Tribes and tribal enterprises now have additional guidance available from the IRS clarifying which entities qualify for clean energy investment tax credits and the method of payment tribes can expect to receive.
Based on all guidance provided to date, tribal casinos qualify under tribal governments as entities eligible for clean energy investment tax credits. Tribal governments or tribal tax-exempt entities are eligible for elective pay.
However, neither party is an applicable entity eligible to transfer the tax credits.
So, what do tribal governments or tribal tax-exempt entities do next if they want to get involved with these credits? Since tribal governments do not file tax returns, they will need to complete a prefiling registration process with the IRS. They will need to file Form 990-T, along with any other forms required to claim the credit, with the IRS electronically.
In addition, tribal governments or tribal tax-exempt entities will need to:
1. Identify and pursue the qualifying project or activity:
You will need to know what applicable credit you intend to earn and use elective pay for.
2. Determine your tax year (if not already known):
Your tax year will determine the due date for your tax return.
3. Complete prefiling registration with the IRS:
This will include providing information about yourself, which applicable credits you intend to earn, each eligible project/property that will contribute to the applicable credit and other information required. Upon completing this process, the IRS will provide you with a registration number for each applicable credit property. You will need to provide that registration number on your tax return as part of making the elective pay election.
- Complete prefiling registration in sufficient time to have a valid registration number at the time you file your tax return.
- More information about this prefiling registration process will be available by late 2023.
4. Satisfy all eligibility requirements for the tax credit and any applicable bonus credits (if applicable) for a given tax year:
For example, to claim an energy credit on a solar energy-generating project, you would need to place the project in service before making an elective payment election.
- You will need the documentation necessary to properly substantiate any underlying tax credit, including any bonus amounts that increased the credit.
5. File Form 990-T by the due date (or extended due date) and make a valid elective payment election.
How Wipfli can help
When navigating energy tax credits, Wipfli tax professionals with deep experience working with tribes are ready to help you understand these new opportunities and maximize your benefits.
Contact us to learn more about our services for tribes.
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