IRS and Treasury reach major milestone implementing key provisions using the IRS Energy Credits Online Elective Pay and Transferability Tool


IR-2024-14, Jan.18, 2024

WASHINGTON — The Internal Revenue Service and the Treasury Department reached a major milestone in implementation of key provisions in the Inflation Reduction Act with more than 1,000 projects registered through the new IRS Energy Credits Online (ECO) tool.

The Inflation Reduction Act created two new credit delivery mechanisms—elective pay (otherwise known as "direct pay") and transferability — that enable state, local and Tribal governments; non-profit organizations, U.S. territories; and other entities to take advantage of clean energy tax credits.

"The IRS is working hard to put in place tools that can help taxpayers and the wider tax community, and this important new online tool reflects our progress in this area. We have surpassed a major milestone with more than 1,000 facility registrations through the tool," said IRS Commissioner Danny Werfel. "This new tool helps key groups with these clean energy credits as well as improves communication and reduces compliance issues. This effort is part of our larger transformation effort underway across the IRS as our efforts continue to accelerate."

To facilitate taxpayers receiving a direct payment, transferring a clean energy credit, or claiming a CHIPS credit, the IRS built ECO for taxpayers to complete the pre-file registration process and receive a registration number. The registration number must be included on the taxpayer's annual return when making a direct payment or transfer election for a clean energy credit.

The IRS and Treasury have conducted a robust and wide-ranging educational campaign on these new provisions to benefit taxpayers, including hosting office hour sessions where representatives from the IRS are available to answer questions related to the pre-registration process.

For the IRS ECO direct pay, transferability, and CHIPS functionality, as of this week approximately 145 entities have requested registration numbers for more than 1,290 projects or facilities located in 40 states and territories, with more than 1,170 projects or facilities pursuing transferability and more than 110 projects or facilities pursuing direct pay. The value of the tax credits for these projects will be determined when the credit recipient files their taxes.

The IRS has published detailed information on how to complete pre-filing registration, including Publication 5884, Inflation Reduction Act (IRA) and CHIPS Act of 2022 (CHIPS) Pre-Filing Registration Tool -- User GuidePDF.