Hi Barton, one of my colleagues recently attended an RMI workshop on this topic and shared the following information with me. I hope this helps! Maybe you can reach out to Lawyers for Good Government directly. The slides also look valuable.
From lawyers for good government.
As I understand it, Treasury released https://www.irs.gov/pub/irs-drop/n-24-09.pdf. Click or tap if you trust this link." data-loopstyle="linkonly" data-linkindex="1" data-auth="Verified" rel="noopener">transition guidance for 2024 at the end of last year and requested feedback on how to shape the exceptions to the requirement so that it is not burdensome to applicable entities, among other things. I believe L4GG and other folks are actively working on this, but again, will let Jillian speak to that more. Happy to do some further digging as needed, just let me know.
Treasury issued draft regulations and a request for comments on domestic content that we are definitely working on with others. Unfortunately, the issue Shara identified really stems from the auditing question and whether domestic content and prevailing wage adders will be reviewed by the IRS leading to potential penalties.
We can't say for certain, but we think (based on private industry practice around tax credits) that it's unlikely that smaller projects will get flagged for audits. Also, there are a couple of tricks that can be used on domestic content to reduce risk of noncompliance. We'll be talking about those on our webinar (see registration link below).
We've also asked the Treasury to provide intel on their approach to audits for newly applicable entities, but I doubt they'll be able to make a formal statement about when and how they plan to audit.
use our https://www.lawyersforgoodgovernment.org/elective-pay-questions?utm_source=Lawyers+for+Good+Government&utm_campaign=50686e8492-EMAIL_CAMPAIGN_2023_08_18_06_47&utm_medium=email&utm_term=0_f40df78120-50686e8492-%5BLIST_EMAIL_ID%5D. Click or ta" data-loopstyle="linkonly" data-linkindex="1" data-auth="Verified" rel="noopener">form to ask a legal question if they have any specific questions they'd like us to run by our legal experts
------------------------------
Gilbert Michaud
Assistant Professor
Loyola University Chicago
Chicago
------------------------------
Original Message:
Sent: 01-10-2024 02:30 PM
From: Barton Fair
Subject: Need COMMERCIAL clarification on credits included in the ITC extension from the Inflation Reduction Act
There is a lot of info about the IRC for residential solar...and for large scale (over 1MWac) systems...but I am struggling to find definitive answers for the middle ground. Any clarity is greatly appreciated:
1. My first question is about the details of the Energy Community Credit
My region (Houston, TX) is categorized as eligible for an "Energy Community Tax Credit Bonus" on this website:
https://arcgis.netl.doe.gov/portal/apps/experiencebuilder/experience/?id=a2ce47d4721a477a8701bd0e08495e1d which implies that my solar system gets a 40% credit (the 30% ITC + 10% bonus). I understand that on systems larger than 1MW these credits are only available when prevailing wage requirements are met. What is unclear to me is whether this bonus credit is available on ALL projects (including those under 1MW) since the prevailing wage requirement does not apply under 1MW?
2. My second question is about the Domestic Content requirements.
I have read many websites that list "steel" as a component that needs to be USA...but most of our racking is Aluminum. Does the law really specify that only steel structures need to comply? As long as we use aluminum, it doesn't matter the source? I am aware of solar MODULES/PANELS that are USA. Is there a requirement on the inverters? In other words, if I have a system that is 100% USA solar panels, and the racking is aluminum (from anywhere), and the inverters are NOT from the USA...does it still meet the domestic content requirement for another 10%? If so, the same question I had above applies...does this count even if the system is smaller than 1MW?
3. My final question is about prevailing wage and other labor requirements.
Assuming the installer DOES pay the appropriate wages and hires the right number of apprentices, etc...what documentation do I need to be given (as the consumer/owner of the solar system) to prove to the IRS that I am eligible for these extra bonus categories? Is there a specific document that the installer needs to give me? Surely they don't have to provide a full payroll accounting? Or as the installer, what documentation would I need to maintain to verify future IRS inquiries on this eligibility?
Thank you! I couldn't find any clear and concise advice on this. Everything assumes these credits are only for giant solar farms, not a 200kW commercial system!