Executive summary
On Dec. 22, 2023, the IRS announced the launch of the IRA/CHIPS Pre-Filing Registration tool. This tool will allow qualifying businesses, tax exempt organizations or entities such as state, local and Indian tribal governments to monetize a tax credit with an elective payment or credit transfer election as provided by the Inflation Reduction Act of 2022 (the Act) and section 48D advanced manufacturing investment credit created by the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act of 2022. The tool can be accessed at this IRS web page. The IRS released Publication 5884 to assist taxpayers on how to use the tool. See RSM US LLP’s prior article on the monetization of credits under the IRS/CHIPS.
The pre-filing registration requirements
In completing the mandatory pre-filing registration, a registrant is required to create a Clean Energy Business Account and provide general information including:
- Tax period of the election
- Employer identification number
- Name
- Address
- Type of entity
- Bank account information
- Types of returns filed
- Information about subsidiaries included in a consolidated group of corporation
The registrant is also required to provide credit-specific information that will vary depending upon the number and type of credits the registrant wishes to monetize. While information related to a facility/property will generally be required to be manually entered, the tool does permit bulk uploads for certain credits of a voluminous nature including section 30C Alternative Fuel Refueling Property Credit, section 45 Renewable Electricity Production Credit, section 45W Commercial Clean Vehicle Credit and section 48 Energy Credit.
Registration package and facility-by-facility reporting
Each registrant can have one registration package for any annual accounting period. The registration package can include as many different elective payments or transfer elections as the registrant is eligible to make for the annual accounting period. While each registrant will have one registration package it could have numerous registration numbers. Once a registration package is submitted for review it cannot be updated for additional credits or facilities until the registration package is fully processed and reviewed by the IRS. Currently the IRS is advising review of the registration package could take 120 days.
The credits are claimed and reported on a facility/property basis. This will determine the number of registration numbers the registrant will need. The pre-filing registration review process will not consider whether the facility-by-facility rules have been applied correctly. The registrant is responsible for determining how many registration numbers will be needed and for providing the information necessary to complete the pre-filing registration process.
Timing considerations
The IRS recommends that entities submit the pre-filing registration at least 120 days prior to the date on which the entity plans to file its tax return.
The IRS recommends that after submitting the registration for review, the registrant visit the status of its registration package weekly. If the IRS requests additional information or denies a registration number, the registrant has 35 days to respond and/or correct errors. If the submission status of a registration package is changed to “Returned-Closed,” any change submitted will be considered a new submission triggering the start of the 120-day review period.
After the IRS reviews and approves the pre-filing registration, the IRS will issue a registration number. This registration number must be included on the taxpayer’s annual return. Registration numbers are valid for one year.
The IRS intends to review and process registration submissions in the order received. A registrant cannot require expedited handling. However, the IRS has the discretion to consider a registrant’s tax period ending date when managing the pre-filing registration caseload. If the registrant chooses to make additional pre-filing registration submissions for different facilities/properties, the registrant must wait until the most recent pre-filing registration submission is processed by the IRS and returned.
Washington National Tax takeaways
Properly completing the pre-filing requirement is required to monetize tax credits under the Act and CHIPS. While Publication 5884 provides a comprehensive roadmap for using the Pre-Filing Registration tool it does not replace legal or technical guidance. It assumes the registrant has familiarity with the general business credits available under the Act/CHIPS including, for example, computation of the credit and required forms to claim credits and make elections.
Registrants will need to carefully consider the timing of any registration package. While registration is not possible prior to the beginning of the tax year in which the credit will be earned, any package should be submitted as reasonably practical during the tax year, or at least 120 days prior to when the registrant intends to file its tax return. Compounding timing considerations for registrants with multiple facilities/properties is the fact that a registration package cannot be amended and/or updated once submitted until the IRS has finalized review of the first registration package submission.
