How to leverage IRA funding for your congregation.

Introduction 

The Inflation Reduction Act (IRA) that was signed into law in August 2022 included the greatest investment in climate care provisions in history.

The climate investments in the IRA are historic and are imperative in addressing the urgent moral issue of climate justice. The new law puts the nation on the path to cut greenhouse gas emissions up to 44% by 2030, while saving thousands of lives, creating millions of good-paying clean energy jobs, investing in environmental justice, and reducing energy bills for working families across the country.

Included in the IRA, are clean energy tax credits for wind and solar, EVs, efficiency upgrades, heat pumps, and much more for nonprofits.

With the passage of the IRA, nonprofits and houses of worship now have easier access to clean energy funds and tax credits through a program called “direct pay.” Before the IRA, only homeowners and commercial entities with some tax liability could claim tax credits when installing solar panels, wind turbines, or other eligible technologies on an eligible property. Now, the “direct pay” option means non-taxable entities can also benefit from these credits.

Faith communities can leverage these new or expanded federal programs for energy and resiliency improvements.

How to leverage IRA funding for your congregation?

Step 1: Tax-exempt organizations can take advantage of certain tax credits even if they don’t have taxable income through new elective payment and transfer options. These options can be applied to certain clean energy and manufacturing credits under the Inflation Reduction Act of 2022 and CHIPS Act.

To monetize applicable credits, an authorized representative of your congregation must:

• Use this online tool to register the intention to make an elective payment or transfer election
• Include registration numbers received through the online tool on the entity’s tax return

If you already have an IRS online account, just sign in. Don’t create a new account for your congregation. If you’re a new user, have your photo identification ready. Verify your personal identity – not the congregation’s information.

As an authorized representative, the first time you use the tool for a congregation you will need to sign in and provide the following information about the entity to authorize its clean energy account:

• Employer ID number (EIN)
• Name and address

Once you sign in, follow the prompts to provide details and documentation to support the credits the congregation will report on its tax return. The information required will vary according to the credit(s) the congregation will earn. All credits and deductions can be found here. 

Step 2: Within the online portal, submit Form 3468 for the investment credit.

Here you can find both Form 3468 and instructions on how to fill out the form. 

Use this form to claim the investment credit. The investment credit is available for qualifying solar, wind, geothermal, and other clean energy projects. There is extra credit for projects in low-income communities or on Indian land.

Step 3: Within the online portal, submit Form 3800 for the business credit.

Here you can find both Form 3800 and instructions on how to claim a general business credit.

Step 4: Within the online portal, submit File 990-T as a Tax Exempt Organization. 

Here you can find Form 990-T which congregations will need to file because they normally do not file any type of tax return. 

These are the current steps as we’ve understood them from the various trainings and webinars the IRS has offered and other organizations have explained. This is dense and can be very confusing for those not familiar with tax codes. We highly recommend working with a tax expert from within your community or an outside consultant. 

Finally – if you have completed this process, please let us know how it went! Your experience will be helpful for others.