, or oil furnace or hot water boiler.

(B) A biomass stove or boiler that (i)

uses the burning of biomass fuel to heat a

dwelling unit located in the United States

and used as a residence by the taxpayer,

or to heat water for use in such a dwelling

unit, and (ii) has a thermal efficiency rating of at least 75 percent (measured by the

higher heating value of the fuel).

(C) Any oil furnace or hot water boiler

that (i) is placed in service after December 31, 2022 and before January 1, 2027,

and (I) meets or exceeds 2021 Energy

Star efficiency criteria, and (II) is rated

by the manufacturer for use with fuel

blends at least 20 percent of the volume

of which consists of an eligible fuel, or

(ii) is placed in service after December

31, 2026, and (I) achieves an annual fuel

utilization efficiency rate of not less than

Bulletin No. 2022–43

90, and (II) is rated by the manufacturer

for use with fuel blends at least 50 percent of the volume of which consists of

an eligible fuel.

(D) Any improvement to, or replacement of, a panelboard, sub-panelboard,

branch circuits, or feeders that (i) is

installed in a manner consistent with the

National Electric Code, (ii) has a load

capacity of not less than 200 amps, (iii)

is installed in conjunction with (I) any

qualified energy efficiency improvements,

or (II) any qualified energy property

described in § 25C(d)(2)(A) through (C)

for which a credit is allowed under this

section, and (iv) enables the installation

and use of any property described in subclause (I) or (II) of § 25C(d)(2)(D)(iii).

As amended by the IRA, § 25C(d)(3)

defines “eligible fuel” as (A) biodiesel

and renewable diesel (within the meaning

of § 40A), (B) second generation biofuel

(within the meaning of § 40), and (C)

transportation fuel (as defined in § 45Z(d)

(5)).

Section 13301(f) of the IRA expands

the types of expenditures eligible for

the § 25C credit to include expenditures

for home energy audits. Section 25C(e)

defines “home energy audit” as an inspection and written report with respect to a

dwelling unit located in the United States

and owned or used by the taxpayer as the

taxpayer’s principal residence that (1)

identifies the most significant and cost-effective energy efficiency improvements

with respect to such dwelling unit, including an estimate of the energy and cost savings with respect to each such improvement, and (2) is conducted and prepared

by a home energy auditor that meets the

certification or other requirements specified by the Secretary of the Treasury or

her delegate (Secretary) in regulations or

other guidance. As amended by the IRA,

§ 25C(b)(6) limits the credit for such

expenditures to $150 and imposes a substantiation requirement.

Section 13301(g) of the IRA adds new

§ 25C(h), which imposes a product identification number requirement. Section

25C(h)(1) provides that no § 25C credit

is allowed for any item of specified property placed in service after December 31,

2024, unless (A) such item is produced

by a qualified manufacturer, and (B) the

taxpayer includes the qualified product

Bulletin No. 2022–43

identification number of such item on the

return of tax for the taxable year. Section

25C(h)(2) defines “qualified product identification number” as, with respect to any

item of specified property, the product

identification number assigned to such

item by the qualified manufacturer pursuant to the methodology referred to in

§ 25C(h)(3). Section 25C(h)(3) defines

“qualified manufacturer” as any manufacturer of specified property that enters

into an agreement with the Secretary that

provides that such manufacturer will (A)

assign a product identification number to

each item of specified property produced

by such manufacturer utilizing a methodology that will ensure that such number

is unique to each such item (by utilizing

numbers or letters that are unique to such

manufacturer or by such other method as

the Secretary may provide), (B) label such

item with such number in such manner as

the Secretary may provide, and (C) make

periodic written reports to the Secretary

(at such times and in such manner as the

Secretary may provide) of the product

identification numbers so assigned and

including such information as the Secretary may require with respect to the

item of specified property to which such

number was so assigned. Section 25C(h)

(4) defines “specified property” as any

qualified energy property and any property described in § 25C(c)(3)(B) or (C),

referencing exterior windows (including

skylights) and exterior doors.

Section 13301(i) of the IRA provides

the effective dates for the amendments to

§ 25C. In general, except as provided in

§ 13301(i)(2) and (3), the amendments

apply to property placed in service after

December 31, 2022. Section 13301(i)

(2) of the IRA provides that amendments

made by § 13301(a) of the IRA relating

to the extension of the credit apply to

property placed in service after December 31, 2021. Section 13301(i)(3) of the

IRA provides that amendments made

by § 13301(g) of the IRA relating to the

requirements for product identification

numbers apply to property placed in service after December 31, 2024.

.02 Residential Clean Energy Credit

(§ 25D)

Section 25D was originally enacted

by § 1335(a) of the Energy Policy Act of

2005, Pub. L. 109–58, 119 Stat. 594, 1033

317

(August 8, 2005) to provide a tax credit

for expenditures made to improve the

energy efficiency of taxpayers’ residential

property. Section 25D has been amended

several times, most recently by § 13302

of the IRA. Section 25D(a) allows a credit

for individual taxpayers for an amount

equal to the sum of the applicable percentages of certain qualified expenditures,

such as solar electric property and geothermal heat pump property, made during

the taxable year (§ 25D credit).

Section 13302(a)(1) of the IRA amends

§ 25D(h), extending § 25D through

December 31, 2034. Section 13302(a)(2)

of the IRA amends the phaseout of the tax

credit provided in § 25D(g). As amended

by the IRA, § 25D(g)(1) through (5) provides that for purposes of calculating the

§ 25D credit, the applicable percentage of

the phaseout is:

(1) in the case of property placed in service after December 31, 2016, and before

January 1, 2020, 30 percent;

(2) in the case of property placed in service after December 31, 2019, and before

January 1, 2022, 26 percent;

(3) in the case of property placed in service after December 31, 2021, and before

January 1, 2033, 30 percent;

(4) in the case of property placed in service after December 31, 2032, and before

January 1, 2034, 26 percent, and

(5) in the case of property placed in service after December 31, 2033, and before

January 1, 2035, 22 percent.

Section 13302(b) of the IRA amends

§ 25D(a)(6) to include “qualified battery

storage technology expenditures” as eligible for the § 25D credit and amends

§ 25D(d)(6). As amended by the IRA,

§ 25D(d)(6) defines the term “qualified

battery storage technology expenditure”

as an expenditure for battery storage

technology that is installed in connection

with a dwelling unit located in the United

States that is used as a residence by the

taxpayer, and has a capacity of not less

than 3 kilowatt hours.

Section 13302(d)(1) of the IRA

provides that except as provided in

§ 13302(d)(2) of the IRA, the amendments made to § 25D by § 13302 of the

IRA apply to expenditures made after

December 31, 2021. Section 13302(d)(2)

of the IRA provides that the amendments

to § 25D pertaining to qualified battery

October 24, 2022

energy technology apply to expenditures

made after December 31, 2022.

.03 New Energy Efficient Home Credit

(§ 45L)

Section 45L was originally enacted

by § 1332(a) of the Energy Policy Act of

2005, Public Law 109-58, 119 Stat 594,

1024 (on August 8, 2005), to provide a

credit for the construction of new energy

efficient homes (§ 45L credit). Section

45L has been amended several times, most

recently by § 13304 of the IRA.

Section 13304 of the IRA retroactively

extends the § 45L credit for dwelling units

acquired after December 31, 2021, by

retaining the credit requirements in place

prior to the enactment of the IRA. For

dwelling units acquired after December

31, 2022, the IRA adds new energy efficiency standards, and new credit amounts,

some of which are increased based on

meeting a prevailing wage requirement.1

As amended by the IRA, the § 45L credit

is available for dwelling units acquired

before January 1, 2033.

Section 45L(a)(1) provides that for

purposes of the general business credit

under § 38 of the Code, in the case of an

eligible contractor, the § 45L credit for the

taxable year is the applicable amount for

each qualified new energy efficient home

that is constructed by the eligible contractor and acquired by a person from such

eligible contractor for use as a residence

during the taxable year.

