Internal Revenue Bulletin 2023-35 (PDF rendition): IRS Revenue Procedures

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Bulletin No. 2023–35
August 28, 2023
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
EMPLOYEE PLANS
Notice 2023-61, page 651.
This notice sets forth updates on the corporate bond
monthly yield curve, the corresponding spot segment rates
for August 2023 used under § 417(e)(3)(D), the 24-month
average segment rates applicable for August 2023, and
the 30-year Treasury rates, as reflected by the application
of § 430(h)(2)(C)(iv).
EXCISE TAX
Notice 2023-52, page 650.
Section 5000D of the Internal Revenue Code imposes an
excise tax on certain sales of certain drugs by manufactur-
ers, producers, and importers of the drugs. Notice 2023-52
announces that the Treasury Department and IRS intend to
issue proposed regulations under section 5000D. Specifically,
the notice proposes that future regulations will provide:
(1) rules on the scope of sales subject to the section
5000D tax;
(2) rules regarding the taxable sale price; and
(3) procedural rules intended to help taxpayers meet
their reporting and payment obligations with respect to the
tax.
EXEMPT ORGANIZATIONS
Announcement 2023-24, page 661.
Revocation of IRC 501(c)(3) Organizations for failure to
meet the code section requirements. Contributions made to
the organizations by individual donors are no longer deduct-
ible under IRC 170(b)(1)(A).
INCOME TAX
REG-109348-22, page 662.
This guidance contains proposed additions to 26 CFR part 1
(Income Tax Regulations) under section 6011 of the Internal
Revenue Code (Code). These proposed regulations would
identify monetized installment sale transactions and substan-
tially similar transactions as listed transactions, a type of
reportable transaction. Material advisors and participants in
these listed transactions would be required to file disclosures
with the IRS and would be subject to penalties for failure
to disclose. The proposed regulations would affect partici-
pants in those transactions as well as material advisors. This
document also provides a notice of a public hearing on the
proposed regulations.
Rev. Proc. 2023-27, page 655.
This revenue procedure provides clarifying and procedural
guidance applicable to the low-income communities bonus
credit program for the energy investment credit established
pursuant to the Inflation Reduction Act of 2022 (Program).
Under this Program, applicants investing in certain solar and
wind-powered electricity generation facilities may apply for
an allocation of environmental justice solar and wind capac-
ity limitation to increase the amount of an energy investment
credit under section 48 for the taxable year in which the
facility is placed in service. These procedural rules provide
guidance necessary to implement the Program, including,
in relevant part, information an applicant must submit, the
application review process, and the manner of obtaining an
allocation. This revenue procedure is being issued simulta-
neously with the final regulations applicable to the Program
provided in TD 9979.
Finding Lists begin on page ii.

T.D. 9979, page 602.
This document contains final regulations concerning the
application of the low-income communities bonus credit
program for the energy investment credit established pur-
suant to the Inflation Reduction Act of 2022 (Program).
Under this Program, applicants investing in certain solar
or wind-powered electricity generation facilities for which
the applicants otherwise would be eligible for an energy
investment credit may apply for an allocation of envi-
ronmental justice solar and wind capacity limitation to
increase the amount of the energy investment credit for
the taxable year in which the facility is placed in service.
This document provides definitions and requirements that
are applicable for this Program. These final regulations
affect applicants seeking allocations of the environmental
justice solar and wind capacity limitation to increase the
amount of the energy investment credit for which such
applicants would otherwise be eligible once the facility is
placed in service. In addition, the Treasury Department
and the IRS are also releasing a revenue procedure simul-
taneously to provide procedural and clarifying guidance
applicable to the Program.

The IRS Mission
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them understand and meet their tax responsibilities and
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Introduction
The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing offi-
cial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of inter-
nal management are not published; however, statements of
internal practices and procedures that affect the rights and
duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service
on the application of the law to the pivotal facts stated in
the revenue ruling. In those based on positions taken in rul-
ings to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature are
deleted to prevent unwarranted invasions of privacy and to
comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B,
Legislation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative
Rulings. Bank Secrecy Act Administrative Rulings are issued
by the Department of the Treasury’s Office of the Assistant
Secretary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
August 28, 2023 Bulletin No. 2023–35

Part I
26 CFR 1.48(e)-1
T.D. 9979
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Part 1
Additional Guidance on
Low-Income Communities
Bonus Credit Program
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations.
SUMMARY: This document contains
final regulations concerning the applica-
tion of the low-income communities bonus
credit program for the energy investment
credit established pursuant to the Inflation
Reduction Act of 2022. Under this pro-
gram, applicants investing in certain solar
or wind-powered electricity generation
facilities for which the applicants oth-
erwise would be eligible for an energy
investment credit may apply for an allo-
cation of environmental justice solar and
wind capacity limitation to increase the
amount of the energy investment credit
for the taxable year in which the facility
is placed in service. This document pro-
vides definitions and requirements that are
applicable for this program. These final
regulations affect applicants seeking allo-
cations of the environmental justice solar
and wind capacity limitation to increase
the amount of the energy investment
credit for which such applicants would
otherwise be eligible once the facility is
placed in service.
DATES: Effective date: These regulations
are effective on October 16, 2023.
Applicability date: For date of applica-
bility, see §1.48(e)-1(o).
