Sections 4375 and 4376 impose a fee on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans to help fund the Patient-Centered Outcomes Research Trust Fund. The fee is determined by multiplying the applicable dollar amount for that year by the average number of lives covered during the year. The applicable dollar amount is based on increases in the projected per capita amount of National Health Expenditures, as most recently released by HHS. Notice 2022-4 provided that the adjusted applicable dollar amount for policy years and plan years ending on or after October 1, 2021, and before October 1, 2022, is $2.79. Notice 2022-59 provides that the adjusted applicable dollar amount that applies for determining the PCORTF fee for policy years and plan years ending on or after October 1, 2022, and before October 1, 2023, is $3.00. This amount has been determined by Treasury economists using the percentage increase in the projected per capita amount of National Health Expenditures published by HHS in March 2022 (Table 3) and the adjustment, as determined by Treasury economists, for year to year variations.

Following enactment of Public Law 117-169, 136 Stat. 1818 (August 16, 2022), commonly known as the Inflation Reduction Act of 2022 (IRA), this announcement notifies taxpayers of new credit amounts for calendar year 2022 for the renewable electricity production credit under § 45 of the Internal Revenue Code (§ 45 credit) in the case of any qualified facility placed in service after December 31, 2021. Because the IRA changed the manner in which the § 45 credit amounts are calculated in the case of any qualified facility placed in service after December 31, 2021, this announcement supplements the § 45 credit amounts as originally published in Notice 2022-20, 2022-21 I.R.B. 1095. In the case of any qualified facility placed in service before January 1, 2022, the § 45 credit amounts published in Notice 2022-20 remain unchanged.

This notice provides the adjusted applicable dollar amount to be multiplied by the average number of covered lives for purposes of calculating the fee imposed by sections 4375 and 4376 of the Internal Revenue Code for policy years and plan years that end on or after October 1, 2022, and before October 1, 2023.

Section 4375 imposes a fee on the issuer of a specified health insurance policy for each policy year ending after September 30, 2012, and before October 1, 2029. Section 4376 imposes a fee on the plan sponsor of an applicable self-insured health plan for each plan year ending after September 30, 2012, and before October 1, 2029. The fee imposed by sections 4375 and 4376 helps to fund the Patient-Centered Outcomes Research Trust Fund (PCORTF) and is calculated using the average number of lives covered under the policy or plan and the applicable dollar amount for that policy year or plan year. Under sections 4375(a) and 4376(a), the applicable dollar amount is $2 for policy and plan years ending on or after October 1, 2013, and before October 1, 2014.¹ See Treas. Reg. §§ 46.4375-1(c)(4) and 46.4376-1(c)(3).

Under sections 4375(d) and 4376(d) and §§ 46.4375-1(c)(4) and 46.4376-1(c)(3), the applicable dollar amount for policy years and plan years ending in any Federal fiscal year beginning on or after October 1, 2014, is increased based on increases in the projected per capita amount of National Health Expenditures.

Specifically, the applicable dollar amount is the sum of—

(i) The applicable dollar amount for the policy year or plan year ending in the previous Federal fiscal year; plus

(ii) The amount equal to the product of—

(A) The applicable dollar amount for the policy year or plan year ending in the previous Federal fiscal year; and

(B) The percentage increase in the projected per capita amount of the National Health Expenditures, as most recently released by the Department of Health and Human Services (HHS) before the beginning of the Federal fiscal year.

Notice 2022-4, 2022-2 IRB 309, provides that the adjusted applicable dollar amount for policy years and plan years that end on or after October 1, 2021, and before October 1, 2022, is $2.79.

The applicable dollar amount that must be used to calculate the fee imposed by sections 4375 and 4376 for policy years and plan years that end on or after October 1, 2022, and before October 1, 2023, is $3.00. The increase from the prior applicable dollar amount is calculated by multiplying $2.79 (which is the adjusted applicable dollar amount for policy years and plan years ending in the previous Federal fiscal year) by the percentage increase of the projected per capita amount of National Health Expenditures published by HHS on March 24, 2022. See: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected.html, Table 3. The percentage increase is calculated after adjustment to reflect updates to the data used to calculate the prior applicable dollar amount, $2.79, which was based on the per capita amounts of National Health Expenditures for 2021 and 2022 published by HHS on March 20, 2019.²

This notice is effective for policy years and plan years ending on or after October 1, 2022, and before October 1, 2023.

The principal author of this notice is Jason Sandoval of the Office of Associate Chief Counsel (Employee Benefits, Exempt Organizations, and Employment Taxes). For further information regarding this notice, contact Mr. Sandoval at 202–317–5500 (not a toll-free number).

¹ The applicable dollar amount is $1 for policy and plan years ending before October 1, 2013.

² HHS did not publish updated National Health Expenditures tables for fiscal year 2021.

