Don't Mess With Taxes

Photo by Timothy Eberly on Unsplash

The heat wave that just won't loosen its grip on much of the United States (and world). That has many looking at energy options as traditional grids are stressed.

The obvious options are wind and solar systems. Both, as well as many other alternative energy programs, got boosts in the Inflation Reduction Act.

The law took effect last year and includes more than $300 billion in climate-related programs and tax incentives.

Now the Biden Administration's energy chief is reminding faith-based groups that they, too, could be eligible for the Inflation Reduction Act tax credits.

Notable law change: Under previous law, houses of worship and similar organizations did not qualify for tax credits tied to clean energy projects, such as installing solar panels or electric vehicle charging stations.

However, a provision in the Inflation Reduction Act allows organizations that do not pay taxes to receive a direct payment from the IRS equal to the eligible tax credit discount.

The possibility comes from the direct pay, or elective pay, provision in the new law. It allows organizations that do not pay taxes to receive a direct payment from the IRS equal to the eligible tax credit discount.

The White House's fact sheet on the Inflation Reduction Act's direct pay provision notes:

Unlike competitive grant and loan programs, in which applicants may not receive an award, direct pay allows entities to get their payment if they meet the requirements for both direct pay and the underlying tax credit. … Applicable entities can use direct pay for 12 of the Inflation Reduction Act’s tax credits, including for generating clean electricity through solar, wind, and battery storage projects; building community solar projects that bring clean energy to neighborhood families; installing electric vehicle (EV) charging infrastructure; and purchasing clean vehicles for state or city vehicle fleets.

"With the majority of dollars for clean energy under the Inflation Reduction Act coming in the form of tax credits, direct pay allows faith-based organizations and other nonprofit and government entities to take advantage of those incentives — including a minimum 30% credit for eligible clean energy investments, such as solar arrays, with additional credits available for projects in low-income communities or that use domestic materials," reports Brian Roewe, environmental correspondent for Earthbeat, a project of the National Catholic Reporter.

Energy chief touts benefits: Department of Energy Secretary Jennifer Granholm elaborated on the new law's benefits for tax-exempt faith groups in a prerecorded message during a July 18 briefing hosted by Interfaith Power & Light.

IP&L, a national nonprofit with 40 state affiliates and 22,000 congregations in all 50 states. Its focus is mobilizing people of faith to act on climate change.

Granholm called direct pay "a real game changer" for houses of worship to lower the costs of projects that produce or store clean energy. The law's "unprecedented suite of tools" can help congregations "reduce their carbon footprints, their carbon pollution, while also being climate leaders in their communities," the energy secretary said.

Earthbeat reported that Granholm cited examples of religious groups taking lead roles in response to climate change, from an Oakland, California, Baptist church that served as a resilience hub during wildfires and extreme weather, to countless churches, synagogues, mosques, and other prayer sites across the country that have installed solar panels.

"It's clear to me, as I know that it is to all of you, that faith organizations are uniquely positioned to get the word out about the stakes of this moment, and the tools that we have at our disposal to meet it," Granholm said.

You also might find these items of interest:

• Pope Francis tells churches: Help refugees or pay taxes
• Vatican to help IRS get taxpayers to render unto Uncle Sam
• Pope Francis urges accountants to put people before money

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