FOR FURTHER INFORMATION
CONTACT: Concerning the regulations,
Whitney Brady, the IRS Office of the
Associate Chief Counsel (Passthroughs
and Special Industries) at (202) 317-6853
(not a toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains amendments
to the Income Tax Regulations (26 CFR
Part 1) relating to new section 48(e) of the
Internal Revenue Code (Code). Section
13103 of Public Law 117–169, 136 Stat.
1818, 1921 (August 16, 2022), commonly
known as the Inflation Reduction Act of
2022 (IRA), added new section 48(e) to
the Code to increase the amount of the
energy investment credit determined
under section 48(a) (section 48 credit)
with respect to eligible property of the
taxpayer that is part of a qualified solar
or wind facility if the taxpayer applies
for and is awarded an allocation of envi-
ronmental justice solar and wind capacity
limitation (Capacity Limitation) as part
of the low-income communities bonus
credit program for the section 48 credit
(Low-Income Communities Bonus Credit
Program or Program).
1
This document
contains final definitions and rules appli-
cable to the Program.
The section 48 credit for a taxable year
is generally calculated by multiplying
the basis of each energy property placed
in service by a taxpayer during that tax-
able year by the energy percentage (as
defined in section 48(a)(2)). Section 48(e)
increases the taxpayer’s section 48 credit
by increasing the energy percentage used
to calculate the amount of the section 48
credit (section 48(e) Increase) in the case
of eligible property that is part of a quali-
fied solar or wind facility that receives an
allocation of Capacity Limitation under
the Program.
On February 13, 2023, the Department
of the Treasury (Treasury Department) and
the IRS released Notice 2023-17, 2023-10
I.R.B. 505, to establish the Program. Notice
2023-17 also provided initial Program
guidance regarding applicable definitions
and Program requirements.
On June 1, 2023, the Treasury
Department and the IRS published in the
Federal Register (88 FR 35791) a notice
of proposed rulemaking (REG-110412-23,
2023-26 I.R.B. 1098) under section 48(e)
(Proposed Rules) relating to the Program.
Numerous commenters responded to the
Proposed Rules, and after consideration
of all comments received by June 30,
2023, the Proposed Rules are adopted as
modified by this Treasury decision. The
areas of comment and the revisions to
the Proposed Rules are discussed in the
following Summary of Comments and
Explanation of Revisions section of this
preamble. The comments are available
for public inspection at https://www.regu-
lations.gov or upon request. Other minor,
editorial, and clarifying revisions made
to the Proposed Rules as adopted in these
final regulations are not discussed in the
Summary of Comments and Explanation
of Revisions section of this preamble.
As announced in Proposed Rules, the
Treasury Department and the IRS are also
providing procedural and clarifying guid-
ance applicable to the Program in Revenue
Procedure 2023-27, 2023-35 I.R.B. This
procedural and clarifying guidance is
being issued simultaneously with these
final regulations and provides the process
for applying to the Program. These proce-
dural rules provide guidance necessary to
implement the Program, including, in rel-
evant part, information an applicant must
submit, the application review process,
and the manner of obtaining an allocation.
Summary of Comments and
Explanation of Revisions
I. Definition of Qualified Solar or Wind
Facility
Section 48(e)(2)(A) and the Proposed
Rules define a single qualified solar
or wind facility as any facility that (i)
1
This notice of proposed rulemaking uses the terms “taxpayer” and “applicant” interchangeably (as the context may require) to avoid confusion given that persons eligible to apply for an
allocation of Capacity Limitation under the Program may be exempt from or otherwise not subject to Federal income taxes imposed by chapter 1 of the Code.
August 28, 2023 602 Bulletin No. 2023–35

generates electricity solely from a wind
facility, solar energy property, or small
wind energy property; (ii) has a max-
imum net output of less than 5 mega-
watts (MW) (as measured in alternating
current (AC)); and (iii) is described in
at least one of the four facility catego-
ries described in section 48(e)(2)(A)(iii)
(Category 1, 2, 3, or 4 are described in
more detail in part III of this Summary of
Comments and Explanation of Revisions
section). In addition, for purposes of
determining allocations, administering
the Program fairly, and avoiding abuse,
the Proposed Rules provided that mul-
tiple solar or wind energy properties or
facilities that are operated as part of a
single project would be aggregated and
treated as a single facility. Whether mul-
tiple facilities or energy properties are
operated as part of a single project would
depend on the relevant facts and circum-
stances and would be evaluated based on
the factors provided in section 7.01(2)(a)
of Notice 2018–59 or section 4.04(2) of
Notice 2013–29, as applicable.
A few commenters suggested the
Treasury Department and the IRS should
not impose the single project factors to
aggregate multiple facilities or energy
properties into a single facility for pur-
poses of these regulations. For exam-
ple, some commenters said this does not
work well for Tribal or some other par-
tially-consolidated “projects” that may
share ownership, financing, and other
factors for efficiency, yet are different
and distinguishable facilities. Some of
the commenters suggested that a Tribe
must be allowed to apply Capacity
Limitation allocations for multiple
projects, as separate projects, to allow
for phased deployment of projects, and
to treat each phase as a different proj-
ect. Another commenter recommended
relaxing restrictions in the project defi-
nition so long as a reasonable period has
elapsed to ensure adequate competitive
forces in the market become established
or suggested a carve-out from this rule
for certain projects. An additional com-
menter suggested that if certain factors
are present, those single factors stand-
ing alone should result in energy prop-
erties or facilities being regarded as a
single project (that is, apart from other
properties or facilities with which they
might otherwise be grouped) without the
need to apply all of the factors provided
in section 7.01(2)(a) of Notice 2018–59
or section 4.04(2) of Notice 2013–29, as
applicable. Similarly, a commenter noted
that co-located sites are typically permit-
ted as a single project, even though the
interconnection, ownership, financing,
and construction of the facilities are con-
ducted independently. This commenter
stated that maintaining the requirement
of one project per permit should not
disqualify either project from receiving
allocation under the Program.