Section 45L(a)(2) provides that the

“applicable amount” ranges from between

$500 and $5,000 and is based on a combination of (A) whether the dwelling unit

is eligible to participate in the Energy

Star Residential New Construction Program, the Energy Star Manufactured

New Homes program, or the Energy Star

Multifamily New Construction Program;

and (B) whether the dwelling unit is certified as a zero energy ready home under

the zero energy ready home program of

the Department of Energy as in effect on

January 1, 2023 (or any successor program determined by the Secretary). In all

cases, the dwelling unit must satisfy either

the amended energy saving requirements

provided in § 45L(c)(2) for single family

homes or in § 45L(c)(3) for multifamily

homes (whichever applies).

.04 Energy Efficient Commercial Buildings Deduction (§ 179D)

Section 179D was originally enacted

by § 1331(a) of the Energy Policy Act

of 2005, Public Law 109-58, 119 Stat.

594, 1020 (August 8, 2005), to provide a

deduction for the cost of energy efficient

commercial building property. Section

179D has been amended several times,

most recently by § 13303 of the IRA.

Section 13303 of the IRA amends

§ 179D by changing the deduction

amount (subject to prevailing wage and

apprenticeship requirements), revising the

energy efficiency requirements, removing the partial deduction and the interim

rule for lighting systems, broadening

the type of entities that may allocate the

deduction to a designer, and providing a

new alternative deduction for energy efficient building retrofit property (alternative

deduction). The amendments are generally effective for taxable years beginning

after December 31, 2022. However, the

alternative deduction applies to property

placed in service after December 31, 2022

(in taxable years ending after such date) if

such property is placed in service pursuant

to a qualified retrofit plan established after

December 31, 2022.

Section 179D(a) allows as a deduction an amount equal to the cost of energy

efficient commercial building property

(EECBP) placed in service during the taxable year. As amended by § 13303(a) of

the IRA, § 179D(b)(1) provides that the

deduction with respect to any building for

any taxable year cannot exceed the excess

(if any) of the product of the applicable

dollar value and the square footage of the

building, over the aggregate amount of

§ 179D deductions (including under the

alternative deduction) with respect to the

building for the 3 taxable years immediately preceding such taxable year (or, in

the case of any such deduction allowable

to a person other than the taxpayer, for

any taxable year ending during the 4-taxable-year period ending with such taxable

year). Section 179D(b)(2) provides that

the applicable dollar value is an amount

equal to $0.50 increased (but not above

$1.00) by $0.02 for each percentage point

by which the total annual energy and

power costs for the building are certified

to be reduced by a percentage greater than

25 percent.

Section 179D(b)(3) provides an

increased deduction amount for property

that satisfies prevailing wage and apprenticeship requirements.2

Section 179D(b)(3)(B) provides that in

the case of any EECBP, energy efficient

building retrofit property, or property

installed pursuant to a qualified retrofit

plan, such property meets the requirements for an increased deduction amount

if installation of such property begins

prior to the date that is 60 days after the

Secretary publishes guidance with respect

to the prevailing wage and apprenticeship

requirements of § 179D(b)(4)(A) or (5),

or installation of such property satisfies

the prevailing wage and apprenticeship

requirements.

Section 179D(b)(6) directs the Secretary to issue regulations or other guidance

as the Secretary determines necessary

to carry out the purposes of § 179D(b),

including regulations or other guidance

that provides for requirements for recordkeeping or information reporting for purposes of administering the requirements

of § 179D(b).

Section 13303(a)(2) of the IRA

decreased the minimum energy efficiency

savings required for the § 179D deduction

by amending the definition of EECBP. As

amended by the IRA, § 179D(c)(1) now

defines EECBP, in part, as property that

is certified as being installed as part of a

plan designed to reduce the total annual

energy and power costs with respect to the

interior lighting systems, heating, cooling,

ventilation, and hot water systems of the

building by 25 percent or more in comparison to a reference building that meets

the minimum requirements of Reference

Standard 90.1.

As amended by the IRA, § 179D(c)(2)

provides that for purposes of § 179D, the

Similar prevailing wage requirements were added by the IRA to several other tax credit provisions of the Code. These provisions will be addressed in a separate notice requesting comments.

Similar prevailing wage and apprenticeship requirements were added by the IRA to several other tax credit provisions of the Code. These provisions will be addressed in a separate notice

requesting comments.

1

2

October 24, 2022

318

Bulletin No. 2022–43

term “Reference Standard 90.1” means,

with respect to any property, the more

recent of (A) Standard 90.1-2007 published by the American Society of Heating, Refrigerating, and Air Conditioning

Engineers and the Illuminating Engineering Society of North America; or (B) the

most recent Standard 90.1 published by

the American Society of Heating, Refrigerating, and Air Conditioning Engineers

and the Illuminating Engineering Society

of North America for which the Department of Energy has issued a final determination and that has been affirmed by

the Secretary, after consultation with

the Secretary of Energy, for purposes

of § 179D not later than the date that is

4 years before the date such property is

placed in service.

As redesignated and then amended

by § 13303(c) of the IRA, § 179D(d)(1)

directs the Secretary, after consultation

with the Secretary of Energy, to promulgate regulations that describe in detail

methods for calculating and verifying

energy and power consumption and cost

with respect to any property, based on the

provisions of the most recent California

Nonresidential Alternative Calculation

Method Approval Manual affirmed by the

Secretary, after consultation with the Secretary of Energy, for purposes of § 179D

not later than the date that is 4 years before

the date such property is placed in service.

As redesignated and then amended by

§ 13303(a)(6) of the IRA, § 179D(d)(3)

(A) provides that in the case of EECBP

installed on or in property owned by

a specified tax-exempt entity, the Secretary is to promulgate regulations or

guidance to allow the allocation of the

deduction to the person primarily responsible for designing the property in lieu of

the tax-exempt owner of such property,

which person is treated as the taxpayer for

purposes of § 179D. As amended by the

IRA, § 179D(d)(3)(B) defines “specified

tax-exempt entity” as –

(i) the United States, any State or political subdivision thereof, any U.S. territory, or any agency or instrumentality of

any of the foregoing;

(ii) an Indian tribal government (as

defined in § 30D(g)(9) of the Code) or

Alaska Native Corporation (as defined in

§ 3 of the Alaska Native Claims Settlement Act (43 U.S.C. 1602(m)); and

Bulletin No. 2022–43

(iii) any organization exempt from tax

imposed by chapter 1 of the Code.

Section 13303(a)(7) of the IRA adds

new § 179D(f) to provide an alternative

deduction for energy efficient building

retrofit property. Section 179D(f)(1) provides that in the case of a taxpayer that

elects (at such time and in such manner

as the Secretary may provide) the alternative deduction with respect to any qualified building, the taxpayer is allowed

as a deduction for the taxable year that

includes the date of the qualifying final

certification with respect to the qualified

retrofit plan of such building, an amount

equal to the lesser of (A) the excess

described in § 179D(b) (determined by

substituting “energy use intensity” for

“total annual energy and power costs”

in § 179D(b)(2)); or (B) the aggregate

adjusted basis (determined after taking

into account all adjustments with respect

to such taxable year other than the reduction under § 179D(e)) of energy efficient

building retrofit property placed in service by the taxpayer pursuant to such

qualified retrofit plan.

Section 179D(f)(2) provides that for

purposes of the alternative deduction

the term “qualified retrofit plan” means

a written plan prepared by a qualified

professional that specifies modifications

to a building that, in the aggregate, are

expected to reduce such building’s energy

use intensity by 25 percent or more in

comparison to the baseline energy use

intensity of such building. A qualified retrofit plan must require a qualified professional to –

(A) certify the energy use intensity of

such building as of any date during the

1‑year period ending on the date on which

the property installed pursuant to such a

plan is placed in service;

(B) certify the status of property

installed pursuant to such plan as meeting

the requirements of § 179D(f)(3)(B) and

(C); and

(C) certify the energy use intensity of

such building as of any date that is more

than 1 year after the date on which the

property installed pursuant to such plan is

placed in service.

