The Internal Revenue Service (IRS) released Notice 2023-29, describing what constitutes an energy community for the ten percent bonus credit for production (PTC) and investment tax credits (ITC) under the Inflation Reduction Act (IRA). Projects must be located in communities that have historically been at the forefront of energy production. The bonus is also available in:
- Areas with significant employment or local tax revenue from fossil fuel industries as long as such areas have unemployment rates at or above the national average rate over the previous 12 months, as defined by the guidance,
- Census tracts (including adjoining tracts) in which a coal mine has closed after 1999 or in which a coal-fired electric generating plant has been retired after 2009, and
- Brownfields as defined in the guidance.
The proposal indicates that the regulations will apply to taxable years ending after April 4, 2023. Comments can be submitted here by May 4. Further guidance incorporating county unemployment data for the fossil fuel industry eligibility category is expected to be released in May.
