Bulletin No. 2023–27

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HIGHLIGHTS

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Bulletin No. 2023–27

July 3, 2023

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.

EMPLOYEE PLANS

Notice 2023-48, page 1124.

This notice sets forth updates on the corporate bond

monthly yield curve, the corresponding spot segment rates

for June 2023 used under § 417(e)(3)(D), the 24-month

average segment rates applicable for June 2023, and the

30-year Treasury rates, as reflected by the application of

§ 430(h)(2)(C)(iv).

INCOME TAX

REG-101607-23, page 1127.

This item contains proposed regulations concerning the

election under the Inflation Reduction Act of 2022 to treat

the amount of certain tax credits as a payment of Federal

income tax. The proposed regulations describe rules for

the elective payment of these credit amounts in a taxable

year, including definitions and special rules applicable to

partnerships and S corporations and regarding repayment of excessive payments. In addition, the proposed

regulations describe rules related to an IRS pre-filing

registration process that would be required. These proposed regulations affect tax-exempt organizations, State

and local governments, Indian tribal governments, Alaska

Native Corporations, the Tennessee Valley Authority, rural

electric cooperatives, and, in the case of three of these

credits, certain taxpayers eligible to elect the elective payment of credit amounts in a taxable year. This document

also provides notice of a public hearing on the proposed

regulations.

REG-101610-23, page 1161.

This item contains proposed regulations concerning the

election under the Inflation Reduction Act of 2022 to

Finding Lists begin on page ii.

transfer certain Federal income tax credits. The proposed

regulations describe the proposed rules for the election to

transfer eligible credits in a taxable year, including definitions and special rules applicable to partnerships and S

corporations and regarding excessive credit transfer or

recapture events. In addition, the proposed regulations

describe rules related to an IRS pre-filing registration process that would be required. These proposed regulations

affect eligible taxpayers that elect to transfer eligible credits in a taxable year and the transferee taxpayers to which

eligible credits are transferred.

REG-105595-23, page 1194.

These proposed regulations provide guidance regarding the

elective payment election of the advanced manufacturing

investment credit under section 48D of the Internal Revenue

Code (Code). The proposed regulations reflect changes

made by the CHIPS Act of 2022, and supplement the rules

proposed in the March 2023 proposed regulations. The section 48D credit may be claimed for qualified investments in

an advanced manufacturing facility that manufactures finished semiconductors or finished semiconductor manufacturing equipment.

Rev. Rul. 2023-12, page 1111.

Federal rates; adjusted federal rates; adjusted federal longterm rate, and the long-term tax exempt rate. For purposes of

sections 382, 1274, 1288, 7872 and other sections of the

Code, tables set forth the rates for July 2023.

T.D. 9975, page 1113.

The temporary regulations, TD 9975, provide mandatory information and pre-filing registration requirements that must be

completed before elections available under sections 48D(d),

6417, and 6418 of the Internal Revenue Code (Code) may be

made.

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.

July 3, 2023

Bulletin No. 2023–27

Part I

Section 1274.—

Determination of Issue

Price in the Case of Certain

Debt Instruments Issued for

Property

(Also Sections 42, 280G, 382, 467, 468, 482, 483,

1288, 7520, 7872.)

Rev. Rul. 2023-12

This revenue ruling provides various prescribed rates for federal income

Annual

AFR

110% AFR

120% AFR

130% AFR

4.80%

5.28%

5.77%

6.25%

AFR

110% AFR

120% AFR

130% AFR

150% AFR

175% AFR

3.85%

4.23%

4.62%

5.01%

5.80%

6.78%

AFR

110% AFR

120% AFR

130% AFR

3.98%

4.38%

4.79%

5.19%

Short-term adjusted AFR

Mid-term adjusted AFR

Long-term adjusted AFR

Bulletin No. 2023–27

tax purposes for July 2023 (the current

month). Table 1 contains the shortterm, mid-term, and long-term applicable federal rates (AFR) for the current

month for purposes of section 1274(d)

of the Internal Revenue Code. Table 2

contains the short-term, mid-term, and

long-term adjusted applicable federal

rates (adjusted AFR) for the current

month for purposes of section 1288(b).

Table 3 sets forth the adjusted federal long-term rate and the long-term

tax-exempt rate described in section

382(f). Table 4 contains the appropriate percentages for determining the

REV. RUL. 2023-12 TABLE 1

Applicable Federal Rates (AFR) for July 2023

Period for Compounding

Semiannual

Short-term

4.74%

5.21%

5.69%

6.16%

Mid-term

3.81%

4.19%

4.57%

4.95%

5.72%

6.67%

Long-term

3.94%

4.33%

4.73%

5.12%

Annual

3.63%

2.91%

3.01%

REV. RUL. 2023-12 TABLE 2

Adjusted AFR for July 2023

Period for Compounding

Semiannual

3.60%

2.89%

2.99%

1111

low-income housing credit described

in section 42(b)(1) for buildings placed

in service during the current month.

However, under section 42(b)(2), the

applicable percentage for non-federally subsidized new buildings placed

in service after July 30, 2008, shall not

be less than 9%. Table 5 contains the

federal rate for determining the present

value of an annuity, an interest for life

or for a term of years, or a remainder

or a reversionary interest for purposes

of section 7520. Finally, Table 6 contains the blended annual rate for 2023

for purposes of section 7872.

Quarterly

Monthly

4.71%

5.18%

5.65%

6.11%

4.69%

5.15%

5.62%

6.08%

3.79%

4.17%

4.54%

4.92%

5.68%

6.62%

3.78%

4.15%

4.53%

4.90%

5.65%

6.58%

3.92%

4.31%

4.70%

5.09%

3.91%

4.29%

4.68%

5.07%

Quarterly

3.58%

2.88%

2.98%

Monthly

3.57%

2.87%

2.97%

July 3, 2023

REV. RUL. 2023-12 TABLE 3

Rates Under Section 382 for July 2023

Adjusted federal long-term rate for the current month

Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted federal

long-term rates for the current month and the prior two months.)

3.01%

REV. RUL. 2023-12 TABLE 4

Appropriate Percentages Under Section 42(b)(1) for July 2023

Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after

July 30, 2008, shall not be less than 9%.

Appropriate percentage for the 70% present value low-income housing credit

7.91%

Appropriate percentage for the 30% present value low-income housing credit

3.39%

REV. RUL. 2023-12 TABLE 5

Rate Under Section 7520 for July 2023

Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years, or a

remainder or reversionary interest

4.60%

REV. RUL. 2023-12 TABLE 6

Blended Annual Rate for 2023

Section 7872(e)(2) blended annual rate for 2023

Section 42.—Low-Income

Housing Credit

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

July 2023. See Rev. Rul. 2023-12, page 1.

Section 280G.—Golden

Parachute Payments

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

July 2023. See Rev. Rul. 2023-12, page 1.

Section 382.—Limitation

on Net Operating Loss

Carryforwards and

Certain Built-In Losses

Following Ownership

Change

The adjusted applicable federal long-term rate

is set forth for the month of July 2023. See Rev.

Rul. 2023-12, page 1.

4.65%

Section 467.—Certain

Payments for the Use of

Property or Services

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

July 2023. See Rev. Rul. 2023-12, page 1.

Section 468.—Special

Rules for Mining and Solid

Waste Reclamation and

Closing Costs

The applicable federal short-term rates are set

forth for the month of July 2023. See Rev. Rul.

2023-12, page 1.

Section 482.—Allocation

of Income and Deductions

Among Taxpayers

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

July 2023. See Rev. Rul. 2023-12, page 1.

Section 483.—Interest on

Certain Deferred Payments

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

July 2023. See Rev. Rul. 2023-12, page 1.

Section 1288.—Treatment

of Original Issue Discount

on Tax-Exempt Obligations

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month

of July 2023. See Rev. Rul. 2023-12, page 1.

Section 7520.—Valuation

Tables

The applicable federal mid-term rates are set

forth for the month of July 2023. See Rev. Rul.

2023-12, page 1.

Section 7872.—Treatment

of Loans With BelowMarket Interest Rates

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

July 2023. See Rev. Rul. 2023-12, page 1.

July 3, 2023

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Bulletin No. 2023–27

26 CFR 1.48D-6T: Elective Payment Election; 26

CFR 1.6417-5T: Additional information and registration; 26 CFR 1.6418-4T: Additional information

and registration

DEPARTMENT OF THE

TREASURY

Internal Revenue Service

26 CFR Part 1

T.D. 9975

Pre-Filing Registration

Requirements for Certain

Tax Credit Elections

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Temporary regulations.

SUMMARY: This document contains temporary regulations setting forth mandatory

information and registration requirements

for taxpayers planning to make an elective payment election under the Inflation

Reduction Act of 2022 and the CHIPS Act

of 2022 to treat the amount of certain tax

credits as a payment of Federal income tax,

or in the case of a partnership or S corporation, to receive a payment in the amount of

such credits. This document also contains

temporary regulations setting forth mandatory information and registration requirements for taxpayers planning to make an

election to transfer certain Federal income

tax credits under the Inflation Reduction

Act of 2022. These temporary regulations

affect tax-exempt organizations, State and

local governments, Indian tribal governments, Alaska Native Corporations, the

Tennessee Valley Authority, rural electric cooperatives, and, in the case of three

credits, certain taxpayers eligible to elect

the elective payment of credit amounts in

a taxable year under section 6417 of the

Internal Revenue Code (Code). These temporary regulations also affect taxpayers eligible to make an elective payment election

instead of claiming the advanced manufacturing investment credit under section 48D

of the Code. These temporary regulations

further affect taxpayers eligible to elect to

transfer certain Federal income tax credits

under section 6418 of the Code.

Bulletin No. 2023–27

DATES: Effective date: This temporary

regulation is effective on June 21, 2023.

Applicability date: For dates of applicability, see §§1.48D-6T(j), 1.6417-5T(d),

and 1.6418-4T(d).

FOR FURTHER INFORMATION

CONTACT: Concerning these temporary

regulations, Lani M. Sinfield at (202) 3175871 (not a toll free number).

SUPPLEMENTARY INFORMATION:

Background

I. Overview

This document amends the Income Tax

Regulations (26 CFR part 1) to add temporary regulations providing information

and registration requirements that must

be completed before elections available

under sections 48D(d), 6417, and 6418 of

the Code may be made.

In accordance with section 7805(e)

(1) of the Code, concurrent with the publication of this Treasury Decision, the

Department of the Treasury (Treasury

Department) and the IRS are publishing in

the Proposed Rules section of this issue of

the Federal Register three notices of proposed rulemaking that contain proposed

regulations under §§1.48D-6, 1.6417-5,

and 1.6418-4, the text of which is identical to the text of §§1.48D-6T, 1.6417-5T,

and 1.6418-4T of the temporary regulations. REG-105595-23 provides proposed

regulations under section 48D(d). REG101607-23 provides proposed regulations

under sections 6241 and 6417. REG101610-23 provides proposed regulations

under section 6418.

Interested persons are directed to the

ADDRESSES and COMMENTS AND

PUBLIC HEARING sections of the preambles to REG-105595-23, REG-10160723, and REG-101610-23 for information

on submitting public comments or the public hearings for the proposed regulations.

II. Sections 48D(d), 6417, and 6418

A notice of proposed rulemaking (REG105595-23) in the Proposed Rules section

in this issue of the Federal Register provides a background description of section

1113

48D. A notice of proposed rulemaking

(REG-101607-23) in the Proposed Rules

section in this issue of the Federal

rulemaking (REG-101610-23) in the

Proposed Rules section in this issue of the

Federal Register provides a background

description of section 6418.

Explanation of Provisions

I. Pre-filing Registration Requirements

under Section 48D(d)

Temp. Reg. §1.48D-6T(b)(1) provides

the mandatory pre-filing registration process that, except as provided in guidance,

a taxpayer must complete as a condition

of, and prior to, any amount being treated

as a payment against the tax imposed

under §1.48D-6(a)(1), or an amount paid

to a partnership or S corporation pursuant to §1.48D-6(d)(2)(ii)(A). A taxpayer

is required to use the pre-filing registration process to register each qualified

investment in an advanced manufacturing

facility. A taxpayer that does not obtain a

registration number or report the registration number on its annual tax return with

respect to an advanced manufacturing

facility is ineligible to receive any elective payment amount with respect to the

amount of any section 48D credit determined with respect to that advanced manufacturing facility. However, completion

of the pre-filing registration requirements

and receipt of a registration number does

not, by itself, mean that the taxpayer is

eligible to receive a payment with respect

to the section 48D credits determined with

respect to the advanced manufacturing

facility.

The pre-filing registration requirements are that a taxpayer:

(1) must complete the registration process electronically through the IRS electronic portal and in accordance with the

instructions provided therein, unless otherwise provided in guidance;

(2) must satisfy the registration requirements and receive a registration number

prior to making a section 48D(d)(1) elective payment election on the taxpayer’s

tax return for the taxable year at issue;

(3) is required to obtain a registration

number for each qualified investment in

July 3, 2023

an advanced manufacturing facility with

respect to which a section 48D credit will

be determined and for which the taxpayer

wishes to make a section 48D(d)(1) elective payment election; and

(4) must provide the specific information required to be provided as part

of the pre-filing registration process. The

provision of such information, which

includes information about the taxpayer

and about the qualified investment in an

advanced manufacturing facility, would

allow the IRS to prevent duplication,

fraud, improper payments, or excessive

payments under section 48D. For example, verifying information about the taxpayer would allow the IRS to mitigate

the risk of fraud or improper payments

to entities that are not eligible taxpayers.

Information about the taxpayer’s taxable

year would allow the IRS to ensure that

an elective payment election is timely

made on the entity’s annual tax return.

Information about the advanced manufacturing facility, including its address and

coordinates (longitude and latitude), supporting documentation, beginning of construction date, and placed in service date

would allow the IRS to mitigate the risk

of duplication, fraud, and improper payments for properties that are not advanced

manufacturing facilities.

Temp. Reg. §1.48D-6T(b)(7)(i) provides that, after a taxpayer completes

pre-filing registration with respect to each

qualified investment in an advanced manufacturing facility with respect to which

the taxpayer intends to elect a section

48D(d) elective payment election for the

taxable year, the IRS will review the information provided and will issue a separate

registration number for each qualified

investment for which the taxpayer provided sufficient verifiable information.

Temp. Reg. §1.48D-6T(b)(7)(ii) provides that a registration number is valid

only for the taxable year for which it is

obtained. Temp. Reg. §1.48D-6T(b)(7)(iii)

provides that, if an elective payment election will be made with respect to a qualified

investment in an advanced manufacturing

facility for a taxable year for which a registration number under this section has been

obtained for a prior taxable year, the taxpayer must renew the registration each subsequent year in accordance with applicable

guidance, including attesting that all the

July 3, 2023

facts previously provided are still correct

or updating any facts that are relevant in

calculating the amount of the section 48D

credit. Temp. Reg. §1.48D-6T(b)(7)(iv)

provides that, if facts change with respect

to the qualified investment in an advanced

manufacturing facility for which a registration number has been previously obtained,

the taxpayer must amend the registration to

reflect these new facts. The regulations provide, for example, that if the facility previously registered for an elective payment

election undergoes a change of ownership

(incident to a corporate reorganization or

an asset sale) such that the new owner has

a different employer identification number

(EIN) than the owner who obtained the

original registration, the original owner

would be required to amend the original

registration to disassociate its EIN from the

advanced manufacturing facility and the

new owner must submit an original registration (or if the new owner previously

registered other advanced manufacturing

facilities, must amend its original registration) to associate the new owner’s EIN

with the previously registered advanced

manufacturing facility.

Lastly, Temp. Reg. §1.48D-6(b)(7)

(v) provides that the taxpayer is required

to include the registration number of the

advanced manufacturing facility on the

taxpayer’s annual return for the taxable

year for an election under Temp. Reg.

§1.48D-6(a)(1). The IRS will treat an

elective payment election as ineffective

with respect to any section 48D credit

determined with respect to the advanced

manufacturing facility for which the taxpayer does not include a valid registration

number on the annual tax return.

