Filing for Elective Pay and the Investment Tax Credit (ITC) Bonuses as a Non-Profit Entity

TENCO SOLAR does not provide tax or accounting advice. This material has been prepared for informational purposes only and is not intended to provide, nor should it be relied on, for tax or accounting advice. You should consult your own tax, legal, and accounting advisors regarding your specific circumstances.

To assist eligible non-profit customers with filing for ITC Bonuses, we have prepared the guide below.

What is Elective Pay?

As part of the Inflation Reduction Act (IRA), tax-exempt entities are eligible to receive a cash payment equal to the Investment Tax Credit (ITC) amount they would have received for an eligible investment. 

Entities that can participate in elective pay are those that do not pay any federal income tax, including “… tax-exempt organizations, states and political subdivisions such as local governments, Indian tribal governments, rural electric cooperatives, and agencies and instrumentalities of state, local, tribal and U.S. territorial governments.” 

Beginning in 2024, solar projects 1 MW and above will be required to meet domestic content requirements to receive the full Elective Pay refund.

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How Do You File for Elective Pay and the ITC Bonuses?

Step 1: Complete the Pre-Filing Registration for the IRS

TENCO SOLAR can support you in completing your Pre-Filing Registration.

• If your entity already has a clean energy account, you only need to sign in, you do NOT need to create a new account.
• If your entity does not have a clean energy account, you will need to create: some text
  • a personal account (through ID.me) requiring a photo ID,
  • an entity account (refer to Information Needed to Complete Pre-Filing Registration for ITC Direct Pay for full list of information needed).

TENCO SOLAR, can not support you in completing Steps 2-5, you will need to consult with your own tax, legal, and accounting advisors to complete these forms.

Step 2: After completing the Pre-Filing Registration form, the entity will receive a registration number for each property.

Step 3: Complete Form 3468 – Investment Credit

• Complete Part I, Questions 1-14some text
  • Question 2a: Enter the registration number you received from the IRS. 
  • Queston 10: Answer “Yes, and section 48(a)(9)(B) is satisfied (10% bonus)” if you qualify for the Energy Community Tax Credit Bonus. 

• More information about the Energy Community Tax Credit Bonus can be found on our resource blog.

• Queston 11: Answer “Yes” to a, b, c, or d, and complete “e”, if you qualify for the Low-Income Communities Bonus Credit. some text
  • More information about the Low-Income Community Bonus Credit can be found on our website and you can also reference the US Department of Energy Low-Income Communities map.

• Complete Part VI – Section B, Section I, Section L, Section N, Part VII some text
  • Transfer the completed calculations to Form 3800.

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Step 4: Complete Form 3800 – General Business Credit

• Transfer the calculations from Form 3468 to Part III, #4a.

Step 5: Submit Forms 3468 and 3800 with your tax return or Form 990-T (“Exempt Organization Business Tax Return”) which must include your registration number to claim the payment. 

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Pre-Registration Filing and Annual Tax Returns

According to the US Treasury Pre-Filing Registration should be completed:

• After you have received Permission to Operate the solar system, but “no earlier than the beginning of the tax year in which the taxpayer will earn the credit it wishes to monetize”. 
• At least 120 days before your tax returns are due.

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Additional Resources:

• Elective Pay Frequently Asked Questions
• IRA Pre-Filing Registration Tool User Guide and Instructions
• Energy community Publication Guidance
• Frequently Asked Questions about the Bonus Tax Credit for Energy Communities
• Low-Income Communities Bonus Credit Program
• IRS Instructions for completing Form 3468
• IRS Instructions for completing Form 3800

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