This announcement notifies taxpayers of new credit amounts for calendar year 2022 for the renewable electricity production credit under § 45 of the Internal Revenue Code (§ 45 credit) in the case of any qualified facility placed in service after December 31, 2021. Section 45 was amended by § 13101 of Public Law 117-169, 136 Stat. 1818 (August 16, 2022), commonly known as the Inflation Reduction Act of 2022 (IRA). Because the IRA changed the manner in which the § 45 credit amounts are calculated in the case of any qualified facility placed in service after December 31, 2021, this announcement supplements the § 45 credit amounts as originally published in Notice 2022-20, 2022-21 I.R.B. 1095. In the case of any qualified facility placed in service before January 1, 2022, the § 45 credit amounts published in Notice 2022-20 remain unchanged.

As amended, § 45(a) provides that the § 45 credit for any taxable year is an amount equal to the product of 0.3 cents multiplied by the kilowatt hours of electricity produced by the taxpayer and sold to an unrelated person during the taxable year. This electricity must be produced from qualified energy resources at a qualified facility during the 10-year period beginning on the date the facility was originally placed in service.

Under amended § 45(b)(2), the 0.3 cent amount referenced in § 45(a) is adjusted by multiplying such amount by the inflation adjustment factor for the calendar year in which the sale occurs. If the 0.3 cent amount as adjusted for inflation is not a multiple of 0.05 cent, the amount is rounded to the nearest multiple of 0.05 cent.

In the case of electricity produced in open-loop biomass facilities, landfill gas facilities, trash facilities, qualified hydropower facilities, and marine and hydrokinetic renewable energy facilities, § 45(b)(4)(A) requires the amount in effect under § 45(a)(1) (determined before the application of the last two sentences of § 45(b)(2) regarding rounding) to be reduced by one-half. As amended, § 45(b)(4)(A) no longer applies to qualified hydropower facilities and marine and hydrokinetic renewable energy facilities placed in service after December 31, 2022.

New § 45(b)(6)(A) provides that, in the case of any qualified facility that satisfies the requirements of § 45(b)(6)(B), the credit amount determined under § 45(a) (determined after the application of § 45(b)(1) through (5)¹ and without regard to § 45(b)(6)) is equal to such amount multiplied by 5. A qualified facility satisfies the requirements of § 45(b)(6)(B) if it is placed in service after December 31, 2021, and is one of the following: (i) a facility with a maximum net output of less than 1 megawatt (as measured in alternating current); (ii) a facility the construction of which begins prior to the date that is 60 days after the Secretary of the Treasury or her delegate publishes guidance with respect to the requirements of § 45(b)(7)(A) (prevailing wage requirements) and § 45(b)(8) (apprenticeship requirements);² or (iii) a facility that satisfies the requirements of § 45(b)(7)(A) and (8).

Under the calculations required by § 45(b)(2) and § 45(b)(6)(A), the § 45 credit for calendar year 2022 under § 45(a) is 2.75 cents³ per kilowatt hour on the sale of electricity produced in any qualified facility placed in service after December 31, 2021, from the qualified energy resources of wind, closed-loop biomass, geothermal energy, and solar energy.

Under the calculations required by § 45(b)(2), § 45(b)(4)(A), and § 45(b)(6)(A), the § 45 credit for renewable electricity production for calendar year 2022 under § 45(a) is 1.25 cents⁴ per kilowatt hour on the sale of electricity produced in any qualified facility placed in service after December 31, 2021, that is an open-loop biomass facility, a landfill gas facility, a trash facility, a qualified hydropower facility, or a marine and hydrokinetic renewable energy facility.

The principal author of this announcement is Charles Hyde of the Office of Associate Chief Counsel (Passthroughs & Special Industries). For further information regarding this announcement contact Mr. Hyde at (202) 317-6853 (not a toll-free number).

¹ The phaseout of the § 45 credit for wind facilities provided in § 45(b)(5) does not apply to facilities placed in service after December 31, 2021.

² The publication of this announcement is not the publication of guidance with respect to the prevailing wage and apprenticeship requirements described in § 45(b)(6)(B)(ii), and it is not relevant in determining whether the prevailing wage and apprenticeship requirements are satisfied under § 45 or any other provision of the Internal Revenue Code. The Department of the Treasury and the Internal Revenue Service will explicitly identify when guidance with respect to the prevailing wage and apprenticeship requirements that is relevant for determining whether such requirements have been satisfied for purposes of any provision of the Internal Revenue Code has been published.

³ This number is determined by multiplying the base credit amount of 0.3 cent by the 2022 inflation adjustment factor (1.7593), then rounding to the nearest multiple of 0.05 cent. The rounded number is then multiplied by 5. All calendar year 2022 sales of kilowatt hours of electricity produced in any qualified facility placed in service after December 31, 2021, from the qualified energy resources of wind, closed-loop biomass, geothermal energy, and solar energy, will meet the requirements for the 5X credit multiplier under § 45(b)(6)(A).

⁴ This number is determined by multiplying the base credit amount of 0.3 cent by the 2022 inflation adjustment factor (1.7593), then reducing this number by one-half, before rounding to the nearest multiple of 0.05 cent. The rounded number is then multiplied by 5. All calendar year 2022 sales of kilowatt hours of electricity produced in any qualified facility placed in service after December 31, 2021, that is an open-loop biomass facility, a landfill gas facility, a trash facility, a qualified hydropower facility, or a marine and hydrokinetic renewable energy facility, will meet the requirements for the 5X credit multiplier under § 45(b)(6)(A).