Treasury issues new rules on “direct pay”

Following up on my previous post on the “direct pay” provisions of the Inflation Reduction Act, Treasury has issued new rules clarifying aspects of the “direct pay” process. Those rules can be found here and here. Among other things, the rules clarify (as reported by Bloomberg) that tax-exempt entities will not be able to buy tax credits through transferability (which allows entities that qualify for a tax credit but are not eligible to use direct pay to transfer all or a portion of the credit to a third-party buyer in exchange for cash) and then go on to receive direct payment.

Manoj