Section 179D(f)(3) provides that for

purposes of the alternative deduction, the

term “energy efficient building retrofit

property” means property (A) with respect

319

to which depreciation (or amortization in

lieu of depreciation) is allowable; (B) that

is installed on or in any qualified building;

(C) that is installed as part of (i) the interior

lighting systems, (ii) the heating, cooling,

ventilation, and hot water systems, or (iii)

the building envelope; and (D) that is certified in accordance with § 179D(f)(2)(B)

as meeting the requirements of § 179D(f)

(3)(B) and (C).

Section 179D(f)(4) provides that for

purposes of the alternative deduction, the

term “qualified building” means any building that is located in the United States and

was originally placed in service not less

than 5 years before the establishment of

the qualified retrofit plan with respect to

such building.

Section 179D(f)(5) provides that for

purposes of the alternative deduction,

the term “qualifying final certification”

means, with respect to any qualified retrofit plan, the certification described in

§ 179D(f)(2)(C) if the energy use intensity

certified in such certification is not more

than 75 percent of the baseline energy use

intensity of the building.

Section 179D(f)(6)(A) provides that

for purposes of the alternative deduction,

the term “baseline energy use intensity”

means the energy use intensity certified

under § 179D(f)(2)(A), as adjusted to take

into account weather. Section 179D(f)(6)

(B) provides that for purposes of § 179D(f)

(6)(A), the adjustments described in

§ 179D(f)(6)(A) must be determined in

such manner as the Secretary provides.

Section 179D(f)(7)(A) provides that

for purposes of the alternative deduction,

the term “energy use intensity” means

the annualized, measured site energy use

intensity determined in accordance with

such regulations or other guidance as

the Secretary provides and measured in

British thermal units. Section 179D(f)(7)

(B) provides that the term “qualified professional” means an individual who is a

licensed architect or a licensed engineer

and meets such other requirements as the

Secretary may provide.

Section 179D(f)(8)(A) provides that

in the case of any building with respect

to which an election is made for an

alternative deduction, the term EECBP

does not include any energy efficient

building retrofit property with respect

to which a deduction is allowable

October 24, 2022

under § 179D(f). Section 179D(f)(8)

(B)(i) provides that except as provided

in § 179D(f)(8)(B)(ii), the special rules

provided by § 179D(d) do not apply for

purposes of the alternative deduction.

Section 179D(f)(8)(B)(ii) provides that

rules similar to the rules of § 179D(d)(3)

related to the allocation of the deduction

for public property apply for purposes of

the alternative deduction.

SECTION 3. REQUEST FOR

COMMENTS

The Treasury Department and the IRS

request comments on questions arising

from the amendments made by the IRA to

§§ 25C, 25D, 45L, and 179D. Commenters are encouraged to specify the issues on

which guidance is needed most quickly as

well as the most important issues on which

guidance is needed. In addition to general

comments, the Treasury Department and

the IRS request comments that address the

following specific questions:

.01 Energy Efficient Home Improvement Credit (§ 25C):

(1) Section 25C(e)(2) directs the Secretary to prescribe “certification or other

requirements” for home energy auditors

for credit eligibility. What criteria should

the Treasury Department and the IRS consider requiring for certification or other

requirements for home energy auditors?

(2) Is guidance needed regarding the

definition of “qualified energy property” in

§ 25C(d)(2) as amended by the IRA, such

as definitions for the terms “panelboard”

or “feeders”? Specifically, § 25C(d)(2)

(B) defines “qualified energy property”

to include biomass stoves or boilers, but

only those that have “a thermal efficiency

rating of at least 75 percent (measured by

the higher heating value of the fuel).” Is

guidance needed to define the term “thermal efficiency rating”? If so, what testing

procedures should the Treasury Department and the IRS consider requiring or

permitting to be used by manufacturers to

measure thermal efficiency and demonstrate ratings that are valid for purposes of

the § 25C credit?

(3) Section 25C(h) requires qualified

manufacturers to provide unique product

identification numbers to each item of

specified property and make periodic written reports to the Secretary of the product

October 24, 2022

identification numbers assigned. What

should the Treasury Department and the

IRS consider (1) in determining the manner of agreements between the IRS and

the qualified manufacturer; (2) in developing a methodology to ensure that each

product identification number is unique to

each item of specified property; (3) in prescribing the manner by which such specified property must be labeled with unique

product identification numbers; and (4)

in developing the requirements for the

qualified manufacturers’ periodic written

reports?

(4) Please provide comments on any

other topics relating to the § 25C credit

that may require guidance.

.02 Residential Clean Energy Credit

(§ 25D):

(1) Is guidance needed regarding the

definition of “qualified battery storage

technology expenditure” in § 25D(d)(6)?

(2) Section 25D(b)(2) provides that

no credit is allowed under § 25D for an

item of property described in § 25D(d)(1)

unless such property is certified for performance by the non-profit Solar Rating

Certification Corporation, or a comparable

entity endorsed by the government of the

State in which such property is installed.

What information should the Treasury

Department and the IRS consider in determining what constitutes a “comparable

entity”?

(3) Please provide comments on any

other topics relating to the § 25D credit

that may require guidance.

.03 New Energy Efficient Home Credit

(§ 45L):

(1) Section 45L(b)(3) provides that for

purposes of § 45L, the term “construction” includes “substantial reconstruction

and rehabilitation.” Is guidance defining

the term “substantial reconstruction and

rehabilitation” needed? If so, how should

the term be defined? If needed, should

the definition align with requirements or

standards used in the qualified Energy Star

and Zero Energy Ready Home Programs?

(2) Please provide comments on any

other topics relating to the § 45L credit

that may require guidance.

.04 Energy Efficient Commercial Buildings Deduction (§ 179D):

(1) Section 179D(d)(3)(A) provides

that in the case of EECBP installed on or in

property owned by a specified tax-exempt

320

entity, the Secretary is to promulgate regulations or guidance to allow the allocation

of the deduction “to the person primarily

responsible for designing the property in

lieu of the owner of such property.” What

criteria should the Treasury Department

and the IRS consider in providing rules

to determine the person that is “primarily

responsible for designing the property”

under § 179D(3)(A)?

(2) Section 179D(f)(7)(A) provides

that for purposes of § 179D(f), the term

“energy use intensity” means the annualized, measured site energy use intensity

determined in accordance with such regulations or other guidance as the Secretary

provides and measured in British thermal

units.

(a) What criteria should the Treasury Department and the IRS consider in

developing regulations or other guidance

addressing this determination?

(b) How should the instruction in

§ 179D(h)(1) requiring that new technologies regarding renewable energy be taken

into account in determining energy efficiency and savings be taken into account

in determining energy use intensity?

(3) Section 179D(f)(2) provides detail

on a “qualified retrofit plan.” Is guidance

providing additional definitions or other

guidance regarding qualified retrofit plans

needed?

(4) Section 179D(f)(7)(B) provides that

the term “qualified professional” means

an individual who is a licensed architect or

a licensed engineer and meets such other

requirements as the Secretary provides.

Is any guidance providing other requirements that licensed architects or licensed

engineers must satisfy needed?

(5) Please provide comments on any

other topics relating to the § 179D deduction that may require guidance.

SECTION 4. SUBMISSION OF

COMMENTS

.01 Written comments should be submitted by Friday, November 4, 2022. Consideration will be given, however, to any written

comment submitted after Friday, November

4, 2022, if such consideration will not delay

the issuance of guidance. The subject line

for the comments should include a reference to Notice 2022-48. Comments may be

submitted in one of two ways:

Bulletin No. 2022–43

(1) Electronically via the Federal

eRulemaking Portal at www.regulations.

gov (type IRS-2022-0048 in the search

field on the regulations.gov homepage to

find this notice and submit comments).

