American Public Power Association President and CEO Scott Corwin and Large Public Power Council President Tom Falcone recently wrote the Treasury Department and Internal Revenue Service asking for an immediate extension of a safe harbor for claiming statutory exceptions to the domestic content requirements for elective pay.
While there are certain statutory exceptions to the domestic content requirements for claiming energy tax credits via elective payment, Treasury and IRS have yet to release guidance on how to do so.
Instead, in Notice 2024-9 released last December, they allowed public power utilities, rural electric cooperatives and other “applicable entities” qualifying for elective payment to qualify for one of the statutory exceptions if they “attest” that they have made a good faith determination that they do qualify.
However, the safe harbor only applies if construction of the project begins in 2024. Also, the notice did not explain how to go about making a “good faith determination.”
“The transition process is currently limited to qualified energy projects that begin construction before January 1, 2025, whereas our member utilities need to plan and make commitments to projects several years in advance, practically eliminating the ability of tax-exempt utilities to utilize the credits enacted by Congress,” Corwin and Falcone said in the letter.
As a result, they asked that the current attestation process be extended until additional guidance is provided.
They also asked that Treasury and IRS better explain how an entity could decide whether it had made a good faith determination.
The letter points to existing provisions under Treasury Regulation section 1.6664-4, reasonable cause and good faith exception to section 6662 penalties, which states: “Reliance on an information return, professional advice, or other facts, however, constitutes reasonable cause and good faith if, under all the circumstances, such reliance was reasonable and the taxpayer acted in good faith.”
Additionally, the letter asks that a good faith determination should also be allowed to rely on the guidance and determinations of other agencies implementing similar domestic content provisions.
