Direct Pay and Transferability Provisions for Clean Energy Projects under the Inflation Reduction Act

Summary

This practice note provides guidance on the elective (or direct) pay and transfer of clean energy tax credits under the Inflation Reduction Act of 2022 (the IRA) and its related Internal Revenue Service (IRS) implementing regulations (26 C.F.R. §§ 1.6417-0 through 1.6417-6, and 89 Fed. Reg. 17546 (March 11, 2024)) and (26 C.F.R. §§ 1.6418-0 through 1.6418-5, and 89 Fed. Reg. 34770 (April 30, 2024), respectively). The note focuses on the provisions of the new Sections 6417 and 6418 that were added to the Internal Revenue Code (the Code), by the IRA that will enable the monetization of certain clean energy tax credits through direct payments and/or transfers.