The Treasury Department and the IRS
determined that to prevent some appli-
cants from attempting to circumvent
the less than 5 MW maximum net out-
put limitation provided in section 48(e)
(2)(A)(ii) by artificially dividing larger
projects into multiple facilities, it is nec-
essary to incorporate the single project
factors tests provided in section 7.01(2)
(a) of Notice 2018–59 or section 4.04(2)
of Notice 2013–29, as applicable, into
the definition of qualified solar or wind
facility. Therefore, the final regulations
generally adopt the definition of quali-
fied solar or wind facility provided in the
Proposed Rules. However, the final regu-
lations clarify that if multiple facilities or
energy properties are regarded as a single
facility for purposes of this rule, they will
be regarded as a single facility for all pur-
poses under the Program. Additionally,
to alleviate some commenters’ concerns
that multiple energy properties or facil-
ities that satisfy any of the listed factors
will conclusively result in a single project
determination, the final regulations clarify
that whether multiple facilities or energy
properties are operated as part of a single
project and thus treated a single facility,
will depend on the relevant facts and cir-
cumstances. Thus, a single factor or fac-
tors are not determinative.
A commenter noted that the Proposed
Rules specify that a qualified facility refers
to a solar energy property with an output
of less than 5 MW and recommended
aligning the Program with the industry
standard by allowing projects that have a
capacity of up to 5 MW. This comment is
not adopted because section 48(e)(2)(A)
(ii) limits the Program to facilities that
have a maximum net output of less than 5
MW (as measured in AC).
II. Four Categories of Qualified Solar or
Wind Facilities
Depending on the category of the facil-
ity, an allocation of Capacity Limitation
under the Program may result in a sec-
tion 48(e) Increase equal to either 10 per-
centage points or 20 percentage points.
Section 48(e)(1)(A)(i) provides for a
section 48(e) Increase of 10 percentage
points for eligible property that is located
in a low-income community (Category 1
facility), or on Indian land (Category 2
facility). Section 48(e)(1)(A)(ii) provides
for a section 48(e) Increase of 20 per-
centage points for eligible property that is
part of a qualified low-income residential
building project (Category 3 facility) or
a qualified low-income economic benefit
project (Category 4 facility).
Under section 48(e)(2)(A)(iii)(I), the
term low-income community is generally
defined under section 45D(e)(1), with cer-
tain modifications described elsewhere in
section 45D(e), as any population census
tract if the poverty rate for such tract is at
least 20 percent, or, in the case of a tract
not located within a metropolitan area,
the median family income for such tract
does not exceed 80 percent of statewide
median family income, or in the case of
a tract located within a metropolitan area,
the median family income for such tract
does not exceed 80 percent of the greater
of statewide median family income or the
metropolitan area median family income.
Section 48(e)(2)(A)(iii)(I) provides that
Indian land is defined in section 2601(2)
of the Energy Policy Act of 1992 (25
U.S.C. 3501(2)). The final regulations
clarify that the poverty rate for a census
tract is generally based on the 2011-2015
American Community Survey (ACS)
low-income community data for the New
Markets Tax Credit (NMTC), however, if
updated data is released, a taxpayer can
choose to base the poverty rate for any
population census tract on either the 2011-
2015 ACS low-income community data or
the updated ACS low-income community
data for a period of 1 year following the
date of the release of the updated data.
After the 1-year transition period, the
updated ACS low-income community
data must be used. Applicants who satisfy
the definition of low-income community
at the time of application are considered to
Bulletin No. 2023–35 603 August 28, 2023

August 28, 2023 604 Bulletin No. 2023–35
continue to meet the definition of low-in-
come community for the duration of the
recapture period, unless the location of the
facility changes.
Section 48(e)(2)(B) provides that a
facility will be treated as part of a qualified
low-income residential building project if
(i) such facility is installed on a residen-
tial rental building that participates in a
covered housing program (as defined in
section 41411(a) of the Violence Against
Women Act of 1994 (34 U.S.C. 12491(a)
(3)) (VAWA), a housing assistance pro-
gram administered by the Department of
Agriculture (USDA) under title V of the
Housing Act of 1949, a housing program
administered by a Tribally designated
housing entity (as defined in section 4(22)
of the Native American Housing
Assistance and Self-Determination Act
of 1996 (25 U.S.C. 4103(22)), or such
other affordable housing programs as the
Secretary may provide, and (ii) the finan-
cial benefits of the electricity produced
by such facility are allocated equitably
among the occupants of the dwelling units
of such building.
Section 48(e)(2)(C) provides that a
facility will be treated as part of a qualified
low-income economic benefit project if at
least 50 percent of the financial benefits of
the electricity produced by such facility
are provided to households with income
of less than 200 percent of the poverty
line (as defined in section 36B(d)(3)(A)
of the Code) applicable to a family of the
size involved, or less than 80 percent of
area median gross income (as determined
under section 142(d)(2)(B) of the Code).
