US IRS, Treasury proposed guidance on CHIPS act and Inflation reduction act credits.
CHIPS Act Credits
Proposed regulation offer guidance on implementation of elective payment provisions.
Credits will incentivize manufacture of semiconductors and semiconductor manufacturing equipment within US, available to taxpayers that meet requirements.
Taxpayers eligible for credit can choose to receive the credit as an elective payment.
Partnerships or S corps can make payment election instead of claiming the credit.
Advanced manufacturing investment credit for any taxable year is generally equal to 25% of eligible taxpayer's qualified investment in an advanced manufacturing facility.
An eligible taxpayer's qualified investment equals its basis in any qualified property placed in service during the taxable year, and must be integral to the facility operation.
The credit is available for qualified property placed in service after Dec. 31, 2022.
The proposed regulations include special rules applicable to partnerships and S corporations, repayment of excessive payments, and basis reduction and recapture.
Inflation Reduction Act Credits
Proposed regulation offer guidance on rules for applicable entities that earn certain clean energy credits, elective payment elections and rules on certain credit transfers.
Applicable entities can make elective payment election, which treats certain credits as payment against federal income tax liabilities rather than as a nonrefundable credit.
Payment will offset any tax liability of the entity and any excess will be refundable.
Eligible entities include tax-exempt orgs, state and local governments, Indian tribal governments, Alaska Native Corporations, as well as the Tennessee Valley Authority.
All other taxpayers may elect to be applicable entity for limited number of credits.
Certain taxpayers that are not applicable entities can elect to transfer all or a portion of an eligible credit to unrelated taxpayers for cash payments starting Dec. 31, 2022.
Unrelated taxpayers are then allowed to claim transferred credits on their tax return.
Temporary regulation providing rules on mandatory IRS pre-filing registration process.
Consultation
Temporary regulation on pre-filing registration requirements effective Jun. 21, 2023.
Section 6417 elective payment of application credit proposed rulemaking comments must be submitted by Aug. 14, 2023; public hearing is scheduled for Aug. 21, 2023.
S. 6418 transfer of certain credits comments due Aug. 14; hearing on Aug. 23, 2023.
Jun. 23, 2023 Editorial Update
On Jun. 23, 2023, Reg-Track made an editorial update to include consultation dates.
In Mar. 2024, US IRS, Treasury issued final regulations on tax credits, see #203573.
Mar. 2024 Removal of Temporary Regulations
On Mar. 11, 2024, US IRS and US Treasury published in the federal register, the decision to remove the Jun. 2023 temporary regulations, effective May 10, 2024.
Regulators
US IRS; US Treasury
Entity Types
Corp
Reference
89 FR 17596, 3/11/2024; 88 FR 40086, 88 FR 40528, 6/21/2023; US IRS: PR IR-2023-116, PR IR-2023-117, RF, 2023-12797, RF 2023-12800; 6/14/2023; US Treasury: PR, RF RIN 1545-BQ63, 6/14/2023; RIN 1545-BQ75; 26 CFR Part 1;
