Inflation Reduction Act

On March 31, 2023, the U.S. Department of Treasury and Internal Revenue Service (IRS) released proposed guidance clarifying how manufacturers may meet the critical minerals and battery sourcing requirements for the clean vehicle tax credit under the 2022 Inflation Reduction Act (“IRA”). The IRA substantially modified the tax credit incentive structure of the Internal Revenue Code as it relates to electric vehicles (“EV”). As the demand for lithium and critical minerals is higher than ever, taxpayers and EV manufacturers alike have been eagerly anticipating this guidance.Continue Reading Tax Credits for Electric Vehicle Batteries Under the Inflation Reduction Act: Free Trade Agreement Edition

For years, domestic content requirements have been a point of pain and frustration for government contractors. Historically, these regimes typically come in the form of the proverbial stick – that is, provide products and/or services that meet these country of origin requirements, or risk severe consequences (the billions in False Claims Act Trade Agreements Act settlements speak for themselves). But through the Inflation Reduction Act of 2022, Congress has taken a unique approach by authorizing the Department of Treasury to use country of origin as a carrot – offering certain energy facilities bonus tax credits for meeting specified “domestic content” requirements. To create this new carrot, Congress relied heavily on the Government’s prior experience with domestic content regimes – pulling predominantly from the Federal Transit Authority’s (“FTA”) “Buy America” regulations, but with a Buy American Act twist. In doing so, Congress has left the renewable energy industry with more questions than answers on the applicability of the bonus tax credit to their facilities.Continue Reading Domestic Content Requirements of the Inflation Reduction Act: Basic Requirements, Qualification Analysis, and Lingering Questions