There’s been much talk lately about the clean energy federal tax credits supplied by the Inflation Reduction Act (IRA), particularly regarding bonus and enhanced rates on the renewable electricity production tax credit (PTC) and Investment Tax Credit (ITC). These credits provide competitive incentives and cash flow opportunities for many companies. In some cases, businesses that were previously ineligible are now able to qualify under the IRA. However, as with many credit programs, receiving the benefit normally relies on one major factor: the documentation.
Enhanced PTC and ITC are available only if taxpayers meet certain prevailing wage and apprenticeship, domestic content and community requirements. Additionally, the language in the Act requires taxpayers to maintain accurate and contemporaneous documentation necessary to support credit eligibility. If, as a taxpayer, you don’t meet these documentation requirements, it could result in recapture and penalties, which would significantly impact the overall benefit of the credits themselves.
To help ensure you are appropriately claiming and defending the various credits and meeting documentation requirements, certain attestation engagements, such as an Agreed Upon Procedures (AUPs), could help.