(2) Alternatively, by mail to: Internal Revenue Service, CC:PA:LPD:PR

(Notice 2022-48), Room 5203, P.O. Box

7604, Ben Franklin Station, Washington,

DC 20044.

.02 All commenters are strongly

encouraged to submit comments electronically. The Treasury Department and the

IRS will publish for public availability

any comment submitted electronically, or

on paper, to its public docket on regulations.gov.

SECTION 5. 60-DAY RULE

NOT EFFECTUATED FOR

THE PREVAILING WAGE AND

APPRENTICESHIP REQUIREMENT

For purposes of §§ 30C, 45, 45L,

45Q, 45U, 45V, 45Y, 45Z, 48, 48C, 48E,

and 179D, the publication of this notice

requesting comments is not the publication of guidance with respect to the prevailing wage and apprenticeship requirements, and it is not relevant in determining

whether the prevailing wage and apprenticeship requirements are satisfied under

such sections. The Treasury Department

and the IRS will explicitly identify when

it has published guidance with respect to

the prevailing wage and apprenticeship

requirements that is relevant for determining whether such requirements have been

satisfied for purposes of §§ 30C, 45, 45L,

45Q, 45U, 45V, 45Y, 45Z, 48, 48C, 48E,

and 179D.

SECTION 6. DRAFTING

INFORMATION

The principal author of this notice

is the Office of Associate Chief Counsel (Passthroughs & Special Industries).

However, other personnel from the Treasury Department and the IRS participated

in its development. For further information

regarding this notice, call the energy security guidance contact number at (202)

317-5254 (not a toll-free number).

Request for Comments on

Certain Energy Generation

Incentives

Notice 2022-49

SECTION 1. PURPOSE

The Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) plan to issue guidance

regarding the provisions of §§ 45, 45U,

45Y, 48, and 48E of the Internal Revenue Code (Code), as amended or added

by §§ 13101, 13105, 13701, 13102, and

13702, respectively, of Public Law 117169, 136 Stat. 1818 (August 16, 2022),

commonly known as the Inflation Reduction Act of 2022 (IRA). This notice

requests general as well as specific comments on issues arising under §§ 45, 45U,

45Y, 48, and 48E. Comments received in

response to this notice will help to inform

development of guidance implementing

§§ 45, 45U, 45Y, 48, and 48E.

SECTION 2. BACKGROUND

.01 Renewable Electricity Production

Credit (§ 45).

For purposes of computing the general

business credit under § 38 of the Code,

§ 45(a) allows a credit for any taxable

year for electricity produced by the taxpayer from qualified energy resources at

a qualified facility and sold to an unrelated person during the taxable year. The

§ 45 credit has been amended many times

since its enactment on October 24, 1992.

Most recently, §§ 13101(a) to (c), (e)(1)

and (2)(A), (f) through (j), 13102(f)(4),

and 13204(b)(1) of the IRA made amendments to § 45. These amendments include,

but are not limited to: changing the credit

rate (and associated rounding convention)

for electricity produced by certain facilities; extending the beginning of construction and placed in service deadlines for

certain facilities; adding a special rule for

electricity used at a clean hydrogen facility; amending the definition of marine and

hydrokinetic renewable energy; and providing the Secretary of the Treasury or her

delegate (Secretary) with the authority to

issue regulations or other guidance as necessary to carry out the purposes of § 45(b),

including regulations or other guidance

which provides requirements for recordkeeping or information reporting for purposes of administering the requirements

of § 45(b).1

.02 Energy Investment Credit (§ 48).

For purposes of the investment credit

under § 46, § 48(a)(1) provides, in part,

that the energy credit for any taxable

year is the energy percentage of the basis

of each energy property placed in service during such taxable year. Congress

has repeatedly amended § 48, including repealing and suspending the credit,

changing the amount of the credit and

rules for eligibility.

Most recently, §§ 13101(d), (e)(2)

(B) and (3), 13102(a) through (f)(3), (g),

(h), (j) through (m), (o), (p), 13103(a),

and 13204(c)(1) and (2) of the IRA made

amendments to § 48. These amendments

include, but are not limited to: changing

the energy percentage used to calculate

the credit; amending the definitions of certain types of energy property; extending

the beginning of construction and placed

in service deadlines for certain types of

energy property; adding a new rule for

interconnection property; adding an election to treat clean hydrogen production

facilities as energy property; expanding the definition of “energy property”

to include certain electrochromic glass,

energy storage technology, qualified biogas property, and microgrid controllers;

modifying eligibility dates regarding the

election to treat as energy property certain

types of qualified facilities referred to as

Other amendments made by the IRA to § 45 increase the credit amount if certain prevailing wage, apprenticeship, domestic content, and energy communities requirements are satisfied.

The IRA also provides an election for a taxpayer to receive a direct payment or to transfer the credit. Another amendment made by the IRA addresses the credit phaseout for a taxpayer that

makes an election for direct payment. Similar provisions were added by the IRA to several other provisions of the Code discussed in this notice. See Notice 2022-51 requesting comments

on prevailing wage, energy communities, and apprenticeship requirements related to several Code sections and Notice 2022-50 requesting comments on direct payment and transferability

issues related to several Code sections.

1

Bulletin No. 2022–43

321

October 24, 2022

a “qualified investment credit facility”;

establishing a special program to encourage the placement of certain facilities in

connection with low-income communities (discussed in section 2.06 of this

notice); and providing the Secretary with

the authority to issue regulations or other

guidance as necessary to carry out the

purposes of § 48, including regulations

or other guidance providing for recapture

of the credit in certain situations and the

recordkeeping or information reporting

for purposes of administering the requirements of § 48(a).

.03 Zero-Emission Nuclear Power Production Credit (§ 45U).

Section 13105 of the IRA added new

§ 45U, the zero-emission nuclear power

production credit, to provide an income

tax credit for electricity produced at a

qualified nuclear power facility and sold

by the taxpayer to an unrelated person in

taxable years beginning after December

31, 2023, and before January 1, 2033. A

qualified nuclear power facility is a facility

owned by the taxpayer that was placed in

service before the enactment of § 45U and

uses nuclear energy to produce electricity. A facility that is an advanced nuclear

power facility as defined in § 45J(d)(1)

is not a qualified nuclear power facility

under § 45U.

The credit under § 45U(a) is calculated

by multiplying the kilowatt hours of electricity produced and sold during the taxable year by 0.3 cents (adjusted for inflation), and then subtracting the “reduction

amount” for such taxable year. Section

45U(b)(2)(A) defines the term “reduction amount” as the lesser of (1) the credit

amount determined before application of

the reduction amount or (2) the amount

equal to 16 percent of the excess of (a)

the gross receipts from any electricity produced by the facility and sold to an unrelated person during the taxable year, over

(b) the amount equal to the product of 2.5

cents (adjusted for inflation) multiplied by

the kilowatt hours of electricity produced

by the facility and sold to an unrelated

person during the taxable year. Section

45U(b)(2)(B) provides rules regarding

the treatment of gross receipts. The credit

amount determined under § 45U(a) is

multiplied by 5 if certain prevailing wage

requirements are met. Section 45U(d)(3)

grants the Secretary authority to issue

October 24, 2022

regulations or other guidance to administer the wage requirements of § 45U.

.04 Clean Electricity Production Credit

(§ 45Y).

Section 13701 of the IRA added new

§ 45Y, the clean electricity production

credit, to provide a tax credit for electricity produced by the taxpayer at a qualified

facility and either (1) sold by the taxpayer

to an unrelated person during the taxable year, or (2) in the case of a qualified

facility which is equipped with a metering device which is owned and operated

by an unrelated person, sold, consumed,

or stored by the taxpayer during the taxable year. Section 45Y(b)(1)(A) defines a

“qualified facility” as a facility owned by

the taxpayer that is used for the production

of electricity, placed in service after 2024,

and has a greenhouse gas emissions rate

of not greater than zero. A facility will be

considered a qualified facility for a period

of ten years beginning on the date it is

placed in service. A facility placed in service before January 1, 2025, also can be

considered a qualified facility to the extent

of the increased amount of electricity produced at the facility by reason of a new

unit placed in service after December 31,

2024, or additions of capacity placed in

service after December 31, 2024.

