Regulations issued on tax credit direct payments and transfers

In brief

The IRS and Treasury have released four regulations packages on direct payment and transfers of energy credits and direct payment of the Section 48D advanced manufacturing credit. The IRS also issued FAQs and a fact sheet  outlining key information in the regulations.

The Inflation Reduction Act of 2022 (IRA) provides for tax-exempt entities to elect direct payment of credits under Sections 30C, 45, 45Q, 45U, 45V, 45X, 45Y, 45Z, 48, 48C, and 48E. Other taxpayers may elect to transfer these credits or may elect direct payment of the Section 45Q, 45V, and 45X credits. 

The CHIPS Act of 2022 enacted Section 48D, which applies to facilities that manufacture semiconductors or the equipment to manufacture semiconductors. Section 48D provides for direct payment, but not transfer, of the credit.

The four regulations packages are:

• Temporary regulations requiring taxpayers electing direct payment under either the IRA or CHIPS Act or electing to transfer credits to pre-register 
  
• Proposed regulations on direct payments under the IRA
• Proposed regulations on credit transfers
• Proposed regulations on direct payments under Section 48D.

PwC will publish detailed insights on the regulations in the coming days.