Eyes on Energy Tax Update: Third Quarter 2024

Eyes on Energy Tax Update is a regular publication of the Holland & Knight Renewable and Alternative Energy Tax Team that provides highlights of important developments. The Renewable and Alternative Energy Tax Team also issues more in-depth publications on certain developments. To subscribe to these publications, please add yourself to our Renewable Energy list. All of this information can also be found on Holland & Knight's Inflation Reduction Act Tax Resource Library.

The third quarter of 2024 saw continued developments as a result of the enactment of the Inflation Reduction Act of 2022 (IRA), as well as announcements from federal agencies. Below, we summarize the updates from the quarter.

IRS Rulings and Guidance

• 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. (See Holland & Knight's previous alert, "Treasury Department, IRS Release Section 30C Proposed Regulations," Oct. 8, 2024.) The IRS also released Notice 2024-64, providing updated information on the mapping tool for purposes of determining whether a census tract is eligible.
• The IRS on July 24, 2024, released Notice 2024-60, which provides Internal Revenue Code Section 45Q guidance for utilization of carbon dioxide and other carbon oxides. The Notice addresses the information that must be included in the required life cycle analysis report (LCA Report), procedures for submitting the LCA Report and supporting information required to be provided to the IRS and U.S. Department of Energy for review. (See Holland & Knight's previous alert, "IRS Releases Long-Awaited Section 45Q LCA Procedures," Aug. 12, 2024.)
• The IRS on July 11, 2024, released 2024 production tax credit (PTC) amounts under Section 45 of the Internal Revenue Code. (See Holland & Knight's previous alert, "IRS Releases 2024 Section 45 Production Tax Credit Amounts," July 15, 2024.)
• The IRS on July 10, 2024, issued frequently asked questions (FAQs) related to which entities must apply for registration for the Clean Fuel Production Credit under Section 45Z. (See Holland & Knight's previous alert, "Treasury Department, IRS Issue Section 45Z Clean Fuel PTC Registration Guidance," June 4, 2024.)
• The IRS also released updated FAQs in July 2024 related to the new, previously owned and qualified commercial clean vehicle credits under Section 25E and Section 30D. (For more information on credits, see Holland & Knight's previous alert, "Treasury Department, IRS Issue Final Rules Under Clean Vehicle Tax Credits," May 21, 2024.)
• The IRS on June 28, 2024, issued three private letter rulings (20242002, 20242003 and 20242004) providing that the normalization mechanical deferred tax computational rules of Treasury Regulation Section 1.167(l)-1(h) and the consistency rules of Section 168(i)(9) precluded the reduction of a regulated utility's net operating loss (NOL) by intercompany tax allocation payments received from profitable members of the consolidated group that were able to use the NOLs. (See Holland & Knight's previous alert, "IRS Rules 3 Utilities Cannot Reduce NOL Carryforwards for Tax Allocation Payments," July 2, 2024.)
• On June 18, 2024, the U.S. Department of Treasury and IRS issued final regulations on the prevailing wage and apprenticeship rules related to the increased credit or deduction amounts under certain tax incentives. (See Holland & Knight's previous alert, "A Look at IRA Prevailing Wage and Apprenticeship Requirements Final Regulations Highlights," July 8, 2024.)
• The IRS on June 7, 2024, released Notice 2024-48 and updated FAQs related to the energy community bonus credit under Sections 45, 48, 45Y and 48E. (See Holland & Knight's previous alert, "IRS Updates Energy Community Bonus Tax Credit Guidance," June 11, 2024.)

Other Information

The Treasury Department and IRS on Aug. 7, 2024, issued statistics on the IRA clean energy tax credits for tax year 2023. According to the statistics, taxpayers claimed more than $6 billion in credits for residential clean energy investments and more than $2 billion for energy efficient home improvements on 2023 tax returns filed and processed through May 23, 2024.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.