II. Pre-filing Registration Requirements

and Additional Information under

Section 6417

Section 6417(d)(5) provides that, as

a condition of, and prior to, any amount

being treated as a payment that is made

by the taxpayer under section 6417(a) or

any payment being made pursuant to section 6417(c), the Secretary may require

such information or registration as the

Secretary deems necessary or appropriate

for purposes of preventing duplication,

fraud, improper payments, or excessive

payments.

1114

In general, stakeholders requested additional information about this provision and

requested that the regulations balance the

need to prevent fraud and abuse with the

burden on taxpayers. Stakeholders recommended that the information required to

be provided to the IRS should be provided

in a manner that facilitates automated procedures to help catch potential fraud, discourages abusive or otherwise illegitimate

claims, and allows efficient and prompt

review (both before payment and through

audits). Stakeholders recommended that

all required documents and information

should be able to be submitted easily via an

online portal. Stakeholders recommended

that information or registration should be

as consistent as possible across sections

48D(d)(1), 6417(d)(5), and 6418(g)(1).

Temp. Reg. §1.6417-5T provides the

mandatory pre-filing registration process. Temp. Reg. §1.6417-5T(a) provides an overview of this process and

requires an applicable entity or electing

taxpayer to satisfy the pre-filing registration requirements as a condition of,

and prior to, making an elective payment

election. An applicable entity or electing

taxpayer is required to use the pre-filing

registration process to register itself as

intending to make the elective payment

election, to list all applicable credits it

intends to claim, and to list each applicable credit property that contributed

to the determination of such credits

as part of the pre-filing submission (or

amended submission). An applicable

entity or electing taxpayer that does not

obtain a registration number and report

the registration number on its annual

tax return with respect to an applicable

credit property is ineligible to make an

elective payment election to treat any

elective payment amount with respect

to the amount of any credit determined

with respect to that applicable credit

property as a payment of tax. However,

completion of the pre-filing registration

requirements and receipt of a registration

number does not, by itself, mean that the

applicable entity or electing taxpayer

will receive a payment with respect to

the applicable credits determined with

respect to the applicable credit property.

Temp. Reg. §1.6417-5T(b) provides

the following pre-filing registration

requirements.

Bulletin No. 2023–27

First, an applicable entity or electing

taxpayer must complete the pre-filing registration process electronically through an

IRS electronic portal in accordance with

the instructions provided therein, unless

otherwise provided in guidance. If the

election is by a member of a consolidated

group, the member must complete the

pre-filing registration process as a condition of, and prior to, making an elective

payment election. See §1.1502-77 (providing rules regarding the status of the

common parent as agent for its members).

Second, an applicable entity or electing taxpayer must satisfy the registration

requirements and receive a registration

number prior to making an elective payment election on the applicable entity’s

tax return for the taxable year at issue.

Third, an applicable entity or electing

taxpayer is required to obtain a registration number for each applicable credit

property with respect to which an applicable credit will be determined and for

which the applicable entity or electing

taxpayer intends to make an elective payment election.

Finally, an applicable entity or electing taxpayer must provide the specific

information required to be provided as

part of the pre-filing registration process.

The provision of such information, which

includes information about the taxpayer,

about the applicable credits, and about

the applicable credit property, will allow

the IRS to prevent duplication, fraud,

improper payments, or excessive payments under section 6417. For example,

verifying information about the taxpayer

will allow the IRS to mitigate the risk of

fraud or improper payments to entities

that are not applicable entities or electing

taxpayers. Information about the taxpayer’s taxable year will allow the IRS to

ensure that an elective payment election

is timely made on the entity’s annual

tax return. Information about applicable

credit properties, including their address

and coordinates (longitude and latitude),

supporting documentation, beginning of

construction date, and placed in service

date will allow the IRS to mitigate the risk

of duplication, fraud, and improper payments for properties that are not applicable credit properties. Information about

whether an investment tax credit property

was acquired using any Restricted Tax

Bulletin No. 2023–27

Exempt Amounts will allow the IRS to

prevent improper payments.

Temp. Reg. §1.6417-5T(c) provides

information about the required registration number. Temp. Reg. §1.6417-5T(c)

(1) provides that, after an applicable entity

or electing taxpayer completes the pre-filing registration process as provided in

proposed §1.6417-5(b) for the applicable

credit properties with respect to which the

entity intends to make an elective payment

election in the taxable year, the IRS will

review the information provided and will

issue a separate registration number for

each applicable credit property for which

the applicable entity or electing taxpayer

provided sufficient verifiable information,

as provided in guidance.

Temp. Reg. §1.6417-5T(c)(2) provides

that a registration number is valid only for

the taxable year for which it is obtained.

Temp. Reg. §1.6417-5T(c)(3) provides

that, if an elective payment election will be

made with respect to an applicable credit

property for which a registration number

under proposed §1.6417-5 has been previously obtained, the applicable entity

or electing taxpayer will be required to

renew the registration each year in accordance with applicable guidance, including attesting that all the facts previously

provided are still correct or updating any

facts. Temp. Reg. §1.6417-5T(c)(4) provides that, if specified changes occur with

respect to one or more applicable credit

properties for which a registration number

has been previously obtained, an applicable entity or electing taxpayer is required

to amend the registration (or may need to

submit a new registration) to reflect these

new facts. For example, one stakeholder

asked that, if a taxpayer becomes a party

to an internal reorganization under section

368(a) (such as a merger or distribution

in a nonrecognition transaction) during

the election period, the elective payment

election should carry over to the successor

entity. The temporary regulations provide

that if a facility previously registered for

an elective payment election undergoes

a change of ownership (incident to a corporate reorganization or an asset sale)

such that the new owner has a different

employer identification number (EIN)

than the owner who obtained the original

registration, the original owner is required

to amend the original registration to

1115

disassociate its EIN from the credit property and the new owner must submit an

original registration (or if the new owner

previously registered other credit properties, must amend its original registration)

to associate the new owner’s EIN with the

previously registered credit property.

Lastly, Temp. Reg. §1.6417-5T(c)

(5) provides that the applicable entity or

electing taxpayer is required to include

the registration number of the applicable

credit property on their annual tax return

for the taxable year. The IRS will treat

an elective payment election as ineffective with respect to the portion of a credit

determined with respect to an applicable

credit property for which the applicable entity or electing taxpayer does not

include a valid registration number on the

annual tax return.

III. Pre-filing Registration Requirements

and Additional Information under

Section 6418

Section 6418(g)(1) provides that as

a condition of, and prior to, any transfer

of any portion of an eligible credit under

section 6418, the Secretary may require

such information (including, in such form

or manner as is determined appropriate by

the Secretary, such information returns)

or registration as the Secretary deems

necessary for purposes of preventing

duplication, fraud, improper payments, or

excessive payments under this section.

In general, consistent with section

6417, stakeholders requested additional

information about this provision and

requested that the regulations balance the

need to prevent fraud and abuse with the

burden on taxpayers. Stakeholders recommended a registration system that assigns

a transfer number to an eligible taxpayer

that can be used by transferee taxpayers

to claim transferred credits and allows

the IRS to track transfers of eligible

credits. Stakeholders also recommended

that information or registration requirements should be as consistent as possible

across sections 48D(d)(1), 6417(d)(5),

and 6418(g)(1). In order to meet the purpose of section 6418(g)(1), the Treasury

Department and the IRS have determined

that it is necessary to establish a mandatory registration process that is in place

before the end of the 2023 calendar year,

July 3, 2023

which is the first full taxable year during

which a transfer election under section

6418 is available.

Temp. Reg. §1.6418-4T generally

provides rules requiring that eligible taxpayers register before filing the return

on which a transfer election is made and

provide information related to each eligible credit property for which the eligible

taxpayer intends to transfer a specified

credit portion. Temp. Reg. §1.6418-4T(a),

consistent with section 6418(g)(1),

requires that, as a condition of, and prior

to, making an election to transfer a specified credit portion, an eligible taxpayer

satisfy the pre-filing registration requirements in Temp. Reg. §1.6418-4T(b). After

the required pre-filing registration process

is successfully completed, an eligible

taxpayer will receive a unique registration number from the IRS for each registered eligible credit property for which

the eligible taxpayer intends to transfer

a specified credit portion. The Treasury

Department and the IRS intend for this

pre-filling registration process to occur

through an IRS electronic portal (unless

otherwise allowed in guidance). An eligible taxpayer that does not obtain a registration number and report the registration

number on its return with respect to an eligible credit property is ineligible to make

a transfer election. However, completion

of the pre-filing registration requirements

and receipt of a registration number does

not, by itself, mean the eligible taxpayer

is eligible to transfer any specified credit

portion determined with respect to the

eligible credit property. The registration

number also must be reported on the eligible taxpayer’s return.

Temp. Reg. §1.6418-4T(b) provides

the following pre-filing registration

requirements.

First, an eligible taxpayer must complete the pre-filing registration process

electronically through an IRS electronic

portal in accordance with the instructions provided therein, unless otherwise

provided in guidance. If the election is

by a member of a consolidated group,

the member must complete the pre-filing registration process as a condition of,

and prior to, making an elective payment

election. See §1.1502-77 (providing rules

regarding the status of the common parent

as agent for its members).

July 3, 2023

Second, an eligible taxpayer must

satisfy the registration requirements and

receive a registration number prior to

making a transfer election for a specified

credit portion on the eligible taxpayer’s

return for the taxable year at issue.

Third, an eligible taxpayer is required

to obtain a registration number for each

eligible credit property with respect to

which a transfer election of a specified

credit portion is made.

Finally, an eligible taxpayer must provide the specific information required to

be provided as part of the pre-filing registration process. The provision of such

information, which includes information

about the taxpayer, about the eligible credits, and about the eligible credit property,

will allow the IRS to prevent duplication,

fraud, improper payments, or excessive

transfers under section 6418. For example,

verifying information about the taxpayer

will allow the IRS to mitigate the risk of

fraud or improper transfers. Information

about eligible credit properties, including

their address and coordinates (longitude

and latitude), supporting documentation,

beginning of construction date, and placed

in service date will allow the IRS to mitigate the risk of duplication, fraud, and

improper transfers for properties that are

not eligible credit properties.

Temp. Reg. §1.6418-4T(c) provides

rules related to the registration number

that is obtained after the IRS has reviewed

and approved the taxpayer’s submitted

information. First, these rules provide that

a registration number is valid for an eligible taxpayer only for the taxable year for

which it is obtained, and for a transferee

taxpayer’s taxable year in which the specified credit portion is taken into account.

Second, Temp. Reg.§1.6418-4T(c) provides rules for the renewal of a registration number that has been previously

obtained. The eligible taxpayer is required

to renew the registration with respect

to an eligible credit property each year

in accordance with guidance, including

attesting that all the facts are still correct

or updating any facts. Third, the temporary regulations provide that, if facts

change with respect to an eligible credit

property for which a registration number

has been previously obtained, an eligible

taxpayer is required to amend the registration to reflect these new facts. Lastly,

1116

the temporary regulations provide that an

eligible taxpayer is required to include the

registration number of the eligible credit

property on the eligible taxpayer’s return

for the taxable year, as provided in Temp.

Reg. §1.6418-2T(b), for an election to be

effective with respect to any eligible credit

determined with respect to any eligible

credit property. The IRS will treat a transfer election as ineffective with respect to

an eligible credit determined with respect

to an eligible credit property for which the

eligible taxpayer does not include a valid

registration number on its return.

A transferee taxpayer is also required

to report the registration number received

from an eligible taxpayer on its return for

the taxable year that the transferee taxpayer takes the transferred eligible credit

into account.

Applicability Dates

The temporary regulations under

§1.48D-6T apply to taxable years ending

on or after June 21, 2023. The temporary

regulations under §1.48D-6T expire on

June 12, 2026.

The temporary regulations under

§1.6417-5T apply to taxable years ending

on or after June 21, 2023. The temporary

regulations under §1.6417-5T expire on

June 12, 2026.

The temporary regulations under

§1.6418-4T apply to taxable years ending

on or after June 21, 2023. The temporary

regulations under §1.6418-4T expire on

June 12, 2026.

Special Analyses

I. Good Cause

The Administrative Procedure Act (5

U.S.C. Subchapter II) provides an exception to generally applicable rulemaking

requirements when an agency makes a

finding of good cause (and incorporates

the finding and a brief statement of reasons therefor in the rules issued).

The Treasury Department and the IRS

find that good cause exists for making

these temporary regulations immediately

effective without notice and comment.

The pre-filing registration process is critical to the implementation of sections 48D,

6417, and 6418. As expressly authorized

Bulletin No. 2023–27

by statute to prevent duplication, fraud,

and improper or excessive payments, the

temporary regulations condition elective

payment and transferability on pre-registration with the IRS.1 Section 48D

applies to property placed in service after

December 31, 2022, and sections 6417

and 6418 each apply to taxable years

beginning after that date. This means that

filers will be able take advantage of these

provisions for their 2023 tax years.

The Treasury Department and the IRS

believe it is important to immediately put

into effect these pre-registration requirements. The pre-registration process collects critical information to minimize

fraudulent elections and prevent duplication and improper or excessive payments

by ensuring basic eligibility requirements

for eligible credits before the election

is made. Validating certain information

before the annual tax return process will

result in more accurate review of the

veracity of the information and fewer

duplicate, fraudulent, improper, or excessive transfers or payments. In addition,

the pre-filing registration requirement is

expected to reduce the need for recovering erroneous payments and adjusting

return positions via costly, burdensome,

and inefficient examination, appeals, and

litigation processes (which, in the case of

section 6418, could potentially be needed

with respect to both parties to the credit

transfer transaction). Immediate implementation of these safeguards is important

because it is anticipated that there will be

an immediate and significant increase in

utilization of the tax incentives described

in sections 48D(d), 6417, and 6418 by

entities that have not historically had

return-filing obligations, increasing the

risk of the duplicative, fraudulent, and

improper or excessive payments that the

pre-registration process is intended to

mitigate.

The Treasury Department and the IRS

find that good cause exists for making these

temporary regulations effective without

notice and comment because failure to do

so would be contrary to the public interest.

Without these temporary regulations, the

IRS may not be able to timely and effectively develop and implement a pre-filing

registration system. Lack of a pre-registration process would create risk for the

public fisc by increasing the likelihood of

duplicate, fraudulent, improper, or excessive payments or transfers. The pre-filing

registration system also must be developed sufficiently in advance of the filing

season for taxpayers to have time to gather

the necessary information and complete

the registration process and for the IRS

to be able to review the submitted information and issue registration numbers.

Failing to pre-register taxpayers who have

never before filed a tax return with the IRS

could significantly delay the processing of

those taxpayers’ returns because procedures to allow them to file an annual tax

return would need to be taken during the

middle of filing season. Such delay would

harm taxpayers and also potentially result

in the IRS owing interest on any refunds

due, further damaging the public fisc.

Additionally, it is in the public interest

to have certainly regarding the requirements for pre-registration as far before the

2023 filing season as possible to ensure

the ability to timely and accurately fulfill

the requirements. This certainty is particularly crucial for those filers already

or soon to be engaged in an activity that

would qualify them to make an elective

payment or transfer election. Taxpayer

certainty is also especially important for

particular populations of affected taxpayers such as entities that have not historically had return-filing obligations because

they may need significant time to review

and understand the underlying tax law and

the pre-filing registration requirements.

The Treasury Department and the IRS

also find that good cause exists for making

these temporary regulations immediately

effective because it would be impracticable to comply with the notice and

comments process. The processes established in sections 48D, 6417, and 6418

are novel and complex. Determining how

these processes interact with established

tax procedures is complicated and in

some aspects very difficult to reconcile.

The elections under sections 6417 and

6418 apply to numerous credits, each of

which contain different substantive eligibility and other requirements, which had

to be separately analyzed to understand

what information should be collected as

part of the pre-filing registration process.

Developing a previously nonexistent registration process, new filing portal, and

determining the necessary elements to

protect the fisc has been time consuming.

