Dear USET/USET SPF Family and Infrastructure Partners,
The U.S. Department of Treasury has initiated Tribal consultation a Notice of Proposed Rulemaking (NPRM) involving the treatment of certain unincorporated entities owned by elective pay eligible applicable entities. The NPRM seeks to address questions surrounding eligibility for elective pay under certain joint ownership arrangements where an unincorporated entity is owned by an elective pay-eligible entity. At a high level, the proposed regulations would allow Tribal governments to access elective pay for an applicable credit property through certain joint ownership arrangements. This may include arrangements through a limited liability company, including a limited liability company organized under Tribal law.
Treasury Tribal Consultation on Elective Pay Joint Arrangements Date and time: Friday, April 5th at 1:00PM EST. To register, please click here.
USET SPF is concerned that the NPRM is too limiting for the diverse types of Tribally Chartered Corporations across Indian Country to be able to take advantage of elective pay. We encourage all recipients of this alert to join Friday’s consultation and provide comments. Relatedly, USET SPF has urged Treasury to issue guidance affirming that Tribally Chartered Corporations (whether wholly, jointly or majority owned) share the same tax status as a Tribal government, and therefore, are not subject to federal tax on earned income regardless of the location where that income is earned.
Background on Elective Pay
Under Section 6417 of the Inflation Reduction Act, certain tax-exempt governmental entities, including Tribal governments, are newly authorized to access certain clean energy tax credits as payments from the Internal Revenue Service (IRS). Since Tribal governments generally do not pay taxes to the federal government, Tribal governments are now eligible to apply for the direct payment of these clean energy tax credits to recoup or offset the costs of constructing and putting into service a clean energy project. For the first time, Tribal governments are able to make a direct payment election using twelve applicable credits, including the major clean/green energy production tax credits and investment tax credits, as well as credits for qualified clean commercial vehicles, alternative fuel vehicle refueling property, and carbon oxide sequestration.
USET SPF submitted comments to Treasury on August 18, 2023 calling on Treasury to ensure that the necessary guidance, technical assistance, and other resources are readily available and accessible to Tribal Nations to effectively leverage these credits. The final regulations were issued on March 5th, 2024. For more information on elective pay, including educational resources, please visit www.usetinc.org/infrastructure
Please contact Melanie Plucinski, Tribal Infrastructure Policy Analyst, at mplucinski@usetinc.org if you have any questions.
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