Sign in

Sign In

The New IRS ITC Transfer Portal: What You Need to Know 

The New IRS ITC Transfer Portal: What You Need to Know 

The Internal Revenue Service (IRS) does more than collect taxes. The agency often has a negative reputation, but it is responsible for numerous duties, from tax return processing, enforcement, criminal investigations and oversight of tax-exempt organizations and qualified retirement plans.

The IRS is the largest of the United States Department of Treasury’s nine bureaus, which include the Financial Crimes Enforcement Network (FinCEN), the Inspector General and the U.S. Mint. Although you typically hear the IRS discussed a lot in April, the agency was in the news recently when it announced the launch of its new IRA/CHIPS Pre-filing Registration Tool.

What Is the IRA/CHIPS Pre-Filing Registration Tool?

The new tool, also referred to as a portal, enables qualifying businesses, tax-exempt organizations or entities such as state, local and tribal governments to pre-register eligible renewable energy tax credits as required by the Inflation Reduction Act (IRA). As we mentioned in a previous blog, these credits are Investment Tax Credits (ITCs) established through the Energy Policy Act (EPACT) of 2005 to facilitate the adoption of clean energy.

Through the IRA, these ITCs are available to qualified buyers — even if they do not have taxable income — through new direct pay and transfer election options. The Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act makes it possible for eligible taxpayers to claim direct pay for specific investments in silicon chip manufacturing technology.

What exactly is direct pay, also referred to as elective pay? It provides direct pay from the government to qualified entities — primarily tax-exempt businesses and governmental agencies, including Tribal ones — for the full value of the renewable energy tax credits. Developers in renewable energy do not qualify for direct pay, but it is a part of the IRA tax credit process of which to be aware.

A transfer election is different in that it allows taxpayers qualified for a renewable energy tax credit — but not eligible to utilize direct pay — to transfer some or all of their ITC to a third-party buyer in exchange for cash. In this method, the developer and buyer negotiate and agree to the terms and pricing.

There are multiple requirements for transfer election statements. The entity submitting it must include developer (seller) and buyer data and separate statements that:

  • Provide the necessary information and amounts to enable the buyer to take into account the credits for the eligible credit property
  • Verify that the parties are not related
  • Include a representation from the seller that it has complied with all relevant requirements to make a transfer election and provided the required minimum documentation to the buyer.

When a taxpayer is making a transfer election for an ITC, they must include their appointed registration number on their annual return and have their own Employer Identification Number (EIN). Once the transaction is complete, an election to transfer an eligible credit is irrevocable.

What Does This Mean for Renewable Energy Project Developers?

The launch of the free IRA Pre-Filing Registration Tool marks an important breakthrough for developers interested in the renewable energy ITC market because it allows them to register their intention to make a transfer election or use direct pay and procure pre-registration numbers for their tax credits. For buyers, it provides the knowledge that the project in which they’re interested in purchasing meets the guidelines for registering with the IRS.

Per IRA guidelines, developers are required to register their projects for IRS review to make a transfer election or use direct pay. But, IRS regulations often are complex — and confusing — for a lot of individuals and business owners. That’s a key reason the agency released a user guide and tutorial video about the pre-filing registration tool — to give applicable entities a clear sense of what to expect.


The IRS user guide provides developers with all the information necessary to complete a registration. It also covers ITC-specific requirements and includes a non-exhaustive list of documents.

Smiling entrepreneur sitting at home working on laptop computer

What are Some of the Guidelines for the Pre-File Registration Process?

Probably the biggest rule for developers engaging in the ITC transfer process is that their projects must be placed in-service before they complete their pre-filing registration. Another stipulation is that they need a separate registration number for each of their properties or facilities.

and include the registration number on their annual tax return as part of making a valid election. They also must calculate and report the credit on the applicable source credit form and IRS Form 3800.

Group of young businsswomen sitting in chairs and waiting for an interview

How Long Does It Take for the IRS to Issue a Registration Number?

The ITC credit transfer registration cannot be completed until the beginning of the tax year in which it will be earned. That doesn’t mean you should take your time completing the registration process, though. The IRS recommends that applicable entities register “as soon as reasonably practicable” during the tax year of the ITC.  

Before a developer or other applicable entity receives an ITC transfer registration number, the IRS reviews their case, a process that can take as long as 120 days — and that’s without delays based on registrant submission mistakes. Once you submit your registration, it is closed for any additions, updates or amendments.

Submissions may only be revised when the IRS review is complete and the registration declaration is returned. Also, it’s important to note that just because a developer receives a registration number doesn’t mean they qualify for any specific credit amount.

Our expert team at REOX manages the seamless transfer of tax credits from clean energy developers to C-Corp buyers and offers optional bridge loan financing for sellers, thereby expediting fund exchange. Once your transaction is complete, we provide post-transaction support, from follow-up documentation and reporting to assistance with potential future transactions. Contact us today to learn more!

Related Insights Articles

Public park and high-rise buildings cityscape in metropolis city center . Green environment city and downtown business district in panoramic view .

How Investing in Transferable Clean Energy Tax Credits Makes ESG Goals Achievable

Protecting the natural resources of this beautiful earth is a priority for citizens around the world That includes the United States where two thirds of adults surveyed say the country should prioritize developing renewable energy sources U S businesses increasingly focus on their corporate sustainability performance paying more attention to

Market chart of business increase stock graph or investment financial data profit on growth money diagram background with success diagram exchange information.

What Do the Proposed Basel III Endgame Regulations Mean for Investment in Transferable Tax Credits?

The year 2008 was notable for the United States Barack Obama became the country s first African American president elect some of America s best athletes participated in the Olympic Games in Beijing China and the Global Financial Crisis GFC occurred This financial emergency was the most severe worldwide economic

engineer and businessman planing new ecology project. around solar panel roof.

What Are Transferable Energy Tax Credits? 

Climate change has been a topic of discussion in the United States for decades Congress has debated the issue for roughly 30 years with varying results A notable outcome of those discussions is Renewable Energy Tax Credits Investment Tax Credits ITCs designed to facilitate the adoption of clean energy These