A Surprise Change to Guidance on Energy Community Bonus Credits

Tax attorney Amish Shah was quoted in a Tax Notes article about the Internal Revenue Service's (IRS) new guidance on locating clean energy projects in energy communities. The guidance added language that excludes projects that started construction before Jan. 1, 2023, meaning a number of projects will miss out on the certainty provided by the special rule. Mr. Shah explained that being located in an energy community when construction begins can provide much-needed certainty, but developers often can't wait until projects are placed in service to determine the amount of available tax credits.

“Because of the change, some projects planned for energy communities won’t get built because they can’t take the chance that they won’t be in an energy community when the project is placed in service,” Mr. Shah said. “There is a huge benefit to having the original rule in terms of getting the goal of building in energy communities."

Tax Notes subscribers can access the full article here. A preview of the article can be found here.