One commenter stated that the stat-
ute does not provide for “facility catego-
ries” and that what section 48(e)(2)(A)
(iii) describes is not four distinct facility
categories, but four ways of meeting geo-
graphic or benefits-based qualifying crite-
ria. The Treasury Department and the IRS
determined that a change in the final reg-
ulations is not necessary because the use
of facility categories as a means of differ-
entiating the four distinct geographic or
benefits-based qualifying criteria is con-
sistent with the statute and serves as an
administratively convenient mechanism
to distinguish among them and describe
requirements and definitions applicable
to each. Accordingly, as discussed in part
II of this Summary of Comments and
Explanation of Revisions section, the final
regulations, consistent with the Proposed
Rules, require a qualified solar or wind
facility to be described in one of the four
categories described in section 48(e)(2)
(A)(iii) (Category 1, 2, 3, or 4).
Another commenter asked for clar-
ification on whether a project must just
be located in a low-income community
or whether benefits must also go to a
low-income community to qualify for
each category. The Treasury Department
and the IRS considered the comment
but did not make a change because the
Proposed Rules and now the final regula-
tions clearly describe the categories that
have applicable benefits sharing require-
ments consistent with statutory require-
ments, so no change is necessary. For
Category 1 and Category 2, section 48(e)
(2)(A)(iii)(I) requires a facility to be
located in a low-income community (as
defined in section 45D(e)) or on Indian
land (as defined in section 2601(2) of the
Energy Policy Act of 1992 (25 U.S.C.
3501(2))), but the statute, and accord-
ingly the final regulations, do not impose
any requirements to share financial ben-
efits with low-income subscribers or
households. Conversely, for Category 3
and Category 4, section 48(e)(2)(B) and
(C) does impose benefits sharing require-
ments, and those rules were included in
the Proposed Rules and are provided in
these final regulations as modified. See
part V of this Summary of Comments
and Explanation of Revisions section
for more discussion regarding those
requirements.
Specific to Category 2, another com-
menter noted that the definition of located
on Indian land should include simple fee
and trust lands located off-reservation
owned by Tribes. Trust lands located
off-reservation are covered under the
statutory definition of Indian land refer-
enced in section 48(e)(2)(A)(I). Fee lands,
however, would only be covered if they
are included within the boundaries of a
reservation or in the census categories
included within the Indian land defini-
tion. Therefore, the final regulations did
not adopt the commenter’s suggestion
and define “Indian land” by reference to
section 2601(2) of the Energy Policy Act
of 1992 (25 U.S.C. 3501(2)) without addi-
tional clarification.
Specific to Category 3, a commenter
asked for clarification that the installa-
tion of a facility on a “residential rental
building” extends to the curtilage of the
building, including carports, sheds, and
open space on the same property. Another
commenter asked for similar clarifica-
tion stating that the guidance currently
defines a facility as eligible if it is a facil-
ity installed on an eligible building. This
commenter stated that this is an overly
narrow statement that would not include
adjacent carport or ground-mount solar
on the same parcel. The commenter
encouraged the Treasury Department
and the IRS to include these other solar
installation locations, as rural and sub-
urban section 42 low-income housing
credit (commonly referred to as LIHTC)
properties often have excess land or large
parking areas due to zoning requirements
that could host solar installations. The
final regulations adopt this comment
by clarifying that a facility is treated as
installed on a residential rental build-
ing that participates in a covered hous-
ing program or other affordable housing
program (Qualified Residential Property)
even if that facility is not on the Qualified
Residential Property if the facility is
installed on the same or adjacent par-
cel of land as the Qualified Residential
Property, and the other requirements to
be a Category 3 facility are satisfied.
Several commenters requested that the
Treasury Department and the IRS cate-
gorically include any LIHTC project as a
Category 3 project. Section 48(e)(2)(B)(i)
provides that a covered housing program is
defined in VAWA. The statutory cross-ref-
erence is comprehensive and includes
numerous types of housing programs and
policies across Federal agencies, includ-
ing the low-income housing credit under
section 42 of title 26. Accordingly, a solar
or wind facility that is installed on a “qual-
ified low-income building” under section
42 is eligible for Category 3. In response
to commenters’ general inquiries on cov-
ered housing programs, the Treasury
Department and the IRS, in consultation
with other Federal agencies, developed
an illustrative list of Federal housing pro-
grams and policies that meet the require-
ments in section 48(e)(2)(B)(i). This list
will be made available on the Program
webpage and is also listed here:

Bulletin No. 2023–35 605 August 28, 2023
Covered housing programs and policies
(as defined in VAWA) with active afford-
ability covenants tied to the following:
• Department of Housing and Urban
Development’s (HUD) Section 202
Supportive Housing for the Elderly,
including the direct loan program
under Section 202;
• HUD’s Section 811 Supportive Hous-
ing for Persons with Disabilities;
• HUD’s Housing Opportunities for
Persons With AIDS (HOPWA) pro-
gram;
• HUD’s homeless programs under
title IV of the McKinney-Vento
Homeless Assistance Act, including
the Emergency Solutions Grants pro-
gram, the Continuum of Care pro-
gram, and the Rural Housing Stability
Assistance program;
• HUD’s HOME Investment Partner-
ships (HOME) program;
• Federal Housing Administration (FHA)
mortgage insurance under Section
221(d)(3) subsidized with a below-mar-
ket interest rate (BMIR) prescribed in
the proviso of Section 221(d)(5) of the
National Housing Act;
• HUD’s Section 236 interest rate
reduction payments;
• HUD Public Housing assisted under
section 9 of the United States Housing
Act of 1937;
• HUD tenant-based and project-based
rental assistance under section 8 of
the United States Housing Act of
1937;
• HUD Section 8 Moderate Rehabili-
tation Program;
• HUD Section 8 Moderate Rehabili-
tation Single Room Occupancy Pro-
gram for Homeless Indi viduals;
• USDA Section 515 Rural Rental
Housing;
• USDA Section 514/516 Farm Labor
Housing;
• USDA Section 538 Guaranteed Rural
Rental Housing;
• USDA Section 533 Housing Pre ser-
vation Grant Program;
• Treasury/IRS Low-Income Housing
Credit under section 42 of the Code;
• HUD’s National Housing Trust Fund;
• Veterans Administration’s (VA) Com-
prehensive Service Programs for
Home less Veterans;
• VA’s grant program for homeless vet-
erans with special needs;
• VA’s financial assistance for support-
ive services for very low-income vet-
eran families in permanent housing;
and/or
• Department of Justice transitional
housing assistance grants for victims
of domestic violence, dating violence,
sexual assault, or stalking.