Section 45Y(a)(1) provides that the

amount of the credit is equal to the product of (A) the kilowatt hours of electricity

produced and sold to an unrelated person

(or sold, consumed, or stored if the facility is equipped with a metering device) by

the taxpayer during the taxable year, multiplied by (B) the applicable amount with

respect to such qualified facility. Section

45Y(a)(2) provides that the applicable

amount is generally 0.3 cents (adjusted

for inflation), which can be increased to

1.5 cents (adjusted for inflation) if requirements for prevailing wage and apprenticeship are met.

Section 45Y(b)(2) provides that the

greenhouse gas emissions rate is the

amount of greenhouse gases emitted into

the atmosphere by a facility that produces electricity, expressed as grams of

CO2e per KWh. The emissions rate for

different types or categories of facilities will be published annually by the

Secretary, and to the extent not established by the Secretary, a taxpayer that

owns the facility may file a petition for

322

determination of the rate. Section 45Y(b)

(2) also provides special greenhouse gas

accounting rules allowing calculation of

a net greenhouse gas emissions rate for

facilities producing electricity through

combustion or gasification.

Section 45Y(d) provides a credit phaseout for projects the construction of which

begins during the first, second, or third

calendar year following the “applicable

year,” which is the later of (i) the calendar

year in which the Secretary determines

that the annual greenhouse gas emissions

from the production of electricity in the

United States are equal to or less than 25

percent of such emissions for calendar

year 2022, or (ii) 2032.

Section 45Y(f) directs the Secretary to

issue guidance regarding implementation

of § 45Y not later than January 1, 2025,

including calculation of greenhouse gas

emission rates for qualified facilities and

determination of clean electricity production credits under § 45Y.

.05 Clean Electricity Investment Credit

(§ 48E).

Section 13702 of the IRA added § 48E,

the clean electricity investment credit,

to provide an investment tax credit for

qualified property. The credit amount for

any taxable year is equal to the applicable percentage of the qualified investment

for such taxable year with respect to any

qualified facility and any energy storage

technology. The applicable percentage for

both qualified facilities and energy storage technology is generally 6 percent. The

applicable percentage can be increased to

30 percent if prevailing wage and apprenticeship requirements are met.

A qualified facility is a facility used for

the generation of electricity and placed

in service after December 31, 2024, for

which the anticipated greenhouse gas

emissions rate is not greater than zero.

Section 48E(b)(3) incorporates the special

greenhouse gas accounting rules provided

in § 45Y(b)(2) that allow the calculation

of a net greenhouse gas emissions rate for

facilities producing electricity through

combustion or gasification and for facilities that include carbon capture and

sequestration equipment.

A taxpayer’s qualified investment with

respect to any qualified facility for any

taxable year is the sum of: the basis of any

qualified property placed in service by

Bulletin No. 2022–43

the taxpayer during a taxable year that is

part of a qualified facility plus, for qualified facilities with a maximum net output

of not greater than 5 megawatts, certain

expenditures paid or incurred by the taxpayer for qualified interconnection property. A taxpayer’s qualified investment

with respect to energy storage technology

for any taxable year is the basis of the

energy storage technology placed in service by the taxpayer during such taxable

year.

Section 48E(h) provides a special

program for certain facilities placed in

service in connection with low-income

communities. These rules are discussed

in section 2.06 of this notice with the discussion of § 48(e). Section 48E(i) directs

the Secretary to issue guidance regarding

the implementation of § 48E not later than

January 1, 2025.

.06 Special programs for certain facilities placed in service in connection with

low-income communities (§§ 48(e) and

48E(h)).

Section 13103 of the IRA amended

§ 48 to add new § 48(e), which establishes a special program for certain solar

and wind facilities placed in service in

connection with low-income communities, effective January 1, 2023. Section 13702(a) of the IRA also enacted

§ 48E(h), which provides a similar special program for certain facilities placed

in service in connection with low-income

communities in calendar years after 2024.

These provisions increase the amount of

the § 48 credit and § 48E credit for facilities with a maximum net output of less

than 5 megawatts (as measured in alternating current) by providing a 10 percent

increase in the energy percentage (in the

case of § 48(e)) or the applicable percentage (in the case of § 48E(h)), used to calculate the credit amount, for certain facilities located in low-income communities

(as defined in § 45D(e) of the Code) or

on Indian land (as defined in § 2601(2) of

the Energy Policy Act of 1992 (25 U.S.C.

3501(2))), or a 20 percent increase in the

energy percentage or applicable percentage for certain facilities that are part of

certain low-income residential building

projects or low-income economic benefit

projects. These increased credit amounts

are limited by the facility’s environmental

justice solar and wind capacity limitation

Bulletin No. 2022–43

allocation (§ 48(e)) or its environmental justice capacity limitation allocation

(§ 48E(h)).

Section 48(e)(4) directs the Secretary to establish a program to allocate

amounts of environmental justice solar

and wind capacity limitation to qualified

solar and wind facilities within 180 days

of enactment of the IRA. The total amount

of environmental justice solar and wind

capacity allocation available during any

calendar year is limited to 1.8 gigawatts

of direct current capacity for each of the

years 2023 and 2024. If the 1.8-gigawatt

capacity limitation for any calendar year

exceeds the aggregate amount allocated

for such year, the excess is carried forward

to the next year, but not beyond a calendar

year after 2024. After that, the excess from

2024 may be carried forward and applied

to the capacity limitation for 2025 under

§ 48E(h).

Section 48E(h)(4)(A) directs the Secretary to establish a program to allocate

amounts of environmental justice capacity limitation to applicable facilities not

later than January 1, 2025. The total

amount of environmental justice capacity

limitation available during any calendar

year is limited to 1.8 gigawatts of direct

current capacity for each calendar year

during the period beginning on January 1,

2025, and ending on December 31 of the

Applicable Year (as defined in § 45Y(d)

(3)), and zero thereafter. If the 1.8-gigawatt capacity limitation for any calendar

year exceeds the aggregate amount allocated for such year, the excess increases

the limitation for the next year. However,

no amount may be carried forward to any

calendar year after the third calendar year

following the Applicable Year. To be eligible for the credit increase, the facility

must be placed in service within 4 years

after the date of the allocation of environmental justice capacity limitation to

the facility.

SECTION 3. REQUEST FOR

COMMENTS

The Treasury Department and the

IRS request comments on any questions

arising from the IRA amendments to

§§ 45 and 48 and the IRA’s enactment of

§§ 45U, 45Y, and 48E. Commenters are

encouraged to specify the issues on which

323

guidance is needed most quickly as well

as the most important issues on which

guidance is needed. In addition to general

comments, the Treasury Department and

the IRS request comments that address the

following specific issues:

.01 IRA Changes to the Renewable

Electricity Production Credit (§ 45)

(1) Section 45(e)(13) provides that

electricity produced by a taxpayer will

be treated as sold by such taxpayer to an

unrelated person during the taxable year

if (A) such electricity is used during such

taxable year by the taxpayer or a person

related to the taxpayer at a qualified clean

hydrogen production facility (as defined

in § 45V(c)(3)) to produce qualified clean

hydrogen (as defined in § 45V(c)(2)), and

(B) such use and production is verified (in

such form or manner as the Secretary may

prescribe) by an unrelated third party.

(a) What existing industry standards, if

any, should the Treasury Department and

the IRS consider in establishing guidelines for how an unrelated third party will

verify that electricity produced by a facility for which the taxpayer is claiming the

§ 45 credit has been used to produce qualified clean hydrogen?

(b) The term “unrelated person” is used

in § 45 (as well as other provisions discussed in this notice that were added or

amended by the IRA). Is guidance needed

to clarify the meaning of the term “unrelated person”? If so, how should that term

be clarified?