The Treasury Department and the IRS

have moved quickly to understand these

complex Code sections and determine

technological elements needed to create

the pre-filing registration process and

portal.

To accomplish the purpose of the

pre-filing registration process, the electronic portal must open by Fall 2023.

The Treasury Department and the IRS

understand the need to carefully consider

all public comments and provide robust

responses to all relevant comments. The

few months available between the publication of proposed regulations and the opening of the electronic portal is insufficient

time to receive, review, and meaningfully

respond to public comments. Furthermore,

there would not be sufficient time after all

comments are considered to then make

corresponding changes to the electronic

portal, which would require technological

development and user testing.

Comments are being solicited in the

cross-referenced notices of proposed

rulemaking that are in the Proposed

Rules section in this issue of the Federal

II. Paperwork Reduction Act

The collection of information contained in these temporary regulations

has been submitted to the Office of

Management and Budget for review in

accordance with the Paperwork Reduction

Act. Commenters are strongly encouraged

Sections 48D(d)(2)(E) and 6417(d)(5) authorize the Secretary to require such information or registration as the Secretary deems necessary or appropriate for purposes of preventing duplication, fraud, improper payments, or excessive payments as a condition of, and prior to, any amount being treated as a payment made by or to the taxpayer. Section 6418(g)(1) states that,

as a condition of, and prior to, any transfer of any portion of an eligible credit pursuant to section 6418(a), the Secretary may require such information (including, in such form or manner as

is determined appropriate by the Secretary, such information returns) or registration as the Secretary deems necessary for purposes of preventing duplication, fraud, improper payments, or

excessive payments under section 6418.

Bulletin No. 2023–27

1117

July 3, 2023

to submit public comments electronically. Submit electronic submissions for

the proposed information collection to

the IRS via email at pra.comments@irs.

gov (indicate REG-101607-23 on the

Subject line). Comments on the collection of information should be received by

August 14, 2023. Comments are specifically requested concerning:

Whether the proposed collection of

information is necessary for the proper

performance of the functions of the IRS,

including whether the information will

have practical utility;

The accuracy of the estimated burden

associated with the proposed collection of

information (see below);

How the quality, utility, and clarity of

the information to be collected may be

enhanced;

How the burden of complying with

the proposed collection of information

may be minimized, including through the

application of automated collection techniques or other forms of information technology; and

Estimates of capital or start-up costs

and costs of operation, maintenance,

and purchase of services to provide

information.

The collections of information in

these temporary regulations contain

reporting and recordkeeping requirements. The recordkeeping requirements

are considered general tax records under

Section 1.6001-1(e). These records are

required for IRS to validate that taxpayers

have met the regulatory requirements and

are entitled to transfer the credits. For PRA

purposes, general tax records are already

approved by OMB under 1545-0047 for

tax-exempt organizations and government

entities; under 1545-0074 for individuals;

and under 1545-0123 for business entities.

These reporting requirements include a

requirement to register with IRS to make

the elective payment election or the transfer election in §§1.48D-6T, 1.6417-5T,

1.6418-4T. This pre-filing registration

requirement is being submitted to OMB

and will be processed in accordance with

the PRA as required by 5 CFR 1320.10.

This collection of information is necessary

to prevent duplication, fraud, improper

payments, or excessive payments under

sections 48D, 6417 and 6418 of the Code.

The IRS is seeking a new OMB control

July 3, 2023

number (1545-NEW) for the pre-registration requirements. The respondents are:

(1) Under section 48D, taxpayers eligible to elect the elective payment election

of the advanced manufacturing investment credit.

Estimated total annual reporting burden is 271 hours.

Estimated average annual burden per

respondent is 5.41 hours.

Estimated number of respondents is 50.

(2) Under section 6417, tax-exempt

organizations, State and local governments, Indian tribal governments, Alaska

Native Corporations, the Tennessee Valley

Authority, rural electric cooperatives, and

certain taxpayers eligible to elect the elective payment of applicable credits in a taxable year.

Estimated total annual reporting burden is 126,200 hours.

Estimated average annual burden per

respondent is 6.31 hours.

Estimated number of respondents is

20,000.

(3) Under section 6418, eligible taxpayers that elect to transfer eligible credits

in a taxable year.

Estimated total annual reporting burden is 308,000 hours.

Estimated average annual burden per

respondent is 6.16 hours.

Estimated number of respondents is

50,000.

An agency may not conduct or sponsor,

and a person is not required to respond to,

a collection of information unless it displays a valid control number assigned by

the Office of Management and Budget.

Books or records relating to a collection

of information must be retained if their

contents may become material in the

administration of any internal revenue

law. Generally, tax returns and tax return

information are confidential, as required

by section 6103. The IRS anticipates

opening the electronic portal for pre-filing

registration in Fall 2023, after approval

of the collection of information under the

Paperwork Reduction Act.

III. Regulatory Flexibility Act

For applicability of the Regulatory

Flexibility Act, please refer to the cross-reference notices of proposed rulemaking

(REG-105595-23, REG-101607-23, and

1118

REG-101610-23) published elsewhere in

this issue of the Federal Register.

IV. Section 7805(f)

Pursuant to section 7805(f), these temporary regulations will be submitted to the

Chief Counsel for Advocacy of the Small

Business Administration for comment on

their impact on small business.

V. Unfunded Mandates Reform Act

Section 202 of the Unfunded Mandate

Reform Act of 1995 requires that agencies

assess anticipated costs and benefits and

take certain other actions before issuing a

final rule that includes any Federal mandate

that may result in expenditures in any one

year by a state, local, or tribal government,

in the aggregate, or by the private sector,

of $100 million in 1995 dollars (updated

annually for inflation). These temporary

regulations do not include any Federal

mandate that may result in expenditures by

state, local, or tribal governments, or by the

private sector in excess of that threshold.

VI. Executive Order 13132: Federalism

Executive Order 13132 (Federalism)

prohibits an agency from publishing any

rule that has federalism implications if

the rule either imposes substantial, direct

compliance costs on state and local governments, and is not required by statute,

or preempts state law, unless the agency

meets the consultation and funding

requirements of section 6 of the Executive

Order. These temporary regulations do

not have federalism implications and do

not impose substantial, direct compliance

costs on state and local governments or

preempt state law within the meaning of

the Executive Order.

VII. Executive Order 12866

Pursuant to the Memorandum

of Agreement, Review of Treasury

Regulations under Executive Order 12866

(June 9, 2023), tax regulatory actions

issued by the IRS are not subject to the

requirements of section 6 of Executive

Order 12866, as amended. Therefore,

a regulatory impact assessment is not

required.

Bulletin No. 2023–27

VIII. Congressional Review Act

Pursuant to the Congressional Review

Act (5 U.S.C. 801 et seq.), the Office of

Information and Regulatory Affairs designated this rule as a major rule as defined

by 5 U.S.C. 804(2). For good cause pursuant to 5 U.S.C. 808(2), see part I of this

Special Analyses section.

Drafting Information

The principal author of this temporary regulation is Lani M. Sinfield,

Office of the Associate Chief Counsel

(Passthroughs and Special Industries),

IRS. However, other personnel from the

Treasury Department and the IRS participated in their development.

List of Subjects in 26 CFR Part 1

Income taxes, Reporting and recordkeeping requirements.

Amendments to the Regulations

Accordingly, the Treasury Department

and the IRS amend 26 CFR part 1 as

follows:

PART 1—INCOME TAXES

Paragraph. 1. The authority citation

for part 1 is amended by adding the following entries in numerical order to read

in part as follows:

Authority: 26 U.S.C. 7805 * * *

*****

Section 1.48D-6T also issued under 26

U.S.C. 48D(d)(2)(E) and (6) * * *

*****

Section 1.6417-5T also issued under 26

U.S.C. 6417(d)(5) and (h) * * *

Section 1.6418-4T also issued under 26

U.S.C. 6418(g)(1) and (h)* * *

*****

Par. 2. Section 1.48D-6T is added to

read as follows:

§1.48D-6T Elective payment election.

(a) [Reserved]

(b) Pre-filing registration required—

(1) In general. Pre-filing registration by

any taxpayer (including a partnership

or an S corporation) in accordance with

Bulletin No. 2023–27

this paragraph (b) is a condition that

must be successfully completed prior

to making an elective payment election

under section 48D(d)(1) and this section

with respect to qualified property placed

in service by the taxpayer as part of an

advanced manufacturing facility of an

eligible taxpayer. An elective payment

election will not be effective with respect

to the section 48D credit determined with

respect to any such qualified property

placed in service by any taxpayer unless

the taxpayer received a valid registration number for the taxpayer’s qualified

investment in the advanced manufacturing facility of an eligible taxpayer in

accordance with this paragraph (b) and

provided the registration number for each

qualified investment in each advanced

manufacturing facility on its Form 3800,

General Business Credit, attached to the

tax return in accordance with guidance.

For purposes of this section, the term

guidance means guidance published in

the Federal Register or Internal Revenue

Bulletin, as well as administrative guidance such as forms, instructions, publications, or other guidance on the IRS.

gov website. See §§601.601 and 601.602

of this chapter. However, completion of

the pre-filing registration requirements

and receipt of a registration number does

not, by itself, mean the taxpayer is eligible to receive a payment with respect to

any section 48D credit determined with

respect to the qualified property.

(2) Manner of registration. Unless otherwise provided in guidance, a taxpayer

must complete the pre-filing registration

process electronically through the IRS

electronic portal and in accordance with

the instructions provided therein.

(3) Members of a consolidated group.

A member of a consolidated group is

required to complete pre-filing registration

as a condition of, and prior to, making an

elective payment election. See §1.1502-77

(providing rules regarding the status of the

common parent as agent for its members).

(4) Timing of pre-filing registration. A

taxpayer must satisfy the pre-filing registration requirements of this paragraph (b)

and receive a registration number under

paragraph (b)(6) of this section prior to

making any elective payment election

under this section on the taxpayer’s tax

return for the taxable year at issue.

1119

(5) Each qualified investment in an

advanced manufacturing facility must

have its own registration number. A taxpayer must obtain a registration number for each qualified investment in an

advanced manufacturing facility of an

eligible taxpayer with respect to which an

elective payment election is made.

(6) Information required to complete

the pre-filing registration process. Unless

modified in future guidance, a taxpayer

must provide the following information to

the IRS to complete the pre-filing registration process:

(i) The taxpayer’s general information, including its name, address, taxpayer

identification number, and type of legal

entity;

(ii) Any additional information required

by the IRS electronic portal;

(iii) The taxpayer’s taxable year, as

determined under section 441 of the Code;

(iv) The type of annual return(s) normally filed by the taxpayer with the IRS;

(v) A list of each qualified investment

in an advanced manufacturing facility that

the taxpayer intends to use to determine

a section 48D credit for which the taxpayer intends to make an elective payment

election;

(vi) For each qualified investment in

an advanced manufacturing facility listed

in paragraph (b)(5)(v) of this section, any

further information required by the IRS

electronic portal, such as—

(A) The type of qualified investment in

the advanced manufacturing facility;

(B) Physical location (that is, address

and coordinates (longitude and latitude) of

the advanced manufacturing facility);

relating to the construction, reconstruction or acquisition of the advanced manufacturing facility (such as, State and

local government permits to operate the

advanced manufacturing facility, certifications, and evidence of ownership that

ties to the land deed, lease, or other documented right to use and access any land

upon which the advanced manufacturing

facility is constructed or housed);

(D) The beginning of construction date

and the placed in service date of any qualified property that is part of the advanced

manufacturing facility;

(E) The source of funds the taxpayer

used to acquire the qualified property with

July 3, 2023

respect to which the qualified investment

was made; and

(F) Any other information that the taxpayer or entity believes will help the IRS

evaluate the registration request;

(vii) The name of a contact person

for the taxpayer. The contact person is

the person whom the IRS may contact if

there is an issue with the registration. The

contact person must either possess legal

authority to bind the taxpayer or must provide a properly executed power of attorney on Form 2848, Power of Attorney and

Declaration of Representative;

(viii) A penalties of perjury statement,

effective for all information submitted

as a complete application, and signed by

a person with personal knowledge of the

relevant facts that is authorized to bind the

registrant; and

(ix) Any other information the IRS

deems necessary for purposes of preventing duplication, fraud, improper payments, or excessive payments under this

section that is provided in guidance.

(7) Registration number—(i) In general. The IRS will review the information

provided and will issue a separate registration number for each qualified investment

in an advanced manufacturing facility of

an eligible taxpayer for which the taxpayer making the registration provided

sufficient verifiable information.

(ii) Registration number is only valid

for one year. A registration number is

valid only with respect to the taxpayer that

obtained the registration number under

this section and only for the taxable year

for which it is obtained.

(iii) Renewing registration numbers.

If an elective payment election will be

made with respect to any section 48D

credit determined with respect to a qualified investment in an advanced manufacturing facility for a taxable year after a

registration number under this section has

been obtained, the taxpayer must renew

the registration for that subsequent year

in accordance with applicable guidance,

including attesting that all the facts previously provided are still correct or updating

any facts.

(iv) Amendment of previously submitted registration information if a change

occurs before the registration number is

used. As provided in instructions to the

pre-filing registration portal, if specified

July 3, 2023

changes occur with respect to a qualified

investment in an advanced manufacturing

facility for which a registration number

has been previously obtained, a taxpayer

must amend the registration (or may need

to submit a new registration) to reflect

these new facts. For example, if an eligible

taxpayer that is the owner of an advanced

manufacturing facility previously registered for an elective payment election

for a section 48D credit determined with

respect to that advanced manufacturing

facility and the advanced manufacturing

facility undergoes a change of ownership

(incident to a corporate reorganization or

an asset sale) such that the new owner has

a different employer identification number

(EIN) than the owner who obtained the

original registration, the original owner of

the advanced manufacturing facility must

amend the original registration to disassociate its EIN from the advanced manufacturing facility and the new owner must

submit separately an original registration

(or if the new owner previously registered

other qualified investments or advanced

manufacturing facilities, must amend its

original registration) to associate the new

owner’s EIN with the previously registered advanced manufacturing facility.

(v) Registration number is required to

be reported on the return for the taxable

year of the elective payment election. The

taxpayer must include the registration

number of the qualified investment in the

advanced manufacturing facility on the

taxpayer’s return as provided in paragraph

(b) of this section for the taxable year. The

IRS will treat an elective payment election as ineffective with respect to a section

48D credit determined with respect to a

qualified investment in an advanced manufacturing facility for which the taxpayer

does not include a valid registration number on the annual return.

(j) Applicability date for pre-filing registration requirements. The requirements

of paragraph (b) of this section apply

to property placed in service on or after

December 31, 2022, and during a taxable

year ending on or after June 21, 2023.

(k) Expiration date. The applicability

of paragraph (b) of this section expires on

June 12, 2026.

Par. 3. Section 1.6417-5T is added to

read as follows:

1120

§1.6417-5T Additional information and

registration.

(a) Pre-filing registration and election.

An applicable entity or electing taxpayer

is required to satisfy the pre-filing registration requirements in paragraph (b) of

this section as a condition of, and prior

to, making an elective payment election.

An applicable entity or electing taxpayer

must use the pre-filing registration process to register itself as intending to make

the elective payment election, to list all

applicable credits it intends to claim, and

to list each applicable credit property that

contributed to the determination of such

credits as part of the pre-filing submission (or amended submission). An applicable entity or electing taxpayer that does

not obtain a registration number under

paragraph (c)(1) of this section or report

the registration number on its annual tax

return, as defined in §1.6417-1(b), pursuant to paragraph (c)(5) of this section

with respect to an otherwise applicable

credit property, is ineligible to receive any

elective payment amount with respect to

the amount of any credit determined with

respect to that applicable credit property.

However, completion of the pre-filing registration requirements and receipt of a registration number does not, by itself, mean

the applicable entity or electing taxpayer is

eligible to receive a payment with respect

to the applicable credits determined with

respect to the applicable credit property.