Section 48(e)(2)(B)(i) also includes the
following Federal housing programs:
• Housing assistance programs admin-
istered by the USDA under title V of
the Housing Act of 1949; and/or
• Housing programs administered by an
Indian Tribe or a Tribally designated
housing entity (as defined in section
4(22) of the Native American Housing
Assistance and Self-Determination
Act of 1996 (25 U.S.C. 4103(22)).
One commenter also requested that
Federal Weatherization Assistance Pro-
gram (WAP) affordable housing cate-
gorically qualify as Category 3 covered
housing. The WAP is not a housing pro-
gram. The WAP is a program of the DOE
that provides weatherization services and
support for qualifying housing but does
not provide or administer the actual hous-
ing. Therefore, the WAP program is not
included as a Category 3 housing program.
Several commenters also requested that
Category 3 include as an eligible residen-
tial rental building housing that is enrolled
under a State-specific low-income housing
program that is not enrolled, or may not
qualify, under the statutorily listed Federal
housing programs. Similarly, several com-
menters requested that housing authorities
under State programs be able to appeal
for qualification under the Program. One
commenter provided that housing author-
ities should be able to prove they meet
certain minimum criteria and thresholds
beyond enrollment in specified Federal
programs.
State specific housing programs do not
categorically qualify as Qualified Resi-
dential Properties nor do the facilities
installed on such buildings categorically
meet the requirements of section 48(e)
(2)(B). The statute specifically lists
only Federal housing programs and pro-
vides that the Secretary may include
other affordable housing programs. The
Treasury Department and the IRS decline
to include additional housing programs in
the final regulations at this time so that the
Program will focus on the statutorily-pre-
scribed housing programs. However, the
Treasury Department and the IRS may
include additional housing programs in
future Program guidance.
The final regulations also do not pro-
vide a special review process for housing
authorities to be considered as qualifying
under State specific programs for the same
reasons as provided earlier regarding State
program eligibility. Moreover, a housing
authority is not the same thing as a hous-
ing program. It is the solar or wind facility
that is being reviewed, upon application,
to determine whether the facility qualifies
for an allocation, and not a specific housing
authority or building that the facility will
serve. The building on which the facility
is built must already be a part of a Qualified
Residential Property, otherwise the facil-
ity is not eligible under the requirements
for Category 3.
One commenter also requested greater
protection for the tenants of a Qualified
Re si dential Property when a facility ap-
plies for or receives an allocation under
Category 3. The commenter requested rent
protection for the life of the solar or wind
facility to ensure tenants are not subject to
rent increases due to the installation of the
solar or wind facility. The commenter also
requested eviction protection, relocation
assistance for tenants affected by construc-
tion, with a right of return for those tenants
after construction, a sales restriction of five
years for the building on which the facil-
ity is installed, and strong enforcement
mechanisms.
The Treasury Department and the IRS
considered this comment but did not adopt
the commenter’s suggestions because the
requirements recommended by the com-
menter are outside the scope of section
48(e) and therefore what could be imple-
mented by these final regulations.
III. Eligible Property, including Energy
Storage Technology Installed in
Connection with Solar or Wind Facility
“Eligible property” as defined by sec-
tion 48(e)(3) means energy property that
(i) is part of a wind facility described in
section 45(d)(1) for which an election to
treat the facility as energy property was

August 28, 2023 606 Bulletin No. 2023–35
made under section 48(a)(5) (wind fa-
cility), or (ii) is solar energy property
described in section 48(a)(3)(A)(i) (so-
lar energy property) or qualified small
wind energy property described in sec-
tion 48(a)(3)(A)(vi) (small wind energy
property). Eligible property also includes
energy storage technology (as described
in section 48(a)(3)(A)(ix)) “installed in
connection with” such energy property.
The Proposed Rules defined “installed
in connection with” for energy storage
technology to demonstrate what is required
for such energy storage technology to be
considered eligible property under section
48(e)(3), providing that this is met if both
(1) the energy storage technology and
other eligible property are considered part
of a single qualified solar or wind facil-
ity because the energy storage technology
and other eligible property are owned by a
single legal entity, located on the same or
contiguous pieces of land, have a common
interconnection point, and are described
in one or more common environmental
or other regulatory permits; and (2) the
energy storage technology is charged no
less than 50 percent by the other eligible
property.
The Proposed Rules also added a safe
harbor, which would deem the energy
storage technology to be charged at least
50 percent by the facility if the power
rating of the energy storage technology
is less than 2 times the capacity rating of
the connected wind facility (in kW AC) or
solar facility (in kW direct current (DC)).
