Direct payment of renewable electricity production credit and energy credit

(a)

Renewable electricity production credit

(1)

In general

Section 45(e) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

(12)

Election for direct payment

(A)

In general

In the case of any applicable facility, the amount of any credit determined under subsection (a) with respect to such facility for any taxable year during the period described in paragraph (2)(A)(ii) of such subsection shall, at the election of the taxpayer, be treated as a payment equal to such amount which is made by the taxpayer against the tax imposed by chapter 1 for such taxable year. (B)

Applicable facility

For purposes of this paragraph, the term applicable facility means a qualified facility—(i)the construction of which began before January 1, 2023, and(ii)which is originally placed in service after March 25, 2021.(C)

Form and effect of election

(i)

In general

An election under subparagraph (A) shall be made in such manner as the Secretary may prescribe and not later than the due date (including extensions) for the return of tax for the taxable year in which the qualified facility is originally placed in service. Such election, once made, shall be irrevocable with respect to such qualified facility for the period described in subsection (a)(2)(A)(ii).(ii)

Effect

Any election under subparagraph (A) shall, for any taxable year during the period described in subsection (a)(2)(A)(ii), reduce the amount of the credit which would (but for this paragraph) be allowable under this section with respect to such qualified facility for such taxable year to zero.(D)

Application to partnerships and S corporations

In the case of a partnership or S corporation which makes an election under subparagraph (A)—(i)such subparagraph shall apply with respect to such partnership or corporation without regard to the fact that no tax is imposed by chapter 1 on such partnership or corporation, and(ii)(I)in the case of a partnership, each partner's distributive share of the credit determined under subsection (a) with respect to the qualified facility shall be deemed to be zero, and(II)in the case of a S corporation, each shareholder's pro rata share of the credit determined under subsection (a) with respect to the qualified facility shall be deemed to be zero.

(2)

Effective date

The amendment made by this subsection shall apply to facilities placed in service after March 25, 2021.(b)

Energy credit

(1)

In general

Section 48 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

(e)

Election for direct payment

(1)

In general

In the case of any applicable property placed in service during any taxable year, the amount of any credit determined under subsection (a) with respect to such property for such taxable year shall, at the election of the taxpayer, be treated as a payment equal to such amount which is made by the taxpayer against the tax imposed by chapter 1 for such taxable year (regardless of whether such tax would have been on such taxpayer).(2)

Applicable property

For purposes of this subsection, the term applicable property means any energy property (including any qualified property which is treated as energy property pursuant to subsection (a)(5))—(A)the construction of which began before January 1, 2023, and(B)which is originally placed in service after March 25, 2021.

Such term shall not include any property if a credit for qualified progress expenditures has been allowed with respect to such property before the date of any election under paragraph (1).

(3)

Form and effect of election

(A)

In general

An election under paragraph (1) shall be made in such manner as the Secretary may prescribe and not later than the due date (including extensions) for the return of tax for the taxable year in which the applicable property is originally placed in service. Such election, once made, shall be irrevocable with respect to the applicable property.(B)

Effect

Any election under paragraph (1) shall reduce the amount of the credit which would (but for this subsection) be allowable under this section with respect to such applicable property for the taxable year in which such property is placed in service to zero.

The reduction in credit under subparagraph (B) shall not be taken into account for purposes of applying section 50(a) with respect to such property.

(4)

Application to partnerships and S corporations

Rules similar to the rules of section 45(e)(12)(D) shall apply for purposes of this subsection.(5)

Regulations and guidance

The Secretary shall prescribe such regulations and guidance as may be necessary to carry out this subsection, including regulations or guidance to relating to reporting on the use of applicable property for purposes of administering the recapture under section 50(a) of any refund made by reason of this section.

(2)

Effective date

The amendment made by this subsection shall apply to property placed in service after March 25, 2021. (c)

Carbon oxide sequestration credit

(1)

In general

Section 45Q(f) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

(8)

Election for direct payment

(A)

In general

In the case of any applicable equipment, the amount of any credit determined under subsection (a) with respect to any qualified carbon oxide captured by such equipment for any taxable year during the applicable period shall, at the election of the taxpayer, be treated as a payment equal to such amount which is made by the taxpayer against the tax imposed by chapter 1 for such taxable year. (B)

Applicable equipment

For purposes of this paragraph, the term applicable equipment means carbon capture equipment—(i)which is originally placed in service after March 25, 2021, at a qualified facility the construction of which began before January 1, 2023, and(ii)(I)the construction of which began before January 1, 2023, or(II)which was placed in service at a qualified facility the original planning and design of which included such equipment.(C)

Applicable period

For purposes of this paragraph, the term applicable period means the 12-year period beginning on the date that the applicable equipment was originally placed in service.(D)

Form and effect of election

(i)

In general

An election under subparagraph (A) shall be made in such manner as the Secretary may prescribe and not later than the due date (including extensions) for the return of tax for the taxable year in which the applicable equipment is originally placed in service. Such election, once made, shall be irrevocable with respect to such applicable equipment for the applicable period.(ii)

Effect

Any election under subparagraph (A) shall, for any taxable year during the applicable period, reduce the amount of the credit which would (but for this paragraph) be allowable under this section with respect to such applicable equipment for such taxable year to zero. (E)

Application to partnerships and S corporations

In the case of a partnership or S corporation which makes an election under subparagraph (A)—(i)such subparagraph shall apply with respect to such partnership or corporation without regard to the fact that no tax is imposed by chapter 1 on such partnership or corporation, and(ii)(I)in the case of a partnership, each partner's distributive share of the credit determined under subsection (a) with respect to the qualified carbon oxide captured using such applicable equipment shall be deemed to be zero, and(II)in the case of a S corporation, each shareholder's pro rata share of the credit determined under subsection (a) with respect to the qualified carbon oxide captured using such applicable equipment shall be deemed to be zero.

(2)

Effective date

The amendment made by this subsection shall apply to property placed in service after March 25, 2021.