(b) Pre-filing registration requirements—(1) Manner of pre-filing registration. Unless otherwise provided in

guidance, an applicable entity or electing

taxpayer must complete the pre-filing registration process electronically through the

IRS electronic portal and in accordance

with the instructions provided therein.

(2) Pre-filing registration and election

for members of a consolidated group.

A member of a consolidated group is

required to complete pre-filing registration

as a condition of, and prior to, making an

elective payment election. See §1.1502-77

(providing rules regarding the status of the

common parent as agent for its members).

(3) Timing of pre-filing registration. An

applicable entity or electing taxpayer must

satisfy the pre-filing registration requirements of this paragraph (b) and receive a

registration number under paragraph (c)

Bulletin No. 2023–27

of this section prior to making an elective

payment election under §1.6417-2(b) on

the applicable entity’s or electing taxpayer’s annual tax return for the taxable year

at issue.

(4) Each applicable credit property

must have its own registration number.

An applicable entity or electing taxpayer

must obtain a registration number for each

applicable credit property with respect to

which it intends to make an elective payment election.

(5) Information required to complete

the pre-filing registration process. Unless

modified in future guidance, an applicable entity or electing taxpayer must

provide the following information to the

IRS to complete the pre-filing registration

process:

(i) The applicable entity’s or electing

taxpayer’s general information, including

its name, address, taxpayer identification

number, and type of legal entity.

(ii) Any additional information

required by the IRS electronic portal, such

as information regarding the taxpayer’s

exempt status under section 501(a) of the

Code; that the applicable entity is a political subdivision of a State, the District of

Columbia, an Indian Tribal government,

or a U.S territory; or that the applicable

entity is an agency or instrumentality of a

State, the District of Columbia, an Indian

Tribal government, or a U.S. territory.

(iii) The taxpayer’s taxable year, as

determined under section 441 of the Code.

(iv) The type of annual tax return(s)

normally filed by the applicable entity or

electing taxpayer, or that the applicable

entity or electing taxpayer does not normally file an annual tax return with the

IRS.

(v) The type of applicable credit(s) for

which the applicable entity or electing

taxpayer intends to make an elective payment election.

(vi) For each applicable credit, each

applicable credit property that the applicable entity or electing taxpayer intends

to use to determine the credit for which

the applicable entity or electing taxpayer

intends to make an elective payment

election.

(vii) For each applicable credit property listed in paragraph (b)(4)(vi) of this

section, any further information required

by the IRS electronic portal, such as—

Bulletin No. 2023–27

(A) The type of applicable credit

property;

(B) Physical location (that is, address

and coordinates (longitude and latitude) of

the applicable credit property);

relating to the construction or acquisition

of the applicable credit property (such as

State, District of Columbia, Indian Tribal,

U.S. territorial, or local government permits to operate the applicable credit property; certifications; evidence of ownership

that ties to a land deed, lease, or other

documented right to use and access any

land or facility upon which the applicable

credit property is constructed or housed;

U.S. Coast Guard registration numbers

for offshore wind vessels; and the vehicle

identification number of an eligible clean

vehicle with respect to which a section

45W credit is determined);

(D) The beginning of construction date

and the placed in service date of the applicable credit property;

(E) If an investment-related credit

property (as defined §1.6417-2(c)(3)),

the source of funds the taxpayer used to

acquire the property; and

(F) Any other information that the

applicable entity or electing taxpayer

believes will help the IRS evaluate the

registration request.

(viii) The name of a contact person for

the applicable entity or electing taxpayer.

The contact person is the person whom the

IRS may contact if there is an issue with

the registration. The contact person must

either possess legal authority to bind the

applicable entity or electing taxpayer or

must provide a properly executed power of

attorney on Form 2848, Power of Attorney

and Declaration of Representative.

(ix) A penalties of perjury statement,

effective for all information submitted

as a complete application, and signed by

a person with personal knowledge of the

relevant facts that is authorized to bind the

registrant.

(x) Any other information the IRS

deems necessary for purposes of preventing duplication, fraud, improper payments, or excessive payments under this

section that is provided in guidance.

provided and will issue a separate registration number for each applicable credit

1121

property for which the applicable entity or

electing taxpayer provided sufficient verifiable information.

(2) Registration number is only valid

for one taxable year. A registration

number is valid only with respect to the

applicable entity or electing taxpayer that

obtained the registration number under

this section and only for the taxable year

for which it is obtained.

(3) Renewing registration numbers.

If an elective payment election will be

made with respect to an applicable credit

property for a taxable year after a registration number under this section has been

obtained, the applicable entity or electing

taxpayer must renew the registration for

that subsequent taxable year in accordance

with applicable guidance, including attesting that all the facts previously provided

are still correct or updating any facts.

(4) Amendment of previously submitted registration information if a change

occurs before the registration number is

used. As provided in instructions to the

pre-filing registration portal, if specified

changes occur with respect to one or more

applicable credit properties for which a

registration number has been previously

obtained but not yet used, an applicable

entity or electing taxpayer must amend the

registration (or may need to submit a new

registration) to reflect these new facts. For

example, if the owner of a facility previously registered for an elective payment

election for applicable credits determined

with respect to that facility and the facility

undergoes a change of ownership (incident to a corporate reorganization or an

asset sale) such that the new owner has a

different employer identification number

(EIN) than the owner who obtained the

original registration, the original owner of

the facility must amend the original registration to disassociate its EIN from the

applicable credit property and the new

owner must submit separately an original

registration (or if the new owner previously registered other credit properties,

must amend its original registration) to

associate the new owner’s EIN with the

previously registered applicable credit

property.

(5) Registration number is required to

be reported on the return for the taxable

year of the elective payment election. The

applicable entity or electing taxpayer must

July 3, 2023

include the registration number of the

applicable credit property on its annual

tax return as provided in §1.6417-2(b)

for the taxable year. The IRS will treat an

elective payment election as ineffective

with respect to an applicable credit determined with respect to an applicable credit

property for which the applicable entity

or electing taxpayer does not include a

valid registration number on the annual

tax return.

(d) Applicability date. This section

applies to taxable years ending on or after

June 21, 2023.

(e) Expiration date. The applicability

of this section expires on June 12, 2026.

Par. 4. Section 1.6418-4T is added to

read as follows:

§1.6418-4T Additional information and

registration.

(a) Pre-filing registration and election.

As a condition of, and prior to, any specified credit portion being transferred by an

eligible taxpayer to a transferee taxpayer

pursuant to an election under §1.6418-2,

or a specified credit portion being transferred by a partnership or S corporation

pursuant to §1.6418-3, the eligible taxpayer is required to satisfy the pre-filing

registration requirements in paragraph

(b) of this section. An eligible taxpayer

that does not obtain a registration number under paragraph (c)(1) of this section, and report the registration number

on its return pursuant to paragraph (c)

(5) of this section, is ineligible to make a

transfer election for a specified credit portion under §1.6418-2 or §1.6418-3, with

respect to the eligible credit determined

with respect to the specific eligible credit

property for which the eligible taxpayer

has failed to obtain and report a registration number. However, completion of

the pre-filing registration requirements

and receipt of a registration number does

not, by itself, mean the eligible taxpayer

is eligible to transfer any specified credit

portion determined with respect to the eligible credit property.

(b) Pre-filing registration requirements—(1) Manner of pre-filing registration. Unless otherwise provided in

guidance, eligible taxpayers must complete the pre-filing registration process

electronically through an IRS electronic

July 3, 2023

portal and in accordance with the instructions provided therein.

(2) Pre-filing registration and election

for members of a consolidated group.

A member of a consolidated group is

required to complete pre-filing registration to transfer any eligible credit determined with respect to the member. See

§1.1502-77 (providing rules regarding the

status of the common parent as agent for

its members).

(3) Timing of pre-filing registration.

An eligible taxpayer must satisfy the

pre-filing registration requirements of this

paragraph (b) and receive a registration

number under paragraph (c) of this section

prior to making a transfer election under

§1.6418-2 or §1.6418-3 for a specified

credit portion on the taxpayer’s return for

the taxable year at issue.

(4) Each eligible credit property must

have its own registration number. An eligible taxpayer must obtain a registration

number for each eligible credit property

with respect to which a transfer election

of a specified credit portion is made.

(5) Information required to complete

the pre-filing registration process. Unless

modified in future guidance, an eligible

taxpayer is required to provide the following information to the IRS to complete the

pre-filing registration process:

(i) The eligible taxpayer’s general

information, including its name, address,

taxpayer identification number, and type

of legal entity;

(ii) Any additional information

required by the IRS electronic portal, such

as information establishing that the entity

is an eligible taxpayer;

(iii) The taxpayer’s taxable year, as

determined under section 441;

(iv) The type of annual tax return(s)

normally filed by the eligible taxpayer,

or that the eligible taxpayer does not normally file an annual tax return with the

IRS;

(v) The type of eligible credit(s) for

which the eligible taxpayer intends to

make a transfer election;

(vi) Each eligible credit property that

the eligible taxpayer intends to use to

determine a specified credit portion for

which the eligible taxpayer intends to

make a transfer election;

(vii) For each eligible credit property listed in paragraph (b)(4)(vi) of this

1122

section, any further information required

by the IRS electronic portal, such as—

(A) The type of eligible credit property;

(B) Physical location (that is, address

and coordinates (longitude and latitude) of

the eligible credit property);

relating to the construction or acquisition

of the eligible credit property (such as

State, Indian Tribal, or local government

permits to operate the eligible credit property, certifications, evidence of ownership

that ties to a land deed, lease, or other documented right to use and access any land

or facility upon which the eligible credit

property is constructed or housed, and

U.S. Coast Guard registration numbers for

offshore wind vessels);

(D) The beginning of construction

date, and the placed in service date of the

eligible credit property; and

(E) Any other information that the eligible taxpayer believes will help the IRS

evaluate the registration request;

(viii) The name of a contact person for

the eligible taxpayer. The contact person

is the person whom the IRS may contact if

there is an issue with the registration. The

contact person must either possess legal

authority to bind the eligible taxpayer, or

must provide a properly executed power of

attorney on Form 2848, Power of Attorney

and Declaration of Representative;

(ix) A penalties of perjury statement,

effective for all information submitted

as a complete application, and signed by

a person with personal knowledge of the

relevant facts that is authorized to bind the

registrant; and

(x) Any other information the IRS

deems necessary for purposes of preventing duplication, fraud, improper payments, or excessive payments under this

section that is provided in guidance.

information provided and will issue a separate registration number for each eligible credit property for which the eligible

taxpayer provided sufficient verifiable

information.

(2) Registration number is only valid

for one taxable year. A registration number is valid to an eligible taxpayer only

for the taxable year in which the credit is

determined for the eligible credit property

for which the registration is completed,

Bulletin No. 2023–27

and for a transferee taxpayer’s taxable

year in which the eligible credit is taken

into account under §1.6418-2(f).

(3) Renewing registration numbers. If

an election to transfer an eligible credit

will be made with respect to an eligible

credit property for a taxable year after a

registration number under this section has

been obtained, the eligible taxpayer must

renew the registration for that subsequent

taxable year in accordance with applicable

guidance, including attesting that all the

facts previously provided are still correct

or updating any facts.

(4) Amendment of previously submitted registration information if a change

occurs before the registration number

is used. As provided in instructions to

the pre-filing registration portal, if specified changes occur with respect to one

or more applicable credit properties for

which a registration number has been

previously obtained but not yet used, an

eligible taxpayer must amend the registration (or may need to submit a new

registration) to reflect these new facts.

For example, if the owner of a facility

previously registered for a transfer election under §1.6418-2 or §1.6418-3 for

eligible credits determined with respect

to that facility and the facility undergoes

Bulletin No. 2023–27

a change of ownership (incident to a corporate reorganization or an asset sale)

such that the new owner has a different

employer identification number (EIN)

than the owner who obtained the original registration, the original owner of the

facility must amend the original registration to disassociate its EIN from the eligible credit property and the new owner

must submit separately an original registration (or if the new owner previously

registered other credit properties, must

amend its original registration) to associate the new owner’s EIN with the previously registered eligible credit property.

(5) Reporting of registration number

by an eligible taxpayer and a transferee

taxpayer—(i) Eligible taxpayer reporting.

As part of making a valid transfer election

under §1.6418-2 or §1.6418-3, an eligible taxpayer must include the registration

number of the eligible credit property on

the eligible taxpayer’s return (as provided

in §1.6418-2(b) or §1.6418-3(d)) for the

taxable year the specified credit portion

was determined. The IRS will treat an

election as ineffective if the eligible taxpayer does not include a valid registration

number on the return.

(ii) Transferee taxpayer reporting.

A transferee taxpayer must report the

1123

registration number received (as part

of the transfer election statement as

described in §1.6418-2(b) or otherwise)

from a transferor taxpayer on the Form

3800, General Business Credit, as part

of the return for the taxable year that the

transferee taxpayer takes the transferred

specified credit portion into account. The

specified credit portion will be disallowed

to the transferee taxpayer if the transferee

taxpayer does not include the registration

number on the return.

(d) Applicability date. This section

applies to taxable years ending on or after

June 21, 2023.

(e) Expiration date. The applicability

of this section expires on June 12, 2026.

Douglas W. O’Donnell,

Deputy Commissioner for Services

and Enforcement.

Approved: June 5, 2023.

Lily Batchelder,

Assistant Secretary of the Treasury

(Tax Policy).

(Filed by the Office of the Federal Register June 14,

2023, 11:15 a.m., and published in the issue of the

Federal Register for June 21, 2023, ** FR *****)

July 3, 2023

Part III

Update for Weighted

Average Interest Rates,

Yield Curves, and Segment

Rates

under § 414(y)) pursuant to § 412. Section

430(h)(2) specifies the interest rates that

must be used to determine a plan’s target

normal cost and funding target. Under

this provision, present value is generally

determined using three 24-month average

interest rates (“segment rates”), each of

which applies to cash flows during specified periods. To the extent provided under

§ 430(h)(2)(C)(iv), these segment rates

are adjusted by the applicable percentage

of the 25-year average segment rates for

the period ending September 30 of the

year preceding the calendar year in which

the plan year begins.1 However, an election may be made under § 430(h)(2)(D)

(ii) to use the monthly yield curve in place

of the segment rates.

Notice 2007-81, 2007-44 I.R.B. 899,

provides guidelines for determining the

monthly corporate bond yield curve, and

the 24-month average corporate bond segment rates used to compute the target normal cost and the funding target. Consistent

with the methodology specified in Notice

2007-81, the monthly corporate bond

yield curve derived from May 2023 data

is in Table 2023-5 at the end of this notice.

Notice 2023-48

This notice provides guidance on the

corporate bond monthly yield curve, the

corresponding spot segment rates used

under § 417(e)(3), and the 24-month average segment rates under § 430(h)(2) of the

Internal Revenue Code. In addition, this

notice provides guidance as to the interest rate on 30-year Treasury securities

under § 417(e)(3)(A)(ii)(II) as in effect for

plan years beginning before 2008 and the

30-year Treasury weighted average rate

under § 431(c)(6)(E)(ii)(I).

YIELD CURVE AND SEGMENT

RATES

Section 430 specifies the minimum

funding requirements that apply to single-employer plans (except for CSEC plans

Applicable Month

June 2023

The spot first, second, and third segment

rates for the month of May 2023 are,

respectively, 4.91, 5.15, and 5.34.

The 24-month average segment rates

determined under § 430(h)(2)(C)(i)

through (iii) must be adjusted pursuant

to § 430(h)(2)(C)(iv) to be within the

applicable minimum and maximum percentages of the corresponding 25-year

average segment rates. For this purpose,

any 25-year average segment rate that is

less than 5% is deemed to be 5%. The

25-year average segment rates for plan

years beginning in 2022 and 2023 were

published in Notice 2021-54, 2021-41

I.R.B. 457, and Notice 2022-40, 2022-40

I.R.B. 266, respectively. The applicable

minimum and maximum percentages are

95% and 105% for a plan year beginning

in 2022 or 2023.