A commenter stated that the last sen-
tence relating to the safe harbor appears
to have the phrases “power rating” and
“capacity rating” reversed, and to have
omitted how energy storage is measured.
The commenter stated that energy storage
is measured in kWh, a measure of energy.
A generating facility such as a solar or
wind farm produces power, measured
in kW. The commenter believes that the
apparent intended meaning of the sen-
tence would be better rendered with: “The
Treasury Department and the IRS also
propose to add a safe harbor, which would
deem the energy storage technology to be
charged at least 50 percent by the facility if
the [capacity] rating of the energy storage
technology [(in kWh)] is less than 2 times
the [power] rating of the connected wind
facility (in kW AC) or solar facility (in kW
DC).” The Treasury Department and the
IRS considered this comment, but the final
regulations do not adopt the commenter’s
suggestion.
2
For energy storage, the power
rating (measured in kilowatts) indicates
how much power can flow into or out of
the battery in any given instant. It is simi-
lar to the capacity rating of a solar or wind
facility, which indicates how much power
can theoretically come out of the solar or
wind facility in any given instant. In this
context, the Treasury Department and the
IRS accurately referred to the “power rat-
ing” of the energy storage technology.
Additionally, a couple of commenters
requested that the Treasury Department
and the IRS eliminate the requirement that
energy storage technology be charged at
least 50 percent by other eligible property.
These commenters point to the general
language in sections 48(a)(2)(A)(i)(VI)
and 48(c)(6) on energy storage technology
and argue against including the charging
requirement for section 48(e). One com-
menter said there is no statutory basis to
require energy storage technology to be
charged by other eligible energy property
and this goes against Congressional intent.
Another commenter said this rule may set
a problematic and inequitable precedent
in the context of the underlying section
48 credit, which Congress deliberately
moved away from this standard in the IRA
to better promote the benefits of energy
storage, and that the standard for storage
inclusion should not be more burdensome
for environmental justice communities or
Tribes than for other projects seeking the
section 48 credit.
The general language in sections 48(a)
(2)(A)(vi) and 48(c)(6) describing energy
storage technology eligible for the sec-
tion 48 credit differs from what Congress
included when describing energy storage
technology eligible for a section 48(e)
Increase. Eligible property as described in
section 48(e)(3) includes energy storage
technology (as described in section 48(a)
(3)(A)(ix)) installed in connection with
other eligible energy property. The use
of the phrase “in connection with” limits
the energy storage technology eligible for
a section 48(e) Increase to energy storage
that is installed in connection with the
eligible solar or wind facility. The gen-
eral energy storage technology language
in section 48 includes no such limiting
language. As required by the statute, the
Treasury Department and the IRS deter-
mined that the proposed rule serves to
ensure that energy storage technology
eligible for a section 48(e) Increase has a
sufficient nexus to the eligible property.
The Treasury Department and the IRS
provide taxpayers with the safe harbor
described earlier as a means of deeming
the energy storage technology as satisfy-
ing the requirement that it be charged no
less than 50 percent by the other eligible
property. The Proposed Rule applies uni-
formly to all taxpayers seeking an allo-
cation of Capacity Limitation. Therefore,
the final regulations retain the requirement
that the energy storage technology must
be charged no less than 50 percent by the
other eligible property. However, to pro-
vide additional guidance on the applica-
tion of this standard, the final regulations
clarify that “50 percent” is based on an
annual average.
Another commenter suggested elim-
inating the co-location requirement
applicable to energy storage technol-
ogy because the language of the statute
can and should be interpreted to include
storage projects that have firm, contrac-
tual offtake agreements with offsite solar
or wind projects, and that these projects
would be located within the same balanc-
ing authority, ensuring that all benefits are
local. The final regulations do not adopt
the commenter’s suggestion because the
Treasury Department and the IRS view
the Proposed Rule that the energy stor-
age technology be located on the same
or contiguous pieces of land as the other
eligible property as consistent with the
statutory requirement that limits energy
storage technology eligible for a section
48(e) Increase to only energy storage tech-
nology that is installed in connection with
other eligible property.
2
The commenter correctly identified that the Proposed Rules omitted how energy storage is measured. The omission was an error, and the Treasury Department and the IRS issued a correc-
tion to the Proposed Rules published in the Federal Register (88 FR 41340) on June 26, 2023, to clarify that the power rating of the energy storage technology is measured in kW. The final
regulations incorporate this correction.

Bulletin No. 2023–35 607 August 28, 2023
Finally, one commenter requested
clarification that the power rating of con-
nected energy storage technology will not
be counted against a facility’s Capacity
Limitation allocation. Because the final
regulations, consistent with the Proposed
Rules, define a qualified solar or wind
facility eligible for a Capacity Limitation
without reference to energy storage tech-
nology, the Treasury Department and the
IRS believe this clarification in the final
regulations is unnecessary.
A few commenters also requested that
final regulations expand the definition of
“in connection with” under section 48(e)
(3)(B) applicable to energy storage tech-
nology to include interconnection property
under section 48(a)(8), so that intercon-
nection costs are eligible for purposes of
calculating the section 48(e) Increase.
Section 48(e)(3)(B) provides that
energy storage technology defined under
section 48(a)(3)(A)(ix) installed in con-
nection with eligible solar or wind prop-
erty described in section 45(d)(1) or
section 48(a)(3)(A)(i) or (vi) is eligible
property for purposes of calculating the
section 48(e) Increase. Neither section
48(e)(3)(B) nor any other provision appli-
cable to section 48(e) includes intercon-
nection property or costs in the definition
of eligible property. Therefore, the final
regulations do not adopt these comment-
ers’ suggestion.
