Thanks to new IRS rules, local governments, public school districts, and hospitals will more easily be able to jointly invest in clean energy projects.
Utility Dive reports that regulations released by the U.S. Department of the Treasury and the IRS on November 19th expand on an Inflation Reduction Act provision that allows entities with little to no federal tax liability to benefit from clean energy tax credits via direct pay instead.
Under the direct pay rules, eligible tax-exempt organizations can claim credits on battery storage systems, solar arrays, small wind turbines, fuel cells, geothermal heat pumps and other clean energy equipment – a boon to often cash-strapped local governments.
According to the Department of Treasury guidance, “In response to comments received, the final regulations clarify that eligible co-ownership arrangements can be organized to own and operate property giving rise to any of the Inflation Reduction Act credits where elective pay is available,” Treasury said. “It also enables such arrangements to invest in clean energy projects through a noncorporate entity.”
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