In Brief
- All companies that want to file the IRA & CHIPs credit as transferable or an elective payment must pre-file with the IRS.
- Online pre-filing registration process launched on 12-22-23.
- Each property that could receive credit must have its own registration number.
- A registration number is only valid for one taxable year.
Before applying for clean energy credits (IRA) and semiconductor credits (CHIPs), companies must pre-file through the IRS to gain their registration number. This is required before any tax credit form is to be filed or intended to be claimed. However, this does not guarantee that the credit will be claimed by the company, it only legitimizes the application when the company files for the credit on their tax returns.
Pre-Filing Registration Process
This is a required electronic process for all companies that intend to make an elective payment election or those that intend to make a credit transfer. It is designed to expedite the processing of returns and prevent improper payments. The IRS has provided guidance on how new and returning users can access their clean energy accounts to pre-file: https://www.irs.gov/newsroom/irs-opens-free-ira-and-chips-pre-filing-registration-tool-for-organizations-to-register-to-monetize-clean-energy-credits
As part of the pre-filing registration process, companies need to list all applicable credits they intend to claim on their income tax return or Form 990-T (tax exempt) and each applicable credit property that contributed or will contribute to determine these credits. Companies also need to provide any other specific information required, such as any required information about each applicable credit property. Once the company successfully completes the pre-filing registration process, they will receive a registration number(s) that will be necessary for making the elective payment election or a transfer election on their tax return.
After you complete the pre-filing registration process, the IRS will review the information provided and will issue a separate registration number for each applicable credit property for which the applicable entity or electing taxpayer provided sufficient verifiable information.
Why is this registration number important?
For each applicable credit property, it will need to have a unique registration number that contributes to an applicable credit. For example, a company plans to make an elective payment election to claim credits related to two applicable credit properties—a solar energy property and a geothermal energy property—they would complete and list both properties during the pre-filing registration process to obtain registration numbers for each property. When making an elective payment election for the credit attributable to both properties, both registration numbers must then be provided when filing a tax return.
When can you pre-file?
The online pre-filing registration process launched on Friday December 22nd, 2023. After the launch, a company may complete pre-filing registration as soon as they have all the information required. The IRS has also issued Publication 5884 with instructions on the pre-filing process.
Do you need to file again for the same credit in the next year?
A registration number is only valid for the taxable year for which it is obtained. Registration numbers must be renewed each year as necessary. For example, an elective payment for the Renewable Electricity Production Credit (45/45Y) requires annually renewing registration numbers even though the credit lasts for 10 years.
What happens if you’re late registering?
Completing the pre-filing process and receiving a registration number is a requirement to making an elective payment election. There are no extensions for registration numbers and the IRS recommend completion of the pre-registration at 120 days before filing the respective tax return, to give time for the IRS to review the information and provide back a valid registration number.
Am I locked into Elective Payment after pre-filing?
No. Completing the pre-filing registration process does not require that a company make an elective payment election when filing a return. Also, the pre-filing registration process is unnecessary if a company will not be using elective pay (or a transfer election).
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