Treasury to Clarify Usage of Direct Pay for Energy Credits (2)

Treasury and the IRS will clarify if an instrumentality of the state can monetize its clean energy tax credits through direct pay in guidance this spring, an official said Friday.

The tax-and-climate law offers a way for these tax-exempt entities, which often don’t have the tax liability to use the incentives, to monetize the credits through a process known as direct pay. Direct pay is when the credits can be treated as refundable payments.

The law lists entities such as public power, public universities, governments, and Native American territorial governments are eligible for direct pay, but it does not include ...