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Additional Guidance Issued Related to IRC §48C(e) Credit

The IRS has issued additional guidance for the first round of funding for the qualifying advanced energy project credit program. Read on for details.
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On May 31, 2023, the IRS issued Notice 2023-44 (the Notice) to provide additional guidance to clarify and modify Notice 2023-18 (the February Notice) previously issued in February 2023 by the IRS and the U.S. Department of the Treasury (Treasury) to announce Round 1 of funding allocation under Internal Revenue Code (IRC) Section 48C(e).

IRC §48C was originally enacted under the American Recovery and Reinvestment Act of 2009 and allocated $2.3 billion in tax credits by tax year 2014. The Inflation Reduction Act of 2022 (IRA) allocates an additional $10 billion in investment tax credits for eligible investments in qualifying advanced energy projects (IRC §48C(e) program), of which at least $4 billion must be allocated to investments in certain energy communities.

The Notice includes Appendixes A (examples of qualifying advanced energy projects) and B (describes the U.S. Department of Energy (DOE) application process), which were previously included in the February Notice, and new Appendix C (lists §48C(e) Energy Communities Census Tracts). While modifications to Appendix A by the Notice are minor, modifications to Appendix B are substantial and provide a great deal of guidance with respect to the filing of §48C(e) concept papers and applications. The Notice also provides the criteria by which concept papers will be measured by the DOE in making recommendations to taxpayers encouraging or discouraging submissions of §48C(e) applications.

The Notice includes general guidance for the §48C(e) program, including the following:

  1. Definitions of the term “facility” for purposes of the credits under IRC §48C and §45X,
  2. Clarification regarding projects placed in service prior to being awarded an allocation of qualifying advanced energy project credits, i.e., §48C credits,
  3. The process for submitting concept papers and joint applications for DOE recommendations and for IRS §48C(e) certifications,
  4. Information regarding §48C(e) Energy Communities Census Tracts,
  5. The selection criteria used to evaluate whether a project merits a DOE recommendation,
  6. The procedures for informing the IRS and the DOE of a significant change in plans for a project that has received an allocation of §48C credits, and 
  7. The disclosure of certain information (public disclosure of taxpayer, credit allotted, etc.).

No §48C(e) Allocation if Placed in Service Prior to Allocation Award

The Notice provides that eligible property is placed in service in the earlier of the following taxable years: (1) the taxable year in which, under the taxpayer’s depreciation practice, the period for depreciation with respect to such eligible property begins; or (2) the taxable year in which the eligible property is placed in a condition or state of readiness and availability for a specifically assigned function, whether in a trade or business or in the production of income. In addition, the Notice states that to be eligible to claim a tax credit allocated under the §48C(e) program, the earliest a taxpayer may place a §48C facility in service is after receiving the allocation letter with respect to that facility.

§48C(e) Energy Communities Census Tract

The Notice also provides that a §48C facility is treated as being located within a §48C(e) Energy Communities Census Tract if the facility satisfies the square footage test, i.e., Footprint Test. The Footprint Test, as provided for in the Notice, provides that a relevant facility is considered located within a §48C(e) Energy Communities Census Tract if 50% or more of its square footage is in a specified census tract. The percentage is determined by dividing the square footage of the facility located in a §48C(e) Energy Communities Census Tract by the total square footage of the facility. The Notice further provides that a taxpayer can evaluate whether the project is located in a §48C(e) Energy Communities Census Tract by referring to the list of census tracts provided by Appendix C, or by referring to a map of such census tracts provided by the DOE. The Notice indicates Energy Community status will be made at the time the DOE provides its recommendations to the IRS and that its conclusion will not be redetermined.

Additional Guidance in Appendix B

There will be a two-stage technical evaluation process. Stage one involves concept paper submissions and stage two involves §48C(e) applications. Applications will not be considered by the DOE unless a concept paper has been submitted. The deadline to submit applications will be announced to applicants through the exchange portal after the DOE concept paper review concludes and encouragement or discouragement letters are transmitted.

