The Internal Revenue Service on Nov. 22 announced that it is extending at least through 2026 a safe harbor for “applicable” entities seeking to claim a statutory exception to the domestic content requirement for elective payment tax credits.
Under Notice 2024-84 a safe harbor created in December 2023 for projects construction of which begin in 2024 would be extended for projects construction of which begins before January 1, 2027, or until further guidance is released – whichever is later.
APPA joined with the Large Public Power Council last week in writing the Treasury Department and Internal Revenue Service asking for such an extension.
The issue is that the IRS and the Treasury Department have yet to release guidance for claiming statutory exceptions to the domestic content requirements for claiming energy tax credits via elective payment
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 for projects construction of which begins in 2024 and 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,” APPA and LPPC wrote in their letter to Treasury and the IRS.
As a result, they asked that the current attestation process be extended until additional guidance is provided – relief provided in today’s notice.
Absent from the Nov. 22 notice is further guidance on how to make a good faith determination of compliance.
APPA said it will continue to work with Treasury for the clarity that will make the attestation process most effective.
