Through new elective payment and transfer options, applicable businesses, tax-exempt organizations or entities such as state, local, and tribal governments can take advantage of certain tax credits – even if they don’t have taxable income.

They can apply these options to certain clean energy and manufacturing credits under the Inflation Reduction Act of 2022 and the CHIPS Act, according to a news release.

Register Online Before Filing

Before filing a tax return, the applicable business or entity must complete the pre-file registration process to receive a registration number. They can register online with the new IRA/CHIPS Pre-filing Registration Tool. Their registration number must be included on their annual return to make an effective election.

Interested businesses and entities should submit the pre-filing registration request for the tax year in which they will earn the credit. The IRS recommends that eligible entities register as soon as possible after the facility/property is placed in service and at least 120 days before filing a tax return. This allows time for the IRS to review and request any additional information before issuing the registration number before the due date of the return.

If the elective payment amount, together with other tax payments and refundable credits, exceeds income tax liability, the IRS will treat the elective payment amount as an overpayment of tax, which can be refunded or credited to the estimated tax for the next tax year.

More Information

Publication 5884, Inflation Reduction Act (IRA) and CHIPS Act of 2022 (CHIPS) Pre-Filing Registration Tool User Guide

Elective Pay and Transferability Frequently Asked Questions: Elective Pay

IRS: Inflation Reduction Act and CHIPS Act of 2022 Pre-filing Registration Tool How-To Video

Publication 5902, Clean Energy Authorization Permission Management User Guide

Credits and Deductions Under the Inflation Reduction Act of 2022

About Form 3800, General Business Credit

Source: IRS