(2) Sections 45(b)(3), 48(a)(4), 45Y(g)

(8), 48E(d)(2) and several other sections in

the IRA include a reduction in the respective credit for tax-exempt bond financing.

The reduction is calculated in accordance

with § 45(b)(3) (or rules similar to the rule

under § 45(b)(3)). What additional guidance would be helpful in determining how

to calculate the reduction?

(3) Section 45(c)(10)(A)(v), as

amended by the IRA, provides a modified definition of marine and hydrokinetic

energy by adding pressurized water used

in a pipeline (or similar man-made conveyance) that is operated for the distribution of water for agricultural, municipal,

or industrial consumption and not primarily for the generation of electricity. Is

guidance needed to define these qualified

facilities? If so, how should these qualified facilities be defined?

October 24, 2022

(4) Please provide comments on any

other topics relating to the § 45 credit that

may require guidance.

.02 The Energy Investment Credit

(§ 48)

(1) IRA Changes to the Energy Investment Credit (§ 48)

(a) The IRA expanded the definition of

energy property to include electrochromic glass, energy storage technology,

qualified biogas property, and microgrid

controllers.

(i) What should the Treasury Department and the IRS consider in determining

what types of technologies are included

in the definitions of these new types of

energy property?

(ii) What should the Treasury Department and the IRS consider in determining

what components of those technologies

are included in energy property?

(b) Section 48(a)(8) provides that for

certain energy property amounts paid or

incurred for qualified interconnection

property may be included in basis.

(i) For interconnection property, what

types of additions, modifications, or

upgrades to the transmission or distribution system are required for the purpose of

accommodating interconnection?

(ii) For interconnection property, what

type of documentation, in addition to

interconnection agreements and cost certification reports, is readily available for

a taxpayer to demonstrate that they have

paid or incurred interconnection costs?

(iii) For interconnection property, is

guidance needed to define energy property that has a maximum net output of not

greater than 5 megawatts (as measured in

alternating current)?

(c) Please provide comments on any

other topics relating to the § 48 credit that

may require guidance.

(2) Additional Issues Regarding the

Energy Investment Credit (§ 48)

(a) Is guidance needed to determine

whether an investment credit facility that

elects to claim the § 48 investment tax

credit in lieu of the § 45 production tax

credit is subject to all of the requirements

of § 45, including the requirement that

electricity generated by the investment

credit facility be sold to an unrelated person? If so, what factors should the Treasury Department and the IRS consider

regarding such guidance?

October 24, 2022

(b) Is clarification needed on the applicability of the 80/20 rule used to determine

whether retrofitted or repowered projects

may qualify as new energy property? If so,

how should this be clarified?

(c) Section 48(a)(3)(A)(i) provides

that energy property includes “equipment which uses solar energy to generate

electricity, to heat or cool (or provide hot

water for use in) a structure.” Is guidance

needed to clarify the meaning of the term

“structure”? If so, how should this term be

clarified?

(d) Please provide comments on any

other topics relating to the § 48 credit that

may require guidance.

.03 IRA Addition of the Zero-Emission

Nuclear Power Production Credit (§ 45U)

(1) Section 45U(a)(2) reduces the

amount of the § 45U credit by a “reduction amount” that is calculated, in part,

based on the gross receipts from any electricity produced by the facility. Section

45U(b)(2)(B) provides that gross receipts

generally include any amount received

by a qualified facility that are from a

zero-emission credit program, unless an

exclusion applies. Is guidance needed to

clarify the meaning of the term “gross

receipts,” especially as it applies to taxpayers receiving revenue through costof-service regulation or regulated contracts and who do not sell electricity in a

manner attributable to individual nuclear

reactors such as through sales into organized electricity markets or via power purchase agreements to third parties? If so,

how should “gross receipts” be clarified?

Should it be defined by cross reference to

§ 448(c) of the Code?

(2) Section 45U(b)(2)(B)(ii) defines

the term “zero-emission credit program.”

What should the Treasury Department

and the IRS consider in determining

whether a payment is as a result of a government program for the zero-emission,

zero-carbon, or air quality attributes of

any portion of the electricity produced by

the facility?

(3) Section 45U(b)(2)(B)(iii) excludes

from gross receipts, for purposes of the

reduction amount calculation, any amount

received by the taxpayer from a zero-emission credit program if the full amount

of the § 45U credit (determined without regard to § 45U(b)(2)(B)) is used to

reduce payments from such zero-emission

324

credit program. What should the Treasury

Department and the IRS consider when

determining whether the full amount of

the § 45U credit (calculated pursuant

to § 45U(a)) is used to reduce payments

from a zero-emission credit program?

(4) Please provide comments on any

other topics relating to the § 45U credit

that may require guidance.

.04 IRA Addition of the Clean Electricity Production Credit (§ 45Y)

(1) What existing industry standards, if

any, should the Treasury Department and

the IRS consider in determining a taxpayer’s eligibility for the § 45Y credit?

(2) Section 45Y(b)(2)(C)(i) requires

the Secretary to annually publish a table

that sets forth the greenhouse gas emissions rates for types or categories of facilities. What should the Treasury Department and the IRS consider in publishing

this table, including considerations around

scope and the factors?

(3) Section 45Y(a)(1) generally provides a credit for electricity produced

by the taxpayer at a qualified facility

and either (1) sold by the taxpayer to an

unrelated person during the taxable year,

or (2) in the case of a qualified facility which is “equipped with a metering

device which is owned and operated by

an unrelated person, sold, consumed, or

stored by the taxpayer during the taxable

year.” Is guidance needed to clarify when

a facility is “equipped with a metering

device which is owned and operated by

an unrelated person” or when electricity

produced at such a facility is “sold, consumed, or stored by the taxpayer during

the taxable year”?

(4) Section 45Y(b)(2)(C)(ii) provides

that, in the case of any facility for which

an emissions rate has not been established

by the Secretary, a taxpayer that owns

such facility may file a petition with the

Secretary for a determination of the emissions rate with respect to such facility.

What procedures should be provided by

the Treasury Department and the IRS for

taxpayers to file such a petition? What

should the Secretary consider when making such determinations?

(5) Please provide comments on any

other topics relating to the § 45Y credit

that may require guidance.

.05 IRA Addition of the Clean Electricity Investment Credit (§ 48E)

Bulletin No. 2022–43

(1) What industry mechanisms currently exist for a taxpayer to demonstrate

eligibility for the credit?

(2) Please provide comments on any

other topics relating to the § 45E credit

that may require guidance.

.06 IRA Addition of Special Programs

for Certain Facilities Placed in Service in

Connection with Low-income Communities (§§ 48(e) and 48E(h))

(1) Sections 48(e)(4)(A) and 48E(h)

(4)(A) require the Secretary to establish

a program to allocate amounts of environmental justice capacity limitation to

applicable facilities. In establishing such

program, the Secretary must provide procedures to allow for an efficient allocation

process.

(a) What should the Treasury Department and the IRS consider in providing

guidance regarding the application process for taxpayers seeking an allocation

of the environmental justice capacity

limitation?

(b) How can the application procedures

and application process be made accessible to taxpayers?

(c) How can the process incorporate

community input, engagement, and benefit for projects seeking an allocation of the

environmental justice capacity limitation?

(2) What stage of completion, if any,

should be required of the taxpayer at the

time of application for or allocation of

amounts of environmental justice capacity limitation (since the taxpayer will have

four years to place the facility in service)?

(3) What methods currently exist or

need to be designed for a taxpayer to certify that a project is being built in a low-income community, on Indian land, or as

part of a low-income residential building

project or a qualified low-income economic benefit project?

(4) What mechanisms exist for a taxpayer to demonstrate that the financial

benefits of the electricity produced by an

applicable facility are allocated equitably

among the occupants of a low-income

residential building project and do not

impact the occupants’ eligibility for their

housing? Similarly, what mechanisms

exist for a taxpayer to demonstrate that at

least 50 percent of the financial benefits

of electricity produced by an applicable

facility which is part of a low-income

Bulletin No. 2022–43

economic benefit project are provided

to households within certain income

thresholds?