24-MONTH AVERAGE CORPORATE

BOND SEGMENT RATES

The three 24-month average corporate

bond segment rates applicable for June

2023 without adjustment for the 25-year

average segment rate limits are as follows:

24-Month Average Segment Rates Without 25-Year Average Adjustment

First Segment

Second Segment

3.03

4.11

The adjusted 24-month average segment rates set forth in the chart below reflect

§ 430(h)(2)(C)(iv) of the Code. The

24-month averages applicable for June

2023, adjusted to be within the applicable

minimum and maximum percentages of

Third Segment

4.27

the corresponding 25-year average segment rates in accordance with § 430(h)(2)

(C)(iv) of the Code, are as follows:

Adjusted 24-Month Average Segment Rates

For Plan Years

Beginning In

Applicable Month

First Segment

Second Segment

Third Segment

2022

June 2023

4.75

5.18

5.92

2023

June 2023

4.75

5.00

5.74

30-YEAR TREASURY SECURITIES

INTEREST RATES

Section 431 specifies the minimum

funding requirements that apply to

multiemployer plans pursuant to § 412.

Section 431(c)(6)(B) specifies a minimum amount for the full-funding limitation described in § 431(c)(6)(A), based on

the plan’s current liability. Section 431(c)

(6)(E)(ii)(I) provides that the interest

rate used to calculate current liability for

this purpose must be no more than 5 percent above and no more than 10 percent

below the weighted average of the rates

Pursuant to § 433(h)(3)(A), the third segment rate determined under § 430(h)(2)(C) is used to determine the current liability of a CSEC plan (which is used to calculate the minimum amount

of the full funding limitation under § 433(c)(7)(C)).

July 3, 2023

1124

Bulletin No. 2023–27

of interest on 30-year Treasury securities during the four-year period ending

on the last day before the beginning of

the plan year. Notice 88-73, 1988-2 C.B.

383, provides guidelines for determining the weighted average interest rate.

The rate of interest on 30-year Treasury

securities for May 2023 is 3.86 percent.

The Service determined this rate as the

average of the daily determinations of

yield on the 30-year Treasury bond maturing in February 2053 determined each day

through May 10, 2023 and the yield on the

30-year Treasury bond maturing in May

2053 determined each day for the balance

of the month. For plan years beginning in

June 2023, the weighted average of the

rates of interest on 30-year Treasury securities and the permissible range of rates

used to calculate current liability are as

follows:

For Plan Years Beginning In

Treasury Weighted Average Rates

30-Year Treasury Weighted Average

Permissible Range 90% to 105%

June 2023

2.67

2.40 to 2.80

under § 417(e)(3)(D) are segment rates

computed without regard to a 24-month

average. Notice 2007-81 provides guidelines for determining the minimum

present value segment rates. Pursuant to

that notice, the minimum present value

segment rates determined for May 2023

are as follows:

MINIMUM PRESENT VALUE

SEGMENT RATES

In general, the applicable interest rates

Month

May 2023

Minimum Present Value Segment Rates

First Segment

Second Segment

4.91

5.15

DRAFTING INFORMATION

The principal author of this notice is

Tom Morgan of the Office of Associate

Bulletin No. 2023–27

Chief Counsel (Employee Benefits,

Exempt Organizations, and Employment

Taxes). However, other personnel from

the IRS participated in the development

1125

Third Segment

5.34

of this guidance. For further information

regarding this notice, contact Mr. Morgan

at 202-317-6700 or Tony Montanaro at

626-927-1475 (not toll-free calls).

July 3, 2023

Table 2023-5

Monthly Yield Curve for May 2023

Derived from May 2023 Data

Maturity

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

10.5

11.0

11.5

12.0

12.5

13.0

13.5

14.0

14.5

15.0

15.5

16.0

16.5

17.0

17.5

18.0

18.5

19.0

19.5

20.0

Yield

5.47

5.26

5.08

4.93

4.83

4.76

4.71

4.69

4.70

4.72

4.75

4.79

4.83

4.88

4.92

4.97

5.01

5.05

5.09

5.12

5.15

5.18

5.21

5.23

5.25

5.26

5.28

5.29

5.30

5.31

5.32

5.33

July 3, 2023

Maturity

20.5

21.0

21.5

22.0

22.5

23.0

23.5

24.0

24.5

25.0

25.5

26.0

26.5

27.0

27.5

28.0

28.5

29.0

29.5

30.0

30.5

31.0

31.5

32.0

32.5

33.0

33.5

34.0

34.5

35.0

35.5

36.0

36.5

37.0

37.5

38.0

38.5

39.0

39.5

40.0

Yield

5.33

5.34

5.35

Maturity

40.5

41.0

41.5

42.0

42.5

43.0

43.5

44.0

44.5

45.0

45.5

46.0

46.5

47.0

47.5

48.0

48.5

49.0

49.5

50.0

50.5

51.0

51.5

52.0

52.5

53.0

53.5

54.0

54.5

55.0

55.5

56.0

56.5

57.0

57.5

58.0

58.5

59.0

59.5

60.0

Yield

5.35

5.36

1126

Maturity

60.5

61.0

61.5

62.0

62.5

63.0

63.5

64.0

64.5

65.0

65.5

66.0

66.5

67.0

67.5

68.0

68.5

69.0

69.5

70.0

70.5

71.0

71.5

72.0

72.5

73.0

73.5

74.0

74.5

75.0

75.5

76.0

76.5

77.0

77.5

78.0

78.5

79.0

79.5

80.0

Yield

5.36

Maturity

80.5

81.0

81.5

82.0

82.5

83.0

83.5

84.0

84.5

85.0

85.5

86.0

86.5

87.0

87.5

88.0

88.5

89.0

89.5

90.0

90.5

91.0

91.5

92.0

92.5

93.0

93.5

94.0

94.5

95.0

95.5

96.0

96.5

97.0

97.5

98.0

98.5

99.0

99.5

100.0

Yield

5.36

Bulletin No. 2023–27

Part IV

Notice of Proposed

Rulemaking

Section 6417 Elective

Payment of Applicable

Credits

REG-101607-23

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Notice of proposed rulemaking and notice of public hearing.

SUMMARY: This document contains

proposed regulations concerning the election under the Inflation Reduction Act of

2022 to treat the amount of certain tax

credits as a payment of Federal income

tax. The proposed regulations describe

rules for the elective payment of these

credit amounts in a taxable year, including definitions and special rules applicable to partnerships and S corporations

and regarding repayment of excessive

payments. In addition, the proposed regulations describe rules related to an IRS

pre-filing registration process that would

be required. These proposed regulations

affect tax-exempt organizations, State and

local governments, Indian tribal governments, Alaska Native Corporations, the

Tennessee Valley Authority, rural electric

cooperatives, and, in the case of three of

these credits, certain taxpayers eligible

to elect the elective payment of credit

amounts in a taxable year. This document

also provides notice of a public hearing on

the proposed regulations.

DATES: Written or electronic comments

must be received by August 14, 2023. The

public hearing on these proposed regulations is scheduled to be held on August

21, 2023, at 10 a.m. ET. Requests to speak

and outlines of topics to be discussed

at the public hearing must be received

by August 14, 2023. If no outlines are

received by August 14, 2023, the public

hearing will be cancelled. Requests to

attend the public hearing must be received

Bulletin No. 2023–27

by 5 p.m. ET on August 17, 2023. The

public hearing will be made accessible to

people with disabilities. Requests for special assistance during the hearing must be

received by August 16, 2023.

ADDRESSES: Stakeholders are strongly

encouraged to submit public comments

electronically. Submit electronic submissions via the Federal eRulemaking Portal

at https://www.regulations.gov (indicate

IRS and REG-101607-23) by following

the online instructions for submitting

comments. Once submitted to the Federal

eRulemaking Portal, comments cannot be

edited or withdrawn. The Department of

the Treasury (Treasury Department) and

the IRS will publish for public availability any comments submitted, whether

electronically or on paper, to the IRS’s

public docket. Send paper submissions

to: CC:PA:LPD:PR (REG-101607-23),

Room 5203, Internal Revenue Service,

P.O. Box 7604, Ben Franklin Station,

Washington, DC 20044.

FOR FURTHER INFORMATION

CONTACT: Concerning the proposed

regulations, Jeremy Milton at (202) 3175665 and James Holmes at (202) 3175114 (not toll-free numbers); concerning

submissions of comments or the public

hearing, Vivian Hayes at (202) 317–6901

(not a toll-free number) or by email to

publichearings@irs.gov (preferred).

SUPPLEMENTARY INFORMATION:

Background

Section 6417 was added to the Internal

Revenue Code (Code) on August 16,

2022, by section 13801(a) of Public

Law 117-169, 136 Stat. 1818, 2003,

commonly referred to as the Inflation

Reduction Act of 2022 (IRA). Section

6417 allows “applicable entities” (including tax-exempt organizations, State and

local governments, Indian tribal governments, Alaska Native Corporations, the

Tennessee Valley Authority, and rural

electric cooperatives) to make an election

to treat an applicable credit determined

with respect to such entity as making a

1127

payment against the tax imposed by subtitle A of the Code (subtitle A), for the taxable year with respect to which such credit

was determined, equal to the amount

of such credit. Section 6417 also allows

certain taxpayers to elect to be treated as

applicable entities for limited purposes,

as described in part III of this background

section. Section 6417 also provides special rules relating to partnerships and

S corporations and directs the Secretary of

the Treasury or her delegate (Secretary) to

provide rules for making elections under

section 6417 and to require information

or registration necessary for purposes of

preventing duplication, fraud, improper

payments, or excessive payments under

section 6417. Section 13801(g) of the

IRA provides that section 6417 applies to

taxable years beginning after December

31, 2022. This document contains proposed regulations that would amend the

Income Tax Regulations (26 CFR part 1)

and the Procedure and Administration

Regulations (part 301) to implement the

statutory provisions of section 6417.

In the Rules and Regulations section

of this issue of the Federal Register,

the Treasury Department and the IRS

are issuing temporary regulations under

§1.6417-5T that implement the pre-filing

registration process described in proposed

§1.6417-5 of the proposed regulations.

The temporary regulations require applicable entities that want to elect the elective payment of applicable credit amounts

to register with the IRS through an IRS

electronic portal in advance of the applicable entity filing the return on which the

election under section 6417 is made.

I. Overview of Section 6417

Section 6417(a) provides that, in the

case of an applicable entity that makes an

elective payment election under section

6417 with respect to any applicable credit

determined with respect to the applicable

entity for the taxable year, the applicable 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 that is equal to the amount of

July 3, 2023

such credit (elective payment amount). An

election under section 6417 must be made

at such time and in such manner as provided by the Secretary.

Section 6417(b) defines the term

“applicable credit” to mean each of the

following 12 credits:

(1) So much of the credit for alternative

fuel vehicle refueling property allowed

under section 30C of the Code that, pursuant to section 30C(d)(1), is treated as a

credit listed in section 38(b) of the Code

(section 30C credit);

(2) So much of the renewable electricity production credit determined under

section 45(a) of the Code as is attributable

to qualified facilities that are originally

placed in service after December 31, 2022

(section 45 credit);

(3) So much of the credit for carbon

oxide sequestration determined under section 45Q(a) of the Code as is attributable

to carbon capture equipment that is originally placed in service after December 31,

2022 (section 45Q credit);

(4) The zero-emission nuclear power

production credit determined under section 45U(a) of the Code (section 45U

credit);

(5) So much of the credit for production of clean hydrogen determined under

section 45V(a) of the Code as is attributable to qualified clean hydrogen production facilities that are originally placed in

service after December 31, 2012 (section

45V credit);

(6) In the case of a “tax-exempt entity”

described in section 168(h)(2)(A)(i), (ii),

or (iv) of the Code, the credit for qualified

commercial vehicles determined under

section 45W of the Code by reason of section 45W(d)(3)1 (section 45W credit);

(7) The credit for advanced manufacturing production under section 45X(a) of

the Code (section 45X credit);

(8) The clean electricity production

credit determined under section 45Y(a) of

the Code (section 45Y credit);

(9) The clean fuel production credit

determined under section 45Z(a) of the

Code (section 45Z credit);

(10) The energy credit determined

under section 48 of the Code (section 48

credit);

(11) The qualifying advanced energy

project credit determined under section

48C of the Code (section 48C credit); and

(12) The clean electricity investment

credit determined under section 48E of the

Code (section 48E credit).

As described in part II of this

Background section, section 6417(d)

defines an “applicable entity” and provides generally applicable rules for making elective payment elections. Sections

6417(e) through (h) provide special rules

applicable under section 6417 that are

described in part II of this Background

section. As described in parts III and

IV of this Background section, section

6417(c), (d)(1)(B), (C), and (D), and (d)

(3) also contain special rules allowing

a taxpayer, including for this purpose a

partnership or S corporation, that is not

an applicable entity (electing taxpayer)

to elect to be treated as an applicable

entity for the limited purpose of making

an elective payment election under section 6417, but only with respect to section 45Q credits, section 45V credits,

and section 45X credits. Part V of this

Background section describes Notice

2022-50, 2022-43 I.R.B. 325, which, in

part, requested feedback from the public on potential issues with respect to

the elective payment election provisions

under section 6417.

II. Applicable Entities and General

Elective Payment Election Rules

Section 6417(d)(1)(A) defines the term

“applicable entity” to mean:

(1) Any organization exempt from tax

imposed by subtitle A;

(2) Any State or political subdivision

thereof;

(3) The Tennessee Valley Authority;

(4) An Indian tribal government (as

defined in section 30D(g)(9) of the Code);

(5) Any Alaska Native Corporation

(as defined in section 3 of the Alaska

Native Claims Settlement Act (43 U.S.C.

1602(m)); or

(6) Any corporation operating on a

cooperative basis that is engaged in furnishing electric energy to persons in rural

areas.

Section 6417(d)(2) provides that, in the

case of any applicable entity that makes

the election described in section 6417(a),

any applicable credit amount is determined

(1) without regard to section 50(b)(3) and

(4)(A)(i) of the Code (that is, restrictions

on property used by tax-exempt organizations and governmental units), and (2)

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

rules regarding the due date for making

any elective payment election. In the case

of any government (such as a State, the

District of Columbia, an Indian Tribal

government, any U.S. territory, or any

agency or instrumentality of the foregoing), or political subdivision, described

in section 6417(d)(1) and for which no

Federal income tax return is required

under sections 6011 or 6033(a) of the

Code, any election under section 6417(a)

cannot be made later than the date as is

determined appropriate by the Secretary.

In any other case, any election under section 6417(a) cannot be made later than 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 section 6417 (that is, in no

event earlier than 180 days after August

16, 2022, which is February 13, 2023).

Section 6417(d)(3)(A)(ii) provides that

any election under section 6417(a), once

made, is irrevocable, and applies (except

as otherwise provided in section 6417(d)

(3)) with respect to any credit for the taxable year for which the election is made.

Section 6417(d)(3)(B) provides that, in

the case of section 45 credits, any election

under section 6417(a): (1) applies separately with respect to each qualified facility; (2) must be made for the taxable year

in which such qualified facility is originally placed in service; and (3) applies to

such taxable year and to any subsequent

taxable year that is within the 10-year

credit period described in section 45(a)

(2)(A)(ii) with respect to such qualified

facility.

Section 6417(d)(3)(C) provides that,

in the case of section 45Q credits, any

The reference should be to 45W(d)(2). This has been corrected in the proposed regulations.

July 3, 2023

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Bulletin No. 2023–27

election under section 6417(a): (1) applies

separately with respect to the carbon

capture equipment originally placed in

service by the applicable entity during

a taxable year; and (2) applies to such

taxable year and to any subsequent taxable year that is within the 12-year credit

period described in section 45Q(a)(3)(A)

or (4)(A) with respect to such equipment.

Section 6417(d)(3)(C)(i)(II)(aa), (d)(3)

(C)(ii), and (d)(3)(C)(iii) provides special

rules for a taxpayer making the election to

be treated as an applicable entity for purposes of section 6417 with respect to the

45Q credit (see part III of this Background

section).