IV. Location
The Proposed Rules provided that a
qualified solar or wind facility is treated
as “located in a low-income community”
or “on Indian land” under section 48(e)
(2)(A)(iii)(I) or located in a geographic
area under the Additional Selection
Criteria (see part VII of this Summary of
Comments and Explanation of Revisions
section) if the facility satisfies the name-
plate capacity test (Nameplate Capacity
Test).
Under the Nameplate Capacity Test, a
facility that has nameplate capacity (for
example, wind and solar facilities) is con-
sidered located in or on the relevant geo-
graphic area if 50 percent or more of the
facility’s nameplate capacity is in a qual-
ifying area. A facility’s nameplate capac-
ity percentage is determined by dividing
the nameplate capacity of the facility’s
energy-generating units that are located in
the qualifying area by the total nameplate
capacity of all the energy-generating units
of the facility.
Nameplate capacity for an electric-
ity generating unit means the maximum
electricity generating output that the unit
is capable of producing on a steady state
basis and during continuous operation
under standard conditions, as measured
by the manufacturer and consistent with
the definition provided in 40 CFR 96.202.
Energy-generating units that generate
DC power before converting to AC (for
example, solar photovoltaic) should use
the nameplate capacity in DC, otherwise
the nameplate capacity in AC should be
used (for example, wind facilities). Where
applicable, the International Standard
Organization conditions are used to mea-
sure the maximum electricity generating
output or usable energy capacity. The
nameplate capacity of any energy storage
technology installed in connection with
the qualified solar or wind facility does
not affect the assessment of the Nameplate
Capacity Test.
A few commenters noted concerns on
the Nameplate Capacity Test and what it
means to be “located in.” Another com-
menter suggested that the Nameplate
Capacity Test should provide maximum
flexibility. This commenter noted that
Tribal lands are often not contiguous, and
that new housing is limited so it is often
off-reservation and there are also issues of
right of way.
The Nameplate Capacity Test to deter-
mine the location of a facility already
inherently provides flexibility because
it only requires that 50 percent or more
(rather than a larger percentage) of the
facility’s nameplate capacity be in a qual-
ifying area. The Treasury Department
and the IRS concluded that a 50 percent
standard is a reasonable standard, which
strikes the right balance between provid-
ing flexibility to taxpayers and ensuring
that statutory requirements are satisfied.
Additionally, this standard is familiar to
taxpayers because it is the same standard
that is used to determine whether a facility
is located in an energy community under
Notice 2023-29, 2023-20 IRB 1.
Other commenters had concerns about
the use of AC and DC. These comment-
ers said that the Treasury Department and
the IRS should update the Proposed Rules
to clarify that the use of DC is limited
to project location and does not apply to
the maximum output of a qualified facil-
ity. One commenter also added that the
Treasury Department and the IRS should
update the Proposed Rules to clarify that
an allocation will not be reduced if a qual-
ified facility’s AC output is less than the
facility’s DC output. Additionally, a few
commenters suggested that the nameplate
capacity for both wind and solar facil-
ities should be based on AC as the stat-
ute indicates and questioned the differing
standard.
In response to these comments, the
Treasury Department and the IRS added
language in the final regulations to clar-
ify that the Nameplate Capacity Test
only applies for purposes of determining
whether a facility is located in a qualify-
ing area. The Treasury Department and
the IRS did not modify the Nameplate
Capacity Test to remove the reference to
DC for measuring the nameplate capac-
ity of a solar facility because nameplate
capacity for a solar facility is appropri-
ately measured in DC. Solar facilities
produce electricity in DC, which is then
converted to AC for end use. Conversely,
wind facilities produce electricity in AC.
V. Financial Benefits for Category 3 and
Category 4 Allocations
Section 48(e)(2)(D) provides that
“electricity acquired at a below market
rate” will not fail to be taken into account
as a financial benefit. The Proposed Rules
provided definitions of the terms “finan-
cial benefit” and “electricity acquired at
a below market rate” under section 48(e)
(2)(D), as well as a manner to apply such
definitions, appropriately, to qualified
low-income residential building projects
(section 48(e)(2)(B)) and qualified eco-
nomic benefit projects (section 48(e)(2)
(C)).
A. Financial benefits for qualified low-
income residential building projects
For a facility to be treated as part of a
qualified low-income residential building
project, section 48(e)(2)(B)(ii) provides
that the financial benefits of the elec-
tricity produced by such facility must

August 28, 2023 608 Bulletin No. 2023–35
be allocated equitably among the occu-
pants of the dwelling units of a Qualified
Residential Property. The Proposed Rules
reserved allocations under this category
exclusively for applicants that would
apply the financial benefits requirement
under Category 3 in the following manner.
The Proposed Rules provided that
financial benefits can be demonstrated
through net energy savings as defined
later. At least 50 percent of the finan-
cial value of net energy savings would
be required to be equitably passed on to
building occupants. This requirement
would recognize that not all the financial
value of the net energy savings can be
passed on to building occupants because
a certain percentage can be assumed to be
dedicated to lowering the operational costs
of energy consumption for common areas,
which benefits all building occupants. The
Proposed Rules provided that applicants
must equitably pass on net energy savings
by distributing equal shares among the
Qualified Residential Property’s units that
are designated as low-income under the
covered housing program, or by distrib-
uting proportional shares based on each
dwelling unit’s electricity usage.
