Treasury, IRS Release Proposed Regulations Under Section 30C
The U.S. Department of the Treasury and IRS on Sept. 18, 2024, released proposed regulations under Section 30C of the Internal Revenue Code regarding the Alternative Fuel Vehicle Refueling Property Credit. The proposed regulations provide clarity on a number of issues and are open to public comment for 60 days.
Section 30C was originally enacted by the Energy Policy Act of 2005 to provide a credit for the cost of qualified alternative fuel vehicle refueling property. Section 30C has been amended several times since its enactment, including by the Inflation Reduction Act (IRA), which extended the credit for property placed in service after Dec. 31, 2021, and modified the credit with respect to property placed in service after Dec. 31, 2022, and on or before Dec. 31. 2032.
Specifically, as it relates to businesses, the modifications made by the IRA to Section 30C include the following:
- The Section 30C credit historically was capped on a per-location basis, but as a result of the IRA, the cap of $100,000 applies on a per-single item basis.
- The credit is now subject to prevailing wage and apprenticeship requirements. (See Holland & Knight's previous alert, "A Look at IRA Prevailing Wage and Apprenticeship Requirements Final Regulations Highlights," July 8, 2024.) If the prevailing wage and apprenticeship requirements are not met, the credit is reduced from 30 percent to 6 percent.
- Finally, the credit also requires that the refueling property be located in an eligible census tract. This definition was addressed in prior IRS Notice 2024-20 and the related Appendix A and B. (See Holland & Knight's previous alert, "Treasury, IRS Release Section 30C Alternative Fuel Vehicle Refueling Property Credit Guidance," Jan. 24, 2024.) On Sept. 18, 2024, the IRS also issued Notice 2040-64, which provided updated information on the mapping tool for purposes of determining whether a census tract is eligible under Section 30C.
The regulations issued Sept. 18, 2024, propose:
- Single item of 30C property is defined as each charging port for recharging property; charging port is defined as the system within a charger that charges one motor vehicle.
- Associated property – that which is functionally interdependent property and, if applicable, an integral part of refueling or recharging property – is included for purposes the credit calculation.
- The recapture period of the Section 30C credit is limited to three years after the property is placed in service and only occurs in limited scenarios.
The Holland & Knight Energy Tax Team is reviewing the proposed regulations and will provide additional analysis. To be sure you receive this forthcoming analysis, please subscribe to our alerts.
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