Section 6417(d)(3)(D) provides that,

in the case of section 45V credits, any

election under section 6417(a): (1) applies

separately with respect to each qualified clean hydrogen production facility;

(2) 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 section 6417 in the

case of facilities placed in service before

December 31, 2022); and (3) applies to

the taxable year and all subsequent taxable years with respect to such facility.

Section 6417(d)(3)(D)(i)(III)(aa), (d)(3)

(D)(ii), and (d)(3)(D)(iii) provide special

rules for a taxpayer making the election to

be treated as an applicable entity for purposes of section 6417 with respect to the

45V credit (see part III of this Background

section).

Section 6417(d)(3)(E) provides that, in

the case of section 45Y credits, any election under section 6417(a): (1) applies

separately with respect to each qualified

facility; (2) must be made for the taxable

year in which such facility is placed in service; and (3) applies to such taxable year

and to any subsequent taxable year that is

within the 10-year credit period described

in section 45Y(b)(1)(B) with respect to

such facility.

Section 6417(d)(4) provides rules

regarding when the elective payment is

treated as made. Section 6417(d)(4)(A)

provides that in the case of any government or political subdivision described

in section 6417(d)(1), and for which no

return is required under section 6011 or

section 6033(a), the payment described

in section 6417(a) is treated as made on

the later of the date that a return would

be due under section 6033(a) if such government or subdivision were described in

section 6033 or the date on which such

government or subdivision submits a

claim for credit or refund (at such time

and in such manner as the Secretary provides). Section 6417(d)(4)(B) provides

that, in any other case, the payment

described in section 6417(a) is treated as

made on the later of the due date (determined without regard to extensions) of

the return of tax for the taxable year or

the date on which such return is filed with

the IRS.

Section 6417(d)(5) provides that, as

a condition of, and prior to, any amount

being treated as a payment that is made

by an applicable entity under section

6417(a), the Secretary may require

such information or registration as the

Secretary deems necessary for purposes of preventing duplication, fraud,

improper payments, or excessive payments under section 6417.

Section 6417(d)(6) provides rules

relating to excessive payments. In the case

of any amount treated as a payment that is

made by the applicable entity under section 6417(a), or the amount of the payment

made pursuant to section 6417(c), that is

determined to constitute an excessive payment, the tax imposed on such entity by

chapter 1 of the Code (chapter 1), regardless of whether such entity would otherwise be subject to chapter 1 tax, for the

taxable year in which such determination

is made is increased by an amount equal to

the sum of (1) the amount of such excessive payment, plus (2) an amount equal

to 20 percent of such excessive payment.

The increase equal to 20 percent of the

excessive payment does not apply if the

applicable entity can demonstrate that the

excessive payment resulted from reasonable cause.

An excessive payment is defined as,

with respect to a facility or property for

which an election is made under section

6417 for any taxable year, an amount equal

to the excess of (1) the amount treated as

a payment that is made by the applicable entity under section 6417(a), or the

amount of the payment made pursuant to

section 6417(c), with respect to such facility or property for such taxable year, over

(2) the amount of the credit that, without

application of section 6417, would be otherwise allowable (as determined pursuant

to section 6417(d)(2) and without regard

to section 38(c)) with respect to such facility or property for such taxable year.

Section 6417(e) provides a denial of

double benefit rule providing that, in the

case of an applicable entity making an

election under section 6417 with respect to

an applicable credit, such credit is reduced

to zero and, for any other purpose under

the Code, is deemed to have been allowed

to such entity for such taxable year.

Section 6417(f) provides a special rule

relating to any territory2 of the United

States with a mirror code tax system (as

defined in section 24(k) of the Code).

Under this rule, section 6417 will not be

treated as part of the income tax laws of

the United States for purposes of determining the income tax law of any such

U.S. territory unless such U.S. territory

elects to have section 6417 be so treated.

Currently, the U.S. Virgin Islands, Guam,

and the Commonwealth of the Northern

Mariana Islands have mirror code tax

systems.

Section 6417(g) provides basis reduction and recapture rules. It states that,

except as otherwise provided in section

6417(d)(2)(A),3 rules similar to the rules

of section 50 apply for purposes of section

6417.

Section 6417(h) authorizes the

Secretary to issue regulations or other

guidance as may be necessary to carry

out the purposes of section 6417, including guidance to ensure that the amount

of the payment or deemed payment made

under section 6417 is commensurate with

the amount of the credit that would be

otherwise allowable (determined without

regard to section 38(c)).

Section 6417(f) uses the term “possession,” but this proposed regulation uses the alternative term “territory.”

Section 6417(g) actually states “subsection (c)(2)(A),” but there is no section 6417(c)(2)(A); thus, the proposed regulations correct the reference to state“(d)(2)(A).”

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July 3, 2023

III. Special Rules Relating to Certain

Taxpayers Making An Election Under

Section 6417(d)(1)(B), (C), or (D)

(Electing Taxpayers)

A taxpayer other than an applicable

entity under section 6417(d)(1)(A) may

make an election under section 6417(d)(1)

(B), (C), or (D) at such time and in such

manner as the Secretary provides (but no

election may be made with respect to any

taxable year beginning after December

31, 2032). The election allows the electing taxpayer to be treated as an applicable

entity for the limited purpose of making

an elective payment election under section 6417 with respect to a section 45V

credit, a section 45Q credit, or a section

45X credit, respectively. The special rules

for such an election are described in paragraphs III.A, III.B, and III.C of this background section.

A. Electing taxpayers making an election

with respect to section 45V credits

Section 6417(d)(1)(B) allows an

electing taxpayer to make an elective

payment election for any taxable year

in which such taxpayer has placed in

service a qualified clean hydrogen production facility (as defined in section

45V(c)(3)), but only with respect to a

section 45V credit determined in such

year with respect to the electing taxpayer. Pursuant to section 6417(d)(3)

(D)(i)(III), such electing taxpayer is

treated as having made such election for

the taxable year with respect to which

the election is made and each of the

four subsequent taxable years ending

before January 1, 2033. Under section

6417(d)(3)(D)(iii), an electing taxpayer

may elect to revoke the application of

such election, but any such election to

revoke, if made, applies to the applicable year specified in such election (but

not any prior taxable year) and each subsequent taxable year within the 5-year

period and cannot be revoked.

Section 6417(d)(3)(D)(ii) prohibits an

electing taxpayer from making a transfer election under section 6418(a) with

respect to a section 45V credit for any

year for which the electing taxpayer’s

election under section 6417(d)(1)(B) is

in effect.

July 3, 2023

B. Electing taxpayers making an election

with respect to section 45Q credits

Section 6417(d)(1)(C) allows an electing taxpayer to make an elective payment

election for any taxable year in which the

electing taxpayer has, after December

31, 2022, placed in service carbon capture equipment at a qualified facility (as

defined in section 45Q(d)), but only with

respect to a section 45Q credit determined in such year with respect to such

taxpayer. Pursuant to section 6417(d)

(3)(C)(i)(II)(aa), such electing taxpayer

is treated as having made such election

for the taxable year with respect to which

the election is made and each of the four

subsequent taxable years ending before

January 1, 2033. Under section 6417(d)

(3)(C)(iii), an electing taxpayer may

elect to revoke the application of such

election, but any such election to revoke,

if made, applies to the applicable year

specified in such election (but not any

prior taxable year) and each subsequent

taxable year within the 5-year period and

cannot be revoked.

Section 6417(d)(3)(C)(ii) prohibits an

electing taxpayer from making a transfer election under section 6418(a) with

respect to a section 45Q credit for any

year for which the electing taxpayer’s

election under section 6417(d)(1)(C) is

in effect.

C. Electing taxpayers making an election

with respect to section 45X credits

Section 6417(d)(1)(D) allows an electing taxpayer to make an elective payment

election for any taxable year in which the

electing taxpayer has, after December 31,

2022, produced eligible components (as

defined in section 45X(c)(1)), but only

with respect to a section 45X credit determined in such year with respect to such

taxpayer. Pursuant to section 6417(d)

(1)(D)(ii)(I), such electing taxpayer is

treated as having made such election for

the taxable year with respect to which

the election is made and each of the four

subsequent taxable years ending before

January 1, 2033. Under section 6417(d)(1)

(D)(ii)(II), an electing taxpayer may elect

to revoke the application of such election,

but any such election to revoke, if made,

applies to the applicable year specified in

1130

such election (but not any prior taxable

year) and each subsequent taxable year

remaining within the 5-year period and

cannot be revoked.

Section 6417(d)(1)(D)(iii) prohibits an electing taxpayer from making a

transfer election under section 6418(a)

with respect to a section 45X credit for

any year for which the electing taxpayer’s election under section 6417(d)(1)(D)

is in effect.

IV. Section 6417 Rules for Partnerships

and S corporations

Section 6417(c) provides special rules

for partnerships and S corporations that

hold directly (as determined for Federal

income tax purposes) a facility or property for which an applicable credit is

determined. 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 elective payment election must be made by such partnership

or S corporation in the manner provided

by the Secretary. If such a partnership

or S corporation makes an elective payment election with respect to any applicable credit, (1) a payment is made to

such partnership or S corporation equal

to the applicable credit amount, (2) section 6417(e) is applied with respect to the

applicable credit before determining any

partner’s distributive share, or S corporation shareholder’s pro rata share, of such

applicable credit, (3) any applicable credit

amount with respect to which the election

in section 6417(a) is made is treated as tax

exempt income for purposes of sections

705 and 1366 of the Code, and (4) 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 (an S corporation shareholder’s share of tax exempt

income is based on the shareholder’s pro

rata share).

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 section 6417(a) with

respect to any applicable credit determined with respect to such facility or

property.

Bulletin No. 2023–27

V. Notice 2022-50

On October 24, 2022, the Treasury

Department and the IRS published Notice

2022-50, 2022-43 I.R.B. 325, to, among

other things, request feedback from the

public on potential issues with respect

to the elective payment election provisions under section 6417 that may require

guidance. Over 200 comment letters were

received in response to Notice 2022-50.

Based in part on the feedback received,

the Treasury Department and the IRS are

issuing these proposed regulations regarding the elective payment election provisions under section 6417. The major areas

with respect to which public stakeholders

provided letters are discussed in the following Explanation of Provisions.

Explanation of Provisions

I. General Rules and Definitions

A. Applicable entity

Section 6417(d)(1) defines “applicable

entity” as (1) any organization exempt

from the tax imposed by subtitle A, (2)

any State or political subdivision thereof,

(3) the Tennessee Valley Authority, (4) an

Indian tribal government (as defined in

section 30D(g)(9)), (5) any Alaska Native

Corporation (as defined in section 3 of the

Alaska Native Claims Settlement Act (43

U.S.C. 1602(m)), or (6) any corporation

operating on a cooperative basis that is

engaged in furnishing electric energy to

persons in rural areas. Proposed §1.64171(c) would clarify these statutory definitions pursuant to the Secretary’s authority

under section 6417(h) to issue regulations

necessary to carry out the purposes of section 6417, as discussed below.

1. Any organization exempt from the tax

imposed by subtitle A

Stakeholders asked for clarification on

the scope of the phrase “any organization

exempt from the tax imposed by subtitle

A” for purposes of determining whether

a taxpayer is an applicable entity. Entities

may be exempt from tax or have their

income exempt from tax under various

authorities. For example, an organization

could be exempt from taxation by section

501(a) of the Code or by other provisions

of the Code. An organization could also

have its income excluded from taxation

by section 115.

The Treasury Department and the IRS

propose to define the term “any organization exempt from the tax imposed by

subtitle A” to include all organizations

exempt from the tax imposed by subtitle A

by section 501(a) of the Code, commonly

referred to as “tax-exempt organizations.”

Several stakeholders requested clarification that tax-exempt entities in the U.S.

territories are eligible to make an election

under section 6417. Under these proposed

regulations, such entities would be considered organizations exempt from the tax

imposed by subtitle A as long as they are

exempt from taxation by section 501(a)

and as long as they meet the requirements

to claim an applicable credit (such as

being an appropriate owner of an investment credit property under sections 50(b)

(1)(B) and 168(g)(4)(G)).4

Stakeholders also asked whether an

entity classified as a nonprofit under State

law but that does not have Federal tax-exempt status would be described in section 6417(d)(1)(A). Such an entity would

not be described in section 6417(d)(1)

(A) because it is not exempt from the tax

imposed by subtitle A (unless it met the

requirements of another type of applicable entity discussed below, such as a state

instrumentality).

Stakeholders also specifically sought

clarification as to whether governments

of U.S. territories would be treated as

applicable entities, based on their unique

status and the importance of their energy

security. These stakeholders noted that

the renewable energy credits generally may be claimed for activities in

the U.S. territories provided the underlying requirements are met, including

the specific ownership requirements for

investment tax credits.5 In response, the

proposed regulations would interpret the

term “organization exempt from the tax

imposed by subtitle A” as used in section

6417(d)(1)(A) to include the governments of the U.S. territories. Since section 115(2) excludes the income accruing

to the government of any territory of the

United States, or any political subdivision

thereof, from gross income, it effectively

exempts these governments from the tax

imposed by subtitle A. In addition, these

governments may properly be viewed as

organizations.6 Accordingly, proposed

§1.6417-1(c)(1)(ii) would provide that

the government of any U.S. territory, or a

political subdivision thereof, is an applicable entity for purposes of section 6417

or provisions of law referencing section

6417(d)(1)(A).

The Treasury Department and the IRS

request comments on this definition of any

organization exempt from the tax imposed

by subtitle A, including as to whether the

term should encompass the United States,

federal agencies, or other organizations

beyond those listed in these proposed

rules.

2. Any State or political subdivision

thereof

Section 6417(d)(1)(A)(ii) states that

“any State or political subdivision thereof”

is an applicable entity for purposes of section 6417.

The Treasury Department and the IRS

note that section 7701(a)(10) provides

that the term “State” must be construed

to include the District of Columbia where

such construction is necessary to carry out

provisions of Title 26, and thus propose

that the definition of State would include

the District of Columbia. The Treasury

Department and the IRS request comments on whether additional clarification

is needed.

Section 50(b)(1) provides that no investment tax credit can be determined with respect to property used predominantly outside of the United States, but section 50(b)(1)(B) provides an exception for property described in section 168(g)(4). In the case of entities, section 168(g)(4)(G) describes property which is owned by a domestic corporation and which is used predominantly

in a U.S. territory by such a corporation, or by a corporation created or organized in, or under the law of, a U.S. territory.

See footnote 2.

The Code and the regulations under 26 CFR part 1 occasionally refer to governmental entities as organizations. For example, section 509(a)(1) refers to “an organization described in section

170(b)(1)(A),” which includes a governmental unit described in sections 170(b)(1)(A)(v) and 170(c)(1). See corresponding rules in §1.170A-9(a) and (e).

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July 3, 2023

3. Indian tribal governments

Section 6417(d)(1)(A)(iv) states that

an applicable entity includes an Indian

tribal government (as defined in section

30D(g)(9)). To provide Indian tribal governments parity with state governments,

proposed §1.6417-1(c)(3) would include

subdivisions of Indian tribal governments

in this definition.

Section 30D(g)(9) provides that “the

term “Indian tribal government” means

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

this subsection pursuant to section 104

of the Federally Recognized Indian Tribe

List Act of 1994 (25 U.S.C. 5131). Thus,

proposed §1.6417-1(k) would incorporate

this definition into the 6417 regulations.

See Rev. Proc. 2008-55, 2008-39 I.R.B.

768 (generally providing that an Indian

tribal entity that appears on the most

recent list published by the Department of

the Interior in the Federal Register pursuant to the requirements of the List Act

is designated an Indian tribal government

for purposes of section 7701(a)(40)).

The Treasury Department and the IRS

request comments regarding the definitions in proposed §1.6417-1(c)(3) and (k),

including as to whether any further clarification would be warranted. The Treasury

Department and the IRS further request

comments on whether the proposed definitions encompass the entity structures

that Indian tribal governments employ in

activities that would give rise to elective

payments, including entities with partial

Indian tribal government ownership.

