Clean energy tax credits: IRS registration

IRS tax-credit registration pertains to transferable tax credits, which are tax credits that can be sold and transferred to another taxpayer. Under current legislation, the Internal Revenue Code offers numerous transferable tax credits related to clean energy, including the investment tax credit (ITC). 

The IRS requires taxpayers who intend to transfer their tax credits to register them first with the IRS using an online portal on the IRS website. After the taxpayer successfully completes online registration, the IRS has 120 days to supply them with a unique registration number for each of their qualifying investments. 

The IRS tax-credit registration number acts as a unique ID for tax credits generated by a specific clean energy investment, and is required for tax-credit transfers. Transferable tax credits may only be transferred between taxpayers one time, and the registration number helps the IRS prevent and detect sales of the same tax credits to multiple parties, or multiple transfers of the same tax credits. 

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Investment tax credit: When to register

There are several timing considerations for when to register your credits:

1. Placed-in-service date: IRS allows taxpayers to register only after placing an investment property or production facility in service. However, registration can be no earlier than the beginning of the tax period when you earn the credit.
2. Tax filing deadlines: Receiving a registration number can take up to 120 calendar days, so taxpayers should register their credits at least 120 calendar days before their deadline for filing the tax return on which they will claim the credits and elect to transfer them to another party. 
3. Limits on the number of registration submissions: Each taxpayer is allowed to submit up to 33 registration packages per year, and each registration package may contain multiple investment properties. 
4. Transaction closing timelines: Sales of tax credits often occur before the tax filings that formalize the transfer of the credits, which means that sellers of tax credits should also plan to register their credits at least 120 calendar days before a transaction closing date. To ensure a smooth transaction closing, sellers should register their credits as soon as the qualifying clean energy project is placed into service. 

IRS energy tax credit registration guide

Evergrow offers sellers a guide to the tax-credit registration process. For a copy of the guide, click the Get Started button to reach a member of our team.