Pursuant to the requirements of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, refund, credit elections, and refund offset transactions for certain refundable portions of the IRA EPE under Internal Revenue Code section 6417 are subject to sequestration. The IRA EPE provision provides a 6.0445% gross-up or increase to offset the effects of the sequestration reduction rate of 5.7%, although not completely. These credits include: Credit for production of clean hydrogen Credit for carbon oxide sequestration Alternative fuel refueling property credit Renewable electricity production credit Zero-emission nuclear power production credit Credit for qualified commercial vehicles Advanced manufacturing production credit Clean electricity production credit (beginning January 1, 2025) Clean fuel production credit (beginning January 1, 2025) Energy credit Qualifying advanced energy project credit Clean electricity investment credit (beginning January 1, 2025) Sequestration rates are in effect when all administrative actions have been completed by the IRS and prior to refund, credit election, and/or refund offset, not when the original or amended tax return is received. Any EPE credit resulting in a refund, credit election or refund offset, processed on or after October 1, 2023, and on or before September 30, 2031, will be subject to sequestration and gross-up. The sequestration reduction rate will be applied unless and until a law is enacted that cancels or otherwise affects the sequester, at which time the sequestration reduction rate is subject to change. Affected taxpayers will be notified through correspondence that a portion of their requested payment was sequestered.