4. Alaska Native Corporations

Section 6417(d)(1)(A)(v) provides that

an applicable entity for purposes of section 6417(a) includes “any Alaska Native

Corporation (as defined in section 3 of the

Alaska Native Claims Settlement Act (43

U.S.C. 1602(m)).” A “Native Corporation”

is defined in 43 U.S.C. 1602(m) to mean

“any Regional Corporation, any Village

Corporation, any Urban Corporation,

and any Group Corporation,” which are

July 3, 2023

organized under the laws of the State of

Alaska. Although 43 U.S.C. 1606(d) provides that a Regional Corporation is incorporated to conduct business for profit,

each of a Village Corporation, Urban

Corporation, and Group Corporation may

be organized as a business for profit or

nonprofit corporation to hold rights and

assets for Native villages, urban communities of Natives, or members of a Native

group.

A few stakeholders requested that a

Settlement Trust (within the meaning of

43 U.S.C. 1602(t)) that is established by an

Alaska Native Corporation (ANC) for the

benefit of its shareholders also be treated

as an applicable entity. The stakeholders

stated that an ANC is a separate legal

entity that is required to be a C corporation for Federal income tax purposes, and

as such, it is an entity different from the

Settlement Trust established by the ANC.

However, the beneficiaries of the ANC

Settlement Trust are typically the same

Native individuals as the shareholders

of the ANC. the stakeholders thus asked

that an ANC Settlement Trust be added as

an applicable entity in cases in which the

Settlement Trust is directly affiliated with

an applicable ANC.

Unlike the case of the statutory definitions of “Indian Tribal government,” the

statutory definition of ANC is not ambiguous. Accordingly, the proposed regulations would not treat Settlement Trusts as

ANCs. However, Settlement Trusts could

themselves be applicable entities not

based on their relationship with an ANC if

they qualified for exempt status under section 501(a) and applied for and received a

determination letter from the IRS recognizing any such tax-exempt status.

Separately, an ANC may be the common parent of a consolidated group of

corporations (ANC-parented group)

that, in many ways, is treated similarly

to a single taxpayer for Federal income

tax purposes by the consolidated return

regulations (§§1.1502-1, et seq.). For

example, the members of a consolidated

group report their consolidated taxable

income on a single Federal income tax

return that the common parent files with

the IRS as the agent for the group under

§1.1502-77. In this regard, some stakeholders have inquired whether non-ANC

members of an ANC-parented group

1132

may separately make an elective payment election with respect to a section

45V credit, a section 45Q credit, or section 45X credit determined with respect

to such member. The concern appears to

be that, by reason of their affiliation with

an ANC common parent, the non-ANC

members might be prevented from making an election under section 6417(d)(1)

(B), (C), or (D).

The proposed regulations would clarify that a non-ANC member of an ANCparented group may qualify as an electing

taxpayer eligible to make elections under

section 6417(d)(1)(B), (C), or (D), based

on its own corporate status. See —As with

any other electing taxpayer, a non-ANC

member of an ANC-parented group would

be required to —section 6417(d)(1)(B),

(C), or (D) —

The Treasury Department and the IRS

request comments regarding the definition

in proposed §1.6417-1(c)(4) and whether

additional guidance is necessary regarding

consolidated groups with ANC common

parents.

5. Tennessee Valley Authority

As per section 6417(d)(1)(A)(iii), the

Tennessee Valley Authority would be an

applicable entity under proposed §1.64171(c)(5).

6. Rural Electrical Co-ops

Section 6417(d)(1)(A)(vi) provides that

“any corporation operating on a cooperative basis which is engaged in furnishing

electric energy to persons in rural areas” is

an applicable entity. These proposed regulations do not elaborate on this definition,

but request comments on whether further

clarification of the definition in proposed

§1.6417-1(c)(6) is necessary.

Stakeholders asked that any payment

under section 6417(a) not be considered

income for purposes of the 85-percent

income test under section 501(c)(12) for

electric cooperatives. Because the section 6417(a) election results in a credit

being treated as a payment against the

tax imposed by subtitle A for the taxable

year with respect to which such credit was

determined, any such payment that results

in a refund being issued by the IRS to an

electric cooperative under section 6417(a)

Bulletin No. 2023–27

will not affect the application of the

85-percent income test determined with

respect to the electric cooperative.

The Treasury Department and the IRS

request comments on whether additional

guidance is necessary to address any

uncertainty that may exist regarding the

application of section 6417 in the context

of a consolidated group with members

that are cooperatives subject to the rules

of subchapter T of chapter 1.

7. Agencies and instrumentalities

Based on feedback from stakeholders, the Treasury Department and the IRS

believe that, in many instances, States,

Indian tribal governments, U.S. territories, or political subdivisions thereof are

likely to make investments or engage in

activities that qualify for applicable credits through their agencies and instrumentalities. Multiple stakeholders requested

that State and local government agencies

and instrumentalities be included as applicable entities under a variety of theories,

including cross-references to sections

50(b)(4)(A)(i) and 168(h)(2)(A)(i) in

section 6417, the fact that the income of

an instrumentality is generally excluded

from tax by section 115 of the Code, and

the authority provided by section 6417(h)

to issue regulations necessary to carry out

the purposes of section 6417. In particular,

stakeholders stated that the term “Indian

tribal government” should be defined to

include, in part, economic subdivisions of

a tribe (such as a utility, housing authority, energy division or authority, or other

enterprise) regardless of how the entity

is formed (whether by Federal, Tribal or

State law).

It would be administratively burdensome, both for stakeholders and for the

IRS, to determine what is part of a State,

Indian tribal government, U.S. territory,

or political subdivision, on the one hand,

and what is an agency or instrumentality

thereof on the other hand.7 For example,

stakeholders expressed uncertainty about

whether certain entities, such as school

districts, public utility districts, and special purpose entities established by governments (such as joint action agencies,

economic development corporations, and

joint powers authorities) would qualify as political subdivisions or would be

viewed as agencies or instrumentalities.

Stakeholders also noted that the status

of such entities as political subdivisions

may turn on differences in state law, such

as whether a school district has taxing

authority.

In addition, different States may structure ownership of relevant property differently (for example, a school district or

the county of the school district may own

the electric school buses), and it would

be inequitable for entities to be eligible

or ineligible for elective payment on the

basis of such differences in ownership

structures. Furthermore, if agencies and

instrumentalities were not specifically

listed as applicable entities, States and

political subdivisions may decide to create

new entities or reorganize the administration of their activities to perform applicable credit eligible activities directly, which

would be administratively burdensome

without a commensurate public benefit.

For these reasons, and to promote uniform

treatment throughout the United Sates,

proposed §1.6417-1(c)(7) would provide that applicable entities include any

agency or instrumentality of any State, the

District of Columbia, Indian tribal government, U.S. territory, or political subdivision thereof.

The Treasury Department and the

IRS request comments on this approach

to defining applicable entities and on

whether further guidance is necessary.

8. Electing taxpayers

Certain taxpayers may make an election to be treated as an applicable entity

with respect to applicable credit property

giving rise to the section 45Q credit, section 45V credit, or section 45X credit, as

described in part III of this Explanation of

Provisions. Proposed §1.6417-1(g) defines

an “electing taxpayer” as any taxpayer

that is not an applicable entity, but makes

an election in accordance with proposed

§§1.6417-2(b), 1.6417-3, and, if applicable, 1.6417-4, to be treated as an applicable entity for a taxable year with respect to

applicable credits determined with respect

to an applicable credit property described

in proposed §1.6417-1(e)(3), (5), or (7).

Section 7701(a)(14) defines a “taxpayer”

as any person subject to any internal revenue tax, including income taxes, employment taxes, and excise taxes.

Members of a consolidated group that

is not an ANC-parented group also may

make an election to be treated as an applicable entity with respect to the section

45Q credit, section 45V credit, or section

45X credit. A member of the consolidated group would be required to — The

Treasury Department and the IRS request

comments regarding the application of

section 6417 to consolidated groups with

electing taxpayers (for example, whether

special rules are necessary for consolidated groups under proposed §1.64172(e)(2) (the denial of double benefit rule).

B. Entities formed by an applicable entity

or by an electing taxpayer

1. Disregarded entities

Several stakeholders asked whether

an entity disregarded as separate from its

owner (disregarded entity) is described

in section 6417(d)(1)(A) if its owner

is described in section 6417(d)(1)(A).

Since a disregarded entity is disregarded

for Federal income tax purposes and

its attributes are attributed to the owner

regarded for Federal income tax purposes, the disregarded entity’s activities

would be attributed to the owner and the

owner could claim the credit as long as

the owner is described in section 6417(d)

(1)(A). This would also include property

that an electing taxpayer that is a partnership or S corporation holds through a

disregarded entity or multiple disregarded

entities, including tiers of multiple disregarded entities owned though chains of

ownership. Thus, proposed §§1.6417-2(a)

(1)(ii) and -2(a)(2)(iv) would provide that,

if an applicable entity or electing taxpayer

is the owner (directly or indirectly) of a

disregarded entity that directly holds an

applicable credit property, the applicable

entity may make an elective payment election for applicable credits determined with

The definitions of political subdivision under §1.103-1(b) and of instrumentality under Rev. Rul. 57-128, 1957-1 C.B. 311, are frequently cited for Federal tax purposes.

Bulletin No. 2023–27

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July 3, 2023

respect to the applicable credit property

held directly by the disregarded entity.

2. Taxable C corporations

Stakeholders also asked whether an

entity described in section 6417(d)(1)

(A) could create an entity that is a taxable C corporation to perform the applicable credit activity and still qualify for

the section 6417 election. Because a taxable C corporation is an entity separate

from its owner, proposed §1.6417-1(c)(1)

would not include a C corporation that is

not itself an applicable entity described

in proposed §1.6417-1(c)(1), even if its

owner is an applicable entity described in

proposed §1.6417-1(c)(1). However, an

electing taxpayer may include a taxable C

corporation (including a member of a consolidated group).

3. Undivided ownership interests

Stakeholders also asked whether entities such as unincorporated joint ventures

could provide applicable entities access

to earning applicable credits available for

an elective payment election, including

by partnering with other applicable entities or with for-profit entities. Proposed

§1.6417-2(a)(1)(iii) would provide that,

if an applicable entity is a co-owner of

an applicable credit property through an

ownership arrangement treated as a tenancy-in-common or pursuant to a joint

operating arrangement that has properly

elected out of subchapter K of chapter 1

of the Code (subchapter K) under section

761, then each owner is considered to own

an undivided interest in or share of the

underlying applicable credit property and

thus, any applicable credits are determined

separately with respect to each owner. As

a result, an applicable entity may make an

elective payment election under section

6417(a) in the manner provided in paragraph (b) with respect to its share of the

applicable credits determined with respect

to its undivided ownership interest in or

share of the underlying applicable credit

property.

4. Partnerships

Many

stakeholders

questioned

whether a partnership that contains

July 3, 2023

partners described in section 6417(d)

(1)(A) could make an elective payment

election under section 6417 with respect

to those partners, pointing to the “determined with respect to such entity” language in section 6417(a). Stakeholders

stated that clarity around the treatment

of these partnerships is of particular

importance as many applicable entities

choose to partner with non-applicable

entities in investment and development

of credit generating projects, that applicable entities may not have the expertise

or resources to own such projects outright, and that the ability to partner is key

to their meaningful participation in the

energy transition.

The Treasury Department and the IRS

believe that the better interpretation of the

“determined with respect to such entity”

language in section 6417(a), as well as

the rules in sections 6417(c), is to apply

entity-specific rules under section 6417.

Section 6417(c) refers to a credit determined with respect to any facility or

property “held directly by a partnership

or S corporation,” meaning that the partnership or S corporation, not its owners,

is the relevant entity for these purposes.

Additionally, section 6417(c) provides

that the partnership or S corporation,

not the partners or shareholders, makes

the section 6417 election. Furthermore,

because section 6417 elections are made

for a particular applicable credit property, allowing a section 6417 election for

a portion of an applicable credit property

would be contrary to section 6417(a) and,

if permitted, would be difficult to administer, particularly in tiered partnership

structures.

Thus, proposed §1.6417-2(a)(1)(iv)

would provide that partnerships and

S corporations are not applicable entities

described in section 6417(d)(1)(A) and

proposed §1.6417-1(c). This proposed

rule would apply no matter how many of

the partners or shareholders are described

in section 6417(d)(1)(A) and proposed

§1.6417-1(c), including if all partners

or shareholders are described in section

6417(d)(1)(A) and proposed §1.64171(c). However, because section 6418(f)

(2) defines “eligible taxpayer” as any

taxpayer that is not described in section

6417(d)(1)(A) (and thus not in proposed

§1.6417-1(c)), such a partnership would

1134

be an eligible taxpayer described in section 6418(f)(2).

In addition, as described in part I.B.3.

of this Explanation of Provision, an applicable entity may engage with other entities, including with for-profit partners, in

an ownership arrangement that has properly elected out of subchapter K and make

an elective payment election under section

6417(a) with respect to its share of the

applicable credits determined with respect

to its share of the underlying applicable

credit property. This type of arrangement

provides some flexibility for tax-exempt

and government entities to participate

in section 6417 with other entities. The

Treasury Department and the IRS request

comments on whether any additional rules

are needed. Comments are also requested

regarding whether any entity described in

section 6417(d)(1)(A)(i)-(vi) or proposed

§1.6417-1(c) could include an entity

organized as a partnership for Federal tax

purposes.

As described in part IV of this

Explanation of Provisions, an electing

taxpayer may include a partnership or

S corporation.

C. Applicable credit

Section 6417(b) lists the applicable

credits for which a section 6417(a) election is available. Proposed §1.6417-1(d)

lists those credits, with minor changes to

account for erroneous cross-references in

the statute.

Stakeholders asked for clarification

on the scope of the credit for qualified

commercial vehicles. Section 6417(b)

(6) states that the term “applicable

credit” includes the credit for qualified

commercial vehicles determined under

section 45W by reason of subsection

(d)(2)8 thereof, “in the case of a tax-exempt entity described in clause (i), (ii),

or (iv) of section 168(h)(2)(A).” In order

to qualify for elective pay for the section

45W credit, an entity would need to be

both be an applicable entity, as defined

in proposed §1.6417-1(c), and a tax-exempt entity described in clause (i), (ii),

or (iv) of section 168(h)(2)(A) (in other

words, an organization exempt from

the tax imposed by subtitle A by reason

of section 501(a) of the Code; a State,

the District of Columbia, a political

Bulletin No. 2023–27

subdivision thereof, or any agency or

instrumentality of any of the foregoing;

a U.S. territory, a political subdivision

thereof, or any agency or instrumentality of any of the foregoing; or an Indian

tribal government, a subdivision thereof,

or any agency or instrumentality of any

of the foregoing), and would also need

to otherwise qualify for the section 45W

credit.

One stakeholder asked whether the

elective payment election applies to both

the applicable credit and any eligible

bonus credit amounts. The amount of

applicable credit is determined, in part,

under the Code by including any eligible

bonus credit amounts. The entire amount

of any applicable credit is eligible under

the Code for the elective payment election, assuming all the relevant requirements are met.

Several stakeholders asked whether

the applicable entity could treat the applicable credits arising during a quarter as

a payment against quarterly estimated

tax (assuming such an amount was due).

These proposed regulations do not contain

a special rule because taxpayers can determine, based on their projected tax liability,

the correct amount of estimated tax to pay

in order to avoid a section 6654 or section

6655 estimated tax penalty at the end of

the year.

Because registration must be made

with respect to each facility or property

giving rise to an applicable credit, proposed §1.6417-1(e) defines “applicable

credit property” for purposes of each of

the applicable credits, and the section

6417 regulations use the term “applicable

credit property” throughout for clarity.