(5) Is guidance needed to clarify the

meaning of the term “financial benefit”?

(6) What is a financial benefit of the

electricity produced by an applicable

facility other than electricity acquired

at a below-market rate for occupants of

low-income residential building projects and low-income economic benefit

projects?

(7) What should the Treasury Department and the IRS consider in providing

guidance regarding the recapture of the

benefits of the credit increase allowed

under §§ 48(e) and 48E(h) when property

ceases to be property eligible for such

credit increase? How should the one-time

restoration of eligibility be documented

before recapture?

(8) Please provide comments on any

other topics relating to the environmental

justice capacity limitation under §§ 48(e)

and 48E(h) that may require guidance.

SECTION 4: SUBMISSION OF

COMMENTS

.01 Written comments should be submitted by Friday, November 4, 2022. Consideration will be given, however, to any

written comment submitted after Friday,

November 4, 2022, if such consideration

will not delay the issuance of guidance.

The subject line for the comments should

include a reference to Notice 2022-49.

Comments may be submitted in one of

two ways:

(1) Electronically via the Federal

eRulemaking Portal at www.regulations.

gov (type IRS-2022-0049 in the search

field on the regulations.gov homepage to

find this notice and submit comments).

(2) Alternatively, by mail to: Internal Revenue Service, CC:PA:LPD:PR

(Notice 2022-49), Room 5203, P.O. Box

7604, Ben Franklin Station, Washington,

DC 20044.

.02 All commenters are strongly

encouraged to submit comments electronically. The Treasury Department and the

IRS will publish for public availability

any comment submitted electronically, or

on paper, to its public docket on www.regulations.gov.

325

SECTION 5. 60-DAY RULE

NOT EFFECTUATED FOR

THE PREVAILING WAGE AND

APPRENTICESHIP REQUIREMENT

For purposes of §§ 30C, 45, 45L,

45Q, 45U, 45V, 45Y, 45Z, 48, 48C, 48E,

and 179D, the publication of this notice

requesting comments is not the publication of guidance with respect to the prevailing wage and apprenticeship requirements, and it is not relevant in determining

whether the prevailing wage and apprenticeship requirements are satisfied under

such sections. The Treasury Department

and the IRS will explicitly identify when

they have published guidance with respect

to the prevailing wage and apprenticeship

requirements that is relevant for determining whether such requirements have been

satisfied for purposes of §§ 30C, 45, 45L,

45Q, 45U, 45V, 45Y, 45Z, 48, 48C, 48E,

and 179D.

SECTION 6. DRAFTING

INFORMATION

The principal author of this notice

is the Office of Associate Chief Counsel (Passthroughs & Special Industries).

However, other personnel from the Treasury Department and the IRS participated

in its development. For further information regarding this notice, call the energy

security guidance contact number at (202)

317-5254 (not a toll-free number).

Request for Comments

on Elective Payment of

Applicable Credits and

Transfer of Certain Credits

Notice 2022-50

SECTION 1. PURPOSE

The Department of the Treasury (Treasury Department) and the Internal Revenue

Service (IRS) anticipate issuing guidance

to implement the elective payment provisions under § 6417 and the elective credit

transfer provisions under § 6418 of the

October 24, 2022

Internal Revenue Code (Code), as added

by § 13801 of Public Law 117-169, 136

Stat. 1818 (August 16, 2022), commonly

known as the Inflation Reduction Act of

2022 (IRA). This notice requests general

comments on questions arising under

new §§ 6417 and 6418, as well as specific

comments on questions listed in section

3 of this notice. Comments received in

response to this notice will help to inform

development of future guidance implementing §§ 6417 and 6418.

SECTION 2. BACKGROUND

.01 Elective Payment of Applicable

Credits (§ 6417).

Section 6417 of the Code was enacted

by § 13801(a) of the IRA, to allow certain

taxpayers to elect to treat certain credits

as a direct payment rather than a credit

against their federal income tax liabilities.

Section 6417(a) provides that, in the

case of an applicable entity making an

election with respect to any applicable

credit determined with respect to such

entity, such entity is treated as making a

payment against the tax imposed by subtitle A (that is, federal income taxes) for the

taxable year with respect to which such

credit was determined equal to the amount

of such credit. Any election under § 6417

can only be made at such time and in such

manner as the Secretary of the Treasury or

her delegate (Secretary) may provide.

Section 6417(b) defines the term

“applicable credit” to mean each of the

following:

(1) so much of the credit for alternative fuel vehicle refueling property

allowed under § 30C that, pursuant

to § 30(d)(1), is treated as a credit

listed in § 38(b);

(2) so much of the renewable electricity

production credit determined under

§ 45(a) as is attributable to qualified

facilities that are originally placed

in service after December 31, 2022;

(3) so much of the credit for carbon

oxide sequestration determined

under § 45Q(a) as is attributable

to carbon capture equipment that

is originally placed in service after

December 31, 2022;

(4) the zero-emission nuclear power

production credit determined under

§ 45U(a);

October 24, 2022

(5)

so much of the credit for production of clean hydrogen determined

under § 45V(a) as is attributable to

qualified clean hydrogen production

facilities that are originally placed

in service after December 31, 2012;

(6) in the case of a tax-exempt entity

described in § 168(h)(2)(A)(i), (ii),

or (iv), the credit for qualified commercial vehicles determined under

§ 45W by reason of § 45W(d)(3);

(7) the credit for advanced manufacturing production under § 45X(a);

(8) the clean electricity production

credit determined under § 45Y(a);

(9) the clean fuel production credit

determined under § 45Z(a);

(10) the energy credit determined under

§ 48;

(11) the qualifying advanced energy

project credit determined under

§ 48C; and

(12) the clean electricity investment

credit determined under § 48E.

Section 6417(c)(1) provides that, in the

case of any applicable credit determined

with respect to any facility or property

held directly by a partnership or S corporation, any election under § 6417(a) is to be

made by such partnership or S corporation

and must be made in such manner as the

Secretary may provide. If such partnership

or S corporation makes an election under

§ 6417(a) with respect to any applicable

credit, (A) the Secretary must make a payment to such partnership or S corporation

equal to the amount of such credit, (B)

§ 6417(e) is applied with respect to such

credit before determining any partner’s

distributive share, or shareholder’s pro rata

share, of such credit, (C) any amount with

respect to which the election in § 6417(a)

is made is treated as tax exempt income

for purposes of §§ 705 and 1366, and (D)

a partner’s distributive share of such tax

exempt income is based on such partner’s

distributive share of the otherwise applicable credit for each taxable year.

Section 6417(c)(2) provides that, in

the case of any facility or property held

directly by a partnership or S corporation,

no election by any partner or shareholder

is allowed under § 6417(a) with respect

to any applicable credit determined with

respect to such facility or property.

Section 6417(d)(1)(A) defines the

term “applicable entity” to mean (i) any

326

organization exempt from tax imposed

by subtitle A; (ii) any State or political

subdivision thereof; (iii) the Tennessee

Valley Authority; (iv) an Indian tribal

government (as defined in § 30D(g)

(9)); (v) any Alaska Native Corporation

(as defined in § 3 of the Alaska Native

Claims Settlement Act (43 U.S.C.

1602(m)); or (vi) any corporation operating on a cooperative basis that is

engaged in furnishing electric energy to

persons in rural areas.

Pursuant to § 6417(d)(1)(B), if a

taxpayer, other than an entity listed in

§ 6417(d)(1)(A), makes an election

under § 6417(d)(1)(B) with respect to

any taxable year in which such taxpayer

has placed in service a qualified clean

hydrogen production facility (as defined

in § 45V(c)(3)), such taxpayer is treated

as an applicable entity for purposes of

§ 6417 for the taxable year, but only with

respect to the credit under § 45V to the

extent described in § 6417(b)(5).

