IRS urges pre-filing registration for elective pay

The Internal Revenue Service “strongly urges” qualifying businesses, tax-exempts, and state, local and Indian tribal governments to complete the pre-filing registration process now for projects placed in service in 2023 if they plan to claim elective pay.

Taxpayers should file their annual return after completing the pre-filing registration; a timely return (including extensions) is required to select elective payment election. E-filing is also strongly encouraged.

The CHIPS Act of 2022 allows taxpayers to take advantage of certain manufacturing investment, clean-energy investment and production tax credits through elective pay or transfer, both of which create alternative ways to get the benefit of the credit even if the taxpayer cannot use the credit to offset their tax liability.

The taxpayer must complete the pre-file registration process to receive a registration number, which must then be on the taxpayer’s annual return as part of making a valid election. The IRS recommends that taxpayers submit the pre-filing registration at least 120 days before the organization plans to file the return on which it will make its election. The agency will share information about the status of a pre-file registration through the IRA/CHIPS Pre-Filing Registration tool.

Sessions will also be available for organizations needing help with pre-filing registration. Remaining sessions are on Sept. 4, Sept. 18 and Oct. 2; all sessions run from 1:00-2:30 p.m. EST, and registration is required.