IRS Announces Direct Pay Election Extension for Clean Energy Projects
Author
Paige Mellerio
Charlotte Mitchell Duyshart
Rachel Yeung
Emma Conover
Upcoming Events
Related News
Key Takeaways
On October 11, the Internal Revenue Service (IRS) announced that an automatic six month extension to file the agency’s Form 990-T will be granted to counties and other eligible entities making an elective payment election (also referred to as direct pay) to recover the costs of clean energy initiatives.
- Filing Form 990-T is one of the last steps in the process of claiming elective pay. More information on the steps required of counties to claim elective pay is available here
- Eligible counties that were required to but did not file a timely extension on Form 8868 will be granted automatic 6-month extensions to file Form 990-T to make an elective payment election from the original return due date
- The extension applies to taxable years ending between December 31, 2023, and November 30, 2024
What is Direct Pay?
Direct Pay provides counties access to clean energy tax incentives under the Inflation Reduction Act (IRA). Instead of receiving a tax credit, counties that have made certain clean energy investments can apply for a refund equivalent to the value of the credit.
Learn more about elective pay here
Next steps for qualified counties:
- Ensure the required pre-filing registration for projects is complete through IRS Energy Credits Online. A valid registration number is required when submitting the return to claim elective pay.
- If filing paper returns, follow the IRS’s procedural instructions carefully to ensure the elective payment election is valid.
Additional Direct Pay Resources:
- IRS virtual office hours
- October 30 | 1:00 p.m. – 2:30 p.m. EDT | Register here
- November 13 | 1:00 p.m. – 2:30 p.m. EST | Register here
- IRS tutorial video
- IRS elective pay FAQs
- IRS elective pay one-pager for state and local governments
- NACo Inflation Reduction Act Analysis
- NACo IRA Funding Explorer & Elective Pay Hub
Counties are encouraged to take advantage of this extension as they look to new clean energy solutions.
Resource
What Counties Need to Know About Direct Pay in the Inflation Reduction Act
Related News
The EPA announces $2.9 billion for states to support lead pipe replacement
On May 20, the U.S. Environmental Protection Agency (the EPA) announced $2.9 billion in funding to help states support lead service line replacement. The funding will be distributed through the Drinking Water State Revolving Fund (DWSRF) and can be used by communities to identify lead pipes, plan removal projects, and replace lead service lines that deliver drinking water to homes.
House Appropriations Committee releases draft funding bills for public lands and environment programs
On May 20, the U.S. House Appropriations Committee began consideration of the fiscal year (FY) 2027 Interior, Environment and Related Agencies appropriations bill, which funds key environment and public lands programs at the Department of the Interior (DOI), U.S. Forest Service (USFS) and Environmental Protection Agency (EPA). The bill provides agency and program funding levels and sets policy goals for the agencies for FY 2027.
NACo urges adequate FY 2027 Census Bureau funding to support the 2030 Census
NACo urges Congress to fully fund the U.S. Census Bureau in FY 2027, consistent with the administration’s budget request, to support 2030 Census preparation.