D. Definitions pertaining to the election

Proposed §1.6417-1(i) would provide

that the “elective payment election” is the

election provided in proposed §1.64172(b). Proposed §1.6417-1(h) would provide that the “elective payment amount”

means, with respect to an applicable entity

or an electing taxpayer that is not a partnership or an S corporation, the applicable

credit(s) for which an applicable entity or

electing taxpayer makes an elective payment election to be treated as making a

payment against the tax imposed by subtitle A for the taxable year, which would

be equal to the sum of (1) the amount

(if any) of the current year applicable

credit(s) allowed as a general business

credit (GBC) under section 38 for the

taxable year, and (2) the amount (if any)

of unused current year applicable credits

which would otherwise be carried back

or carried forward from the unused credit

year under section 39 and that are treated

as a payment against tax. With respect to

an electing taxpayer that is a partnership

or an S corporation, the term “elective

payment amount” would mean the sum

of the applicable credit(s) for which the

partnership or S corporation makes an

elective payment election and results in a

payment to such partnership or S corporation equal to the amount of such credit(s)

(unless the partnership or S corporation

owes a Federal tax liability, in which case

the payment may be reduced by such tax

liability).

E. Guidance

Interpretations and procedures pertaining to section 6417 and the section 6417

regulations may be issued through guidance, as appropriate. Proposed §1.64171(j) would define “guidance” for purposes

of these regulations as guidance published in the Federal Register or Internal

Revenue Bulletin, as well as administrative guidance such as forms, instructions,

publications, or other guidance on the

IRS.gov website.

F. Annual Tax Return

To avoid any confusion about where

the elective payment election should

be made, proposed §1.6417-1(b) would

define “annual tax return,” for purposes

of the section 6417 regulations, as follows: (1) for any taxpayer normally

required to file an annual tax return with

the IRS, such annual return (including the

Form 1065, “U.S. Return of Partnership

Income,” for partnerships and the Form

990-T for organizations with unrelated

business income tax or a proxy tax under

section 6033(e)); (2) for any taxpayer

that is not normally required to file an

annual tax return with the IRS (such as

taxpayers located in the U.S. territories),

the return they would be required to file

if they were located in the United States,

or, if no such return is required (such as

for State, District of Columbia, local, or

Indian tribal governmental entities), the

Form 990-T; and (3) for short tax year filers, the short year tax return. For example,

an individual in a U.S. territory would file

a Form 1040, “U.S. Individual Income

Tax Return,” a corporation in a U.S. territory would file a Form 1120, “U.S.

Corporation Income Tax Return,” and

the U.S. territory itself would file Form

990-T, “Exempt Organization Business

Income Tax Return (and proxy tax under

section 6033(e).” Similarly, a tax-exempt

entity would file the Form 990-T even if

not otherwise required to file the Form

990-T.

II. Rules for Making Elective Payment

Elections

A. In general

Proposed §1.6417-2 would provide

general rules for an applicable entity or

electing taxpayer to make an elective

payment election under section 6417 in

accordance with the rules of proposed

§1.6417-2(b) with respect to any applicable credit determined with respect to such

entity.

Proposed §1.6417-2(a)(1) would

provide the rules for applicable entities

making elective payment elections. An

applicable entity that makes an elective payment election in the manner

described in Part II.B. of this Explanation

of Provisions would be treated as making a payment against the Federal

income taxes imposed by subtitle A, for

the taxable year with respect to which

an applicable credit was determined, in

the amount of such credit as determined

under the rules discussed in Part II.C. of

this Explanation of Provisions. Proposed

While section 6417(b)(6) refers to section 45W(d)(3), the reference should be to section 45W(d)(2). This has been corrected in the proposed regulations

Bulletin No. 2023–27

1135

July 3, 2023

§1.6417-2(d)(1) would provide that the

payment described in proposed §1.64172(a)(1) is treated as made (1) in the

case of an entity for which no return is

required under sections 6011 or 6033(a),

on the later of the date that a return would

be due under section 6033(a) (determined

without regard to extensions) if such

entity were described in that section, or

the date on which such entity submits a

claim for credit or refund, and (2) in any

other case, on the later of the due date

(determined without regard to extensions) of the return of tax for the taxable

year, or the date on which such return is

filed.

Special rules are provided in proposed

§1.6417-2(a)(1)(ii) through (v) that would

apply for applicable entities if the election is made for applicable credit property

held by a disregarded entity; if the applicable entity is a co-owner in an applicable credit property through an ownership

arrangement properly treated as a tenancy-in-common, or pursuant to a joint

operating arrangement that has properly

elected out of subchapter K under section 761; and for members of a consolidated group of which an Alaska Native

Corporation is the common parent.

As discussed in Part I.B.4 of this

Explanation of Provisions, partnerships

and S corporations would not be applicable entities described in proposed

§1.6417-1(c)(1), and thus would not be

eligible to make an elective payment election unless the partnership or S corporation is an electing taxpayer.

Proposed

§1.6417-2(a)(2)

would

provide the rules for electing taxpayers

making an elective payment election. An

electing taxpayer other than a partnership

or an S corporation that has made an elective payment election in accordance with

proposed §§1.6417-3 and §1.6417-2(b)

would be treated as making a payment

against the Federal income taxes imposed

by subtitle A for the taxable year with

respect to which the applicable credit is

determined in the amount determined

under proposed §1.6417-2(c). Proposed

§1.6417-2(d)(1) would provide that the

payment described in proposed §1.64172(a)(2) is treated as made at the same time

as made by an applicable entity. However,

in the case of an electing taxpayer that is a

partnership or S corporation that has made

July 3, 2023

an elective payment election in accordance with proposed §§1.6417-3, 1.64174, and 1.6417-2(b), the IRS will make a

payment to such partnership or S corporation equal to the amount of such credit

determined under proposed §§1.6417-2(b)

and 1.6417-4(d)(3) (unless the partnership

or S corporation owes any Federal income

tax liability, in which case the payment

may be reduced by such tax liability).

Proposed §1.6417-2(a)(2) also provides special rules for electing taxpayers

that would apply if the election is made for

applicable credit property held by a disregarded entity; if the applicable entity is a

co-owner in an applicable credit property

through an ownership arrangement properly treated as a tenancy-in-common, or

pursuant to a joint operating arrangement

that has properly elected out of subchapter

K under section 761; and for members of

a consolidated group.

Proposed

§1.6417-2(a)(3)(i)-(iv)

would address the special rules with

regard to the election for credits under

section 45, 45V, 45Q, or 45Y, as provided

in section 6417(d)(3). However, the special rules in section 6417(d)(3) that relate

to electing taxpayers are set forth in proposed §1.6417-3, for clarity.

Consistent with the special rule for

electing taxpayers that may elect to be

treated as an applicable entity for purposes

of section 6417 for up to five years with

respect to a facility placed in service that

produces eligible components (as defined

in section 45X(c)(1)), proposed §1.64172(a)(3)(v) would clarify that a section 45X

election is made, for purposes of section

6417, with respect to a facility (whether

the facility existed on or before, or after,

December 31, 2022) at which a taxpayer

produces, after December 31, 2022, eligible components as defined in section

45X(c)(1) during the taxable year.

B. Manner of making the election

Section 6417(a) provides that the elective payment election is made “at such

time and in such manner as the Secretary

may provide,” and proposed §1.6417-2(b)

would provide those rules. First, proposed

§1.6417-2(b)(1) provides that an applicable entity or electing taxpayer would

make an elective payment election on the

applicable entity’s or electing taxpayer’s

1136

annual tax return, as defined in §1.64171(b), in the manner prescribed by the IRS

in guidance, along with any required completed source credit form(s) with respect

to the applicable credit property, a completed Form 3800, General Business

Credit, (or its successor), and any additional information, including supporting

calculations, required in instructions to

the relevant forms.

Proposed §1.6417-2(b)(1)(iv) would

provide that an elective payment election

may only be made on an original return

(including any revisions on a superseding

return) filed not later than the due date

(including extensions of time) for the original return for the taxable year for which

the applicable credit is determined. No

elective payment election may be made

or revised on an amended return or by filing an administrative adjustment request

under section 6227 of the Code. There

also would be no relief available under

§§ 301.9100-1 through 301.9100-3 of the

Procedure and Administration Regulations

(26 CFR part 301) for an elective payment

election that is not timely filed.

Second, proposed §1.6417-2(b)(2)

would specify that pre-filing registration

—is a condition of any amount being

treated as a payment that is made by an

applicable entity under section 6417(a).

An elective payment election will not be

effective with respect to applicable credits

determined with respect to an applicable

credit property unless the applicable entity

or electing taxpayer received a valid registration number for the applicable credit

property and provided the registration

number for each applicable credit property on its Form 3800 (or its successor)

attached to the tax return in accordance

with guidance.

Third, proposed §1.6417-2(b)(3)

would provide the due date for the election under section 6417(a). In the case of

any entity for which no Federal income

tax return is required under sections 6011

or 6033(a) of the Code (such as a governmental entity), the elective payment

election must be made no later than the

due date (including an extension of time)

for the original return that would be due

under section 6033(a) if such applicable entity were described in that section. Under section 6072(e), that date is

the 15th day of the fifth month after the

Bulletin No. 2023–27

taxable year determined by section 441

of the Code. Subject to issuance of guidance that specifies the manner in which

an entity for which no Federal income

tax return is required under sections 6011

or 6033(a) of the Code could request an

extension of time to file, an automatic

paperless six-month extension from the

original due date is deemed to be allowed.

In the case of any taxpayer that is not

normally required to file an annual tax

return with the IRS (such as those located

in the U.S. territories), the elective payment election must be made no later

than the due date (including extensions

of time) that would apply if the taxpayer

was located in the United States (such

as the 15th day of the fourth month after

the end of the year for individuals filling Form 1040 or for corporations filling

Form 1120). For example, an individual

in a U.S. territory would be required to

make the elective payment election on or

before the 15th day of April following the

close of the calendar year, or, if they filed

an extension, on or before the 15th day of

October following the close of the calendar year.

In any other case, the elective payment

election must be made no later than the

due date (including extensions of time) for

the original return for the taxable year for

which the election is made, but in no event

earlier than February 13, 2023.

Fourth, proposed §1.6417-2(b)(4)

would provide that any election under

section 6417(a), once made, is irrevocable

and applies with respect to any applicable

credit for the taxable year for which the

election is made.

Under section 6417, the election

period applies for a period of years with

respect to certain applicable credits.

Specifically, for the section 45 credit or

section 45Y credit, the election applies

to the 10-year period beginning on the

date the facility was originally placed in

service. For the section 45Q credit, the

election applies to the 12-year period

beginning on the date the equipment was

originally placed in service. For the section 45V credit, the election applies to

all subsequent taxable years with respect

to the facility.

Electing taxpayers make the election

for one five-year period per applicable credit property, but are allowed one

Bulletin No. 2023–27

revocation per applicable credit property,

as provided in section 6417(d)(1)(D) and

(d)(3)(C) and (D), and would be provided

in proposed §1.6417-3 (as described in

part III of this Explanation of Provisions).

Fifth, proposed §1.6417-2(b)(5) would

provide that an elective payment election

applies to the entire amount of applicable

credit(s) determined with respect to each

applicable credit property that was properly registered for the taxable year, resulting in an elective payment amount that is

the entire amount of applicable credit(s)

determined with respect to the applicable

entity or electing taxpayer for a taxable

year.

C. Determination of Applicable Credit

Proposed §1.6417-2(c) would provide

three rules relating to the determination of

any applicable credit.

1. Special rules for tax-exempt

organizations and government entities

In accordance with section 6417(d)

(2), proposed §1.6417-2(c)(1) would provide that, in the case of any applicable

entity that makes the election described

in section 6417(a), any applicable credit

is determined (1) without regard to the

restrictions regarding use of property by

tax-exempt organizations and government

entities found in sections 50(b)(3) and (4)

(A)(i), and (2) by treating any property

with respect to which such credit is determined as used in a trade or business of the

applicable entity.

Proposed §1.6417-2(c)(2) elaborates

on the effect of the “trade or business”

rule in section 6417(d)(2) and proposed

§1.6417-2(c)(1)(ii). First, the rule would

allow tax-exempt and government entities to take advantage of applicable credits even outside of the unrelated business

taxable income context (provided other

requirements are met) by allowing the

entity to treat an item of property as if it

is of a character subject to an allowance

of depreciation (such as under sections

30C and 45W); to produce items “in the

ordinary course of a trade or business of

the taxpayer” (such as in sections 45V

and 45X); and to state that an item of

property is one for which depreciation

(or amortization in lieu of depreciation)

1137

is allowable (such as in sections 48, 48C,

and 48E).

Second, the rule allows the entity to

apply the capitalization and accelerated

depreciation rules (such as sections 167,

168, 263 and 263A) that apply to determining the basis and the depreciation

allowance for property used in a trade or

business.

Third, the rule makes applicable general limitations on the use of credits by

those persons engaged in the conduct of

a trade or business, such as section 49 in

the context of investment tax credits, and

section 469 for all applicable credits. For

section 49 to apply for purposes of section 6417, the property must be placed in

service by an applicable entity or electing

taxpayer described in section 465(a)(1)

(that is, an individual or a C corporation

with respect to which the stock ownership requirements of section 542(a)(2)

are met). For section 469 to apply for

purposes of section 6417, the applicable

entity or electing taxpayer would need to

be described in section 469(a)(2) (that is,

an individual, estate or trust, a closely

held C corporation, or a personal service

corporation). Thus, for any applicable

entity or electing taxpayer for which section 49 or 469 generally applies, those

sections apply with respect to the determination of applicable credits under section 6417. The Treasury Department and

the IRS request comments on whether

any additional clarification is needed

regarding the application of sections 49

and 469 to applicable entities or electing

taxpayers determining the amount of an

applicable credit.

Lastly, the rule does not create any

presumption that the trade or business is

related (or unrelated) to a tax-exempt entity’s exempt purpose.

2. Special rule for investment-related

credit property acquired with income,

including income from certain grants

and forgivable loans, that is exempt from

taxation under subtitle A

Multiple stakeholders asked that regulations clarify whether an applicable

entity that funded the purchase of an

investment credit property with income,

including income from certain grants

and forgivable loans, that is exempt from

July 3, 2023

taxation under subtitle A (Tax-Exempt

Amounts9) can include those amounts in

the basis of the property for purposes of

calculating the amount of the investment

tax credit. Stakeholders also noted that in

some cases the full cost of the investment

credit property can be paid through TaxExempt Amounts.

Generally, the basis of property is the

cost of such property. See section 1012 of

the Code. However, for a taxable entity,

cost basis in property may need to be

reduced if Tax-Exempt Amounts are used

for the purpose of purchasing, constructing,

or otherwise acquiring such property. See

for example, sections 118(a) and 362(c)(2)

of the Code. However, grants and forgivable loans received by taxable entities are

generally taxable, and thus generally do not

result in a reduction in basis. See generally

section 61 of the Code.

For tax-exempt and government entities, for which grants, forgivable loans,

and other amounts are generally exempt

from taxation under subtitle A, the treatment of such Tax-Exempt Amounts with

respect to basis in property is less clear.

Because these entities may acquire investment credit properties eligible for the

section 6417(a) election, in whole or in

part, with Tax-Exempt Amounts, if such

amounts were not included in the basis of

the investment credit property (that is, they

resulted in a reduction in the basis of the

investment credit property), the applicable entity may have little or no basis with

respect to which to calculate the credit,

which would frustrate Congressional

intent to provide the section 6417(a) election for investment credit properties owned

by such entities. However, as stakeholders

noted, allowing an elective payment for an

applicable tax credit when the investment

credit property was fully purchased with

Tax-Exempt Amounts subject to donor

restrictions for that purpose would result

in an aggregate benefit to the applicable

entity in excess of the cost of the property.

As a result, a few stakeholders suggested

that local, State, and Federal government

grants received as Tax-Exempt Amounts

by applicable entities specifically for

acquisition of investment credit property

should not be included in the basis of such

property for purposes of calculating the

applicable credit for the elective payment

under section 6417.

Proposed §1.6417-2(c)(3) would provide a special rule for investment credit

property acquired with Tax-Exempt

Amounts and would expand the rule to

other credits that

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