Concept paper submissions will be accepted by the DOE through the eXCHANGE portal beginning no later than June 30, 2023. The DOE will only consider concept papers that are submitted by noon ET on July 31, 2023. All Round 1 allocation decisions will be made by March 31, 2024.

Appendix B of the Notice provides that all applicants must log in to the eXCHANGE portal to download all required forms and submit concept papers and §48C(e) applications. Files required for submission of concept papers, including concept paper templates and data sheets, are available online. The Notice further provides that all concept papers must conform to the following requirements:

  1. The concept paper must be written in English.
  2. All pages must be formatted to fit on 8-1/2 by 11-inch paper with margins not less than one inch on every side. Use Times New Roman typeface, a black font, and a font size of 11 points or larger (except in figures and tables). A symbol font may be used to insert Greek letters or special characters; the font size requirements still apply.
  3. References must be included as footnotes or endnotes in a font size of 10 or larger. Footnotes and endnotes are counted toward the maximum page requirement.
  4. The control number (a unique identifier generated by the eXCHANGE portal) must be prominently displayed on the upper right corner of the header of every page. Page numbers must be included in the footer of every page.
  5. Each must be submitted in Adobe PDF format unless stated otherwise.

The Notice states that the entire concept paper shall include the following three components with the maximum number of pages allowed for each component:

  1. A narrative – four pages;
  2. A workforce and community engagement plan – one page; and
  3. A data sheet – n/a (submit as a separate Excel document)

The Notice provides detailed guidance for content requirements and technical review criteria for each respective project category: Clean Energy Manufacturing and Recycling Projects; Greenhouse Gas Reduction Projects; and Critical Materials Projects. While there appears to be a great deal of information to be included in the required content, it’s important to remember that the concept paper, excluding the data sheet, cannot be more than five pages in length.

Concept papers will undergo a multistep evaluation by the DOE. These steps include:

  1. Compliance & Eligibility Review – The DOE will carry out an initial compliance review for concept papers to determine that: (1) eligibility requirements have been met; (2) the required information has been submitted; (3) the proposed project is technically valid; and (4) all mandatory requirements of this notice are satisfied. As part of this review, the DOE will determine whether the proposed project meets the definition of a qualifying advanced energy project, as described in Appendix A.
  2. Technical Review – After the concept paper compliance and eligibility review, the DOE will perform a technical review process based on four technical review criteria:
    • Criterion 1: Commercial Viability
    • Criterion 2: Greenhouse Gas Emissions Impacts
    • Criterion 3: Strengthening U.S. Supply Chains and Domestic Manufacturing for a Net-Zero Economy
    • Criterion 4: Workforce and Community Engagement
  3. Final Outcome – Following the compliance, eligibility, and technical reviews, the DOE also may consider program policy factors when determining the final portfolio of recommendations.

The Notice also provides the specific format and component requirements, including maximum pages allowed (up to 35 pages) and additional content (such as cash flow models), for submitting §48C(e) applications. Appendix B of the Notice describes the technical review criteria that the DOE will use to evaluate §48C(e) applications for each of the three specific project categories listed above, which will be based on the same four criteria listed above for concept papers. Finally, Appendix B provides an explanation of the DOE recommendation process, including a listing of program policy factors that the DOE may consider when determining its recommendation.


The IRA expanded the credits available under §48C with the establishment of the §48C(e) program that includes $10 billion in funding for securing domestic supply chains of critical materials that serve as inputs for clean energy technology, expanding U.S. manufacturing capacity of such technology, and utilizing clean energy technology to reduce greenhouse gas emissions in the U.S. industrial sector and elsewhere. Taxpayers seeking an allocation of §48C credits in Round 1 must submit a concept paper to the DOE through the eXCHANGE portal. Concept paper submissions will begin no later than June 30, 2023 and end at 12 p.m. (noon) ET on July 31, 2023. The Notice was recently issued and provides additional guidance regarding the §48C(e) program, including the process for submitting concept papers and §48C(e) applications and the selection criteria the DOE will use to evaluate whether a project merits a DOE recommendation.

To learn more about §48C credits or other federal credits, please reach out to a professional at FORVIS or use the Contact Us form below.

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