Pursuant to § 6417(d)(1)(C), if a

taxpayer, other than an entity listed in

§ 6417(d)(1)(A), makes an election under

§ 6417(d)(1)(C) with respect to any taxable year in which such taxpayer has, after

December 31, 2022, placed in service

carbon capture equipment at a qualified

facility (as defined in § 45Q(d)), such taxpayer is treated as an applicable entity for

purposes of § 6417 for such taxable year,

but only with respect to the credit under

§ 45Q to the extent described in § 6417(b)

(3).

Section 6417(d)(1)(D)(i) provides that,

if a taxpayer other than an entity described

in § 6417(d)(1)(A) makes an election

under § 6417(d)(1)(D) with respect to any

taxable year in which such taxpayer has,

after December 31, 2022, produced eligible components (as defined in § 45X(c)

(1)), such taxpayer is treated as an applicable entity for purposes of § 6417 for such

taxable year, but only with respect to the

credit under § 45X to the extent described

in § 6417(b)(7).

Pursuant to § 6417(d)(1)(D)(ii)(I),

except as provided in § 6417(d)(1)(D)(ii)

(II), if a taxpayer makes an election under

§ 6417(d)(1)(D) with respect to any taxable year, such taxpayer is treated as having made such election for each of the 4

succeeding taxable years ending before

January 1, 2033.

Bulletin No. 2022–43

Pursuant to § 6417(d)(1)(D)(ii)(II), a

taxpayer may elect to revoke the application of the election made under § 6417(d)

(1)(D) to any taxable year described in

§ 6417(d)(1)(D)(ii)(I). Any such election, if made, applies to the applicable

year specified in such election and each

subsequent taxable year within the period

described in § 6417(d)(1)(D)(ii)(I). Any

election under § 6417(d)(1)(D) cannot be

revoked once made.

Section 6417(d)(1)(D)(iii) provides

that, for any taxable year described in

§ 6417(d)(1)(D)(ii)(I), no election may

be made by the taxpayer under § 6418(a)

for such taxable year with respect to eligible components for purposes of the credit

described in § 6417(b)(7) (that is, the

credit for advanced manufacturing production under § 45X(a)).

Pursuant to § 6417(d)(1)(E)(i), an election made under § 6417(d)(1)(B), (C), or

(D) must be made at such time and in such

manner as the Secretary may provide.

Pursuant to § 6417(d)(1)(E)(ii), no

election may be made under § 6417(d)(1)

(B), (C), or (D) with respect to any taxable year beginning after December 31,

2032.

Section 6417(d)(2) provides that, in the

case of any applicable entity that makes

the election described in § 6417(a), any

applicable credit is determined (A) without regard to § 50(b)(3) and (4)(A)(i), and

(B) by treating any property with respect

to which such credit is determined as used

in a trade or business of the applicable

entity.

Section 6417(d)(3)(A)(i) provides

that, any election under § 6417(a) cannot be made later than (I) in the case of

any government, or political subdivision, described in § 6417(d)(1) and for

which no return is required under § 6011

or § 6033(a), such date as is determined

appropriate by the Secretary, or (II) in any

other case, the due date (including extensions of time) for the tax return for the taxable year for which the election is made,

but in no event earlier than 180 days

after the date of the enactment of § 6417

by § 13801(a) of the IRA (that is, in no

event earlier than 180 days after August

16, 2022).

Section 6417(d)(3)(A)(ii) provides

that, any election under § 6417(a) applies

(except as otherwise provided in § 6417(d)

Bulletin No. 2022–43

(3)(A)) with respect to any credit for the

taxable year for which the election is

made and, once made, is irrevocable.

Section 6417(d)(3)(B) provides that,

in the case of the credit described in

§ 6417(b)(2) (that is, the renewable

electricity production credit under

§ 45(a)), any election under § 6417(a):

(i) applies separately with respect to

each qualified facility, (ii) must be

made for the taxable year in which such

qualified facility is originally placed in

service, and (iii) applies to such taxable

year and to any subsequent taxable year

that is within the period described in

§ 45(a)(2)(A)(ii) with respect to such

qualified facility.

Section 6417(d)(3)(C)(i) provides

that, in the case of the credit described in

§ 6417(b)(3) (that is, the credit for carbon

oxide sequestration under § 45Q(a)), any

election under § 6417(a): (i) applies separately with respect to the carbon capture

equipment originally placed in service by

the applicable entity during a taxable year,

and (ii)(I) in the case of a taxpayer who

makes an election described in § 6417(d)

(1)(C), applies to the taxable year in

which such equipment is placed in service

and the 4 subsequent taxable years with

respect to such equipment that end before

January 1, 2033, and (II) in any other case,

applies to such taxable year and to any

subsequent taxable year that is within the

period described in § 45Q(a)(3)(A) or (4)

(A) with respect to such equipment.

Section 6417(d)(3)(C)(ii) provides

that, for any taxable year described in

§ 6417(d)(3)(C)(i)(II)(aa) with respect

to carbon capture equipment, no election may be made by the taxpayer under

§ 6418(a) for such taxable year with

respect to such equipment for purposes of

the credit described in § 6417(b)(3).

Section 6417(d)(3)(C)(iii) provides

that, in the case of a taxpayer who makes

an election described in § 6417(1)(C)

with respect to carbon capture equipment,

such taxpayer may, at any time during the

5-year period described in § 6417(d)(3)

(C)(i)(II)(aa), revoke the application of

such election with respect to such equipment for any subsequent taxable years

during such period. Any such election, if

made, applies to the applicable year specified in such election and each subsequent

taxable year within the 5-year period

327

described in § 6417(d)(3)(C)(i)(II)(aa).

Any election under § 6417(d)(3)(C)(iii)

may not be subsequently revoked.

Section 6417(d)(3)(D)(i) provides

that, in the case of the credit described in

§ 6417(b)(5) (that is, the credit for production of clean hydrogen under § 45V(a)),

any election under § 6417(a): (i) applies

separately with respect to each qualified clean hydrogen production facility;

(ii) must be made for the taxable year in

which such facility is placed in service (or

within the 1-year period subsequent to the

date of enactment of § 6417 in the case of

facilities placed in service before December 31, 2022), and (iii)(I) in the case of a

taxpayer who makes an election described

in § 6417(d)(1)(B), applies to such taxable year and the 4 subsequent taxable

years with respect to such facility that end

before January 1, 2033, and (II) in any

other case, applies to the taxable year and

all subsequent taxable years with respect

to such facility.

Section 6417(d)(3)(D)(ii) provides

that, for any taxable year described in

§ 6417(d)(3)(C)(i)(III)(aa) with respect

to a qualified clean hydrogen production

facility, no election may be made by the

taxpayer under § 6418(a) for such taxable

year with respect to such facility for purposes of the credit described in § 6417(b)

(5).

Section 6417(d)(3)(D)(iii) provides

that, in the case of a taxpayer who makes

an election described in § 6417(1)(B)

with respect to a qualified clean hydrogen

production facility, such taxpayer may,

at any time during the period described

in § 6417(d)(3)(D)(i)(III)(aa), revoke the

application of such election with respect

to such facility for any subsequent taxable years during such period. Any such

election, if made, applies to the applicable

year specified in such election and each

subsequent taxable year within the period

described in § 6417(d)(3)(D)(i)(II)(aa).

Any election under § 6417(d)(3)(D)(iii)

may not be revoked once made.

Section 6417(d)(3)(E) provides that,

in the case of the credit described in

§ 6417(b)(8) (that is, the clean electricity

production credit under § 45Y(a)), any

election under § 6417(a): (i) applies separately with respect to each qualified facility, (ii) must be made for the taxable year

in which such facility is placed in service,

October 24, 2022

and (iii) applies to such taxable year and

to any subsequent taxable year that is

within the period described in § 45Y(b)

(1)(B) with respect to such facility.

Section 6417(d

This text is long and has been trimmed here. Open the source document for the complete record.