Registration Prefiling Tool for IRC Tax Credits Is Up and Running

As reported in our release on August 4, 2022, the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act was signed by President Biden on August 9, 2022. The Act not only provides for funds to promote domestic semiconductor production but also provides incentives to these producers by way of an elective payment or transfer of the credit. Subsequently, the Inflation Reduction Act (IRA) was enacted on August 16, 2022, which added Internal Revenue Code (IRC) Section 45X, the advanced manufacturing production credit, and further funded IRC Section 48C, the qualifying advanced energy project.

On December 22, 2023, the long-awaited registration tool was released by the Internal Revenue Service (IRS). The preregistration portal has been in the works for more than a year for properties placed in service within the 2023 tax year. The IRS was requested by Congress to create the website and launch it in Q4 2023, and the IRS delivered on this request on December 22, 2023. Taxpayers must have the preregistration ID number for the tax credit before they can claim it on the tax return. In the IRS notice, taxpayers are instructed to expect a 120-day turnaround time for the IRS to process the preregistration through the website. “Doing the math, this means that any taxpayer intending to claim a tax credit associated with energy property placed in service on their tax return for the 2023 tax year will need to file an extension,” says Scott Stogsdill, director of federal income tax consulting at Ryan.

To file for the elective payment or transfer, the taxpayer filing for the credit must receive a registration number from the IRS and must include that number in the annual tax return to make a valid election of the elective payment or transfer. Qualifying taxpayers may now use the new IRA/CHIPS prefiling registration tool to register. The IRS recommends that eligible taxpayers register for the credit early in the tax year in which the credit will be earned. For taxpayers anxious to monetize their credits, Ryan runs a marketplace for buyers and sellers to connect and transfer the credits. The experts at Ryan listed below can assist taxpayers in determining their eligibility for the credit, registering with the IRS, and monetizing the credits. Contact us now for assistance.

TECHNICAL INFORMATION CONTACTS:

Ian Boccaccio
Principal
Ryan
469.399.4545
ian.boccaccio@ryan.com

Nick List
Director
Ryan
917.472.9472
nicholaus.list@ryan.com

Scott Stogsdill
Director
Ryan
469.399.4496
scott.stogsdill@ryan.com

The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.