Transferability Bonus Provisions

The U.S. Department of the Treasury and the Internal Revenue Service (IRS)  released final rules on transferability. The Inflation Reduction Act created two new credit delivery mechanisms—elective pay (otherwise known as “direct pay”) and transferability—that are enabling state, local, and Tribal governments; non-profit organizations; Puerto Rico and other U.S. territories; and many more businesses to take advantage of clean energy tax credits. 
The Inflation Reduction Act’s transferability provisions allow businesses to transfer all or a portion of any of 11 clean energy credits to a third-party in exchange for tax-free immediate funds, so that businesses can take advantage of tax incentives if they do not have sufficient tax liability to fully utilize the credits themselves. Entities without sufficient tax liability were previously unable to realize the full value of credits, which raised costs and created challenges for financing projects.

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