The Proposed Rules accounted for the
specific nature of facilities serving low-in-
come residential buildings and facility
ownership, as the facility may be third-
party owned or commonly owned with the
building.
In scenarios where the facility and
the Qualified Residential Property have
the same ownership, the Proposed Rules
defined the financial value of net energy
savings as the financial value equal to
the greater of: (1) 25 percent of the gross
financial value of the annual energy pro-
duced or (2) the gross financial value of
the annual energy produced minus the
annual costs to operate the facility. Gross
financial value of the annual energy pro-
duced is calculated as the sum of (a) the
total self-consumed kilowatt-hours pro-
duced by the qualified solar or wind facil-
ity multiplied by the applicable building’s
metered price of electricity and (b) the
total exported kilowatt-hours produced
by the qualified solar or wind facility
multiplied by the applicable building’s
volumetric export compensation rate for
solar or wind kilowatt-hours. The annual
operating costs are calculated as the sum
of annual debt service, maintenance,
replacement reserve, and other costs asso-
ciated with maintaining and operating the
qualified solar or wind facility.
If the facility and building are com-
monly owned, a signed benefit-sharing
agreement between the building owner
and the tenants would be required. The
Proposed Rules requested comments on
how to adjust definitions of gross financial
value to account for scenarios in which
building occupants are compensating the
facility owner for energy services.
In scenarios where the facility and the
Qualified Residential Property have dif-
ferent ownership and the facility owner
enters into a power purchase agreement
(PPA) or other contract for energy ser-
vices with the Qualified Residential
Property owner, the Proposed Rules
defined net energy savings as equal to the
greater of: (1) 50 percent of the financial
value of the annual energy produced by
the facility that accrues to the owner of the
Qualified Residential Property in the form
of utility bill credit and/or cash payments
for net excess generation or (2) the finan-
cial value of the annual energy produced
by the facility that accrues to the owner
of the Qualified Residential Property in
the form of utility bill credit and/or cash
payments for net excess generation minus
any payments made by the building owner
to the facility owner for energy services
associated with the facility in a given year.
In these scenarios, the facility owner must
enter into an agreement with the building
owner for the building owner to distribute
the savings to residents.
1. Requirement to Equitably Allocate
Financial Benefits
Two commenters provided that under
certain State and Federal housing pro-
grams, housing authorities receive utility
subsidies based on historical utility costs.
These commenters also noted that a hous-
ing authority may have their utility allow-
ance decreased if the housing authority
reduces their utility costs through sav-
ings from the facility. Additionally, these
commenters stated that the department
managing a housing authority can claim
a portion of net metering credits if the
housing authority receives net metering
credits. One of the commenters, therefore,
requested that the Treasury Department
and the IRS draft a rule that the housing
authority be able to retain 100 percent
of net metering credits, regardless of the
energy savings received from the program
and the facility. The other commenter
requested that the Treasury Department
and the IRS waive the requirement for
public housing authorities to pass finan-
cial benefits along to residents. This com-
menter stated that in public housing, all
benefits ultimately accrue to the benefit of
residents. Another commenter stated that
HUD-utility allowances may need to be
increased for buildings if net benefits are
to be shared between the owner and ten-
ants, and the external financing is used to
build the system, such that additional pro-
ceeds will be needed to pay debt service
on the energy.
The Treasury Department and the IRS
considered these comments but did not
adopt them in the final regulations because
section 48(e)(2)(B) requires that the finan-
cial benefits of the electricity produced by
the facility be allocated equitably among
the occupants of the Qualified Residential
Property.
One commenter warned the Treasury
Department and the IRS to guard against
owner/related party financing designed
to capture all or most of the energy sav-
ings benefits by artificially manipulating
their terms of the financing to capture the
savings during the term of the credit, and
against owners seeking to purchase energy
wholesale and mark up value to tenants to
artificially inflate the value of the energy
savings. The commenter says the value of
the energy bill savings should be indexed
against the approved meter rate as autho-
rized by the relevant public service com-
mission (where applicable) or some other
third-party verifiable rate unrelated to the
project sponsor or affiliates.
In response to this comment, the
Treasury Department and the IRS have
maintained the baseline of 50 percent of
the net energy savings calculated from
a minimum of 25 percent of the gross
financial value of electricity produced as
described in the Proposed Rules to ensure
the statutory obligation that financial
benefits be allocated to tenants. The final
regulations clarify, consistent with the
comments received, that gross financial
value includes the sale of any renewable

Bulletin No. 2023–35 609 August 28, 2023
energy credits or other attributes associ-
ated with the facility’s production, if sep-
arate from the metered price of electricity
or export compensation rate.
Many commenters requested that the
final regulations provide guidance for
facility owners to prove equitable distri-
bution of benefits to tenants. A few com-
menters stated that in certain cases, like
a project using community renewable
energy facility rate structures offered by
utilities, separately metered residents can
subscribe voluntarily, and some residents
may choose not to subscribe. Therefore,
these commenters requested that the regu-
lations allow for a reduction in the equita-
ble distribution requirement on a pro-rata
basis by the (number) of residents who
choose not to subscribe. However, one
of the commenters recommended a min-
imum threshold of resident participation,
suggesting 50 percent participation at
placed in service, for the distribution of
benefits to be considered equitable.
In consideration of these comments,
the Treasury Department and the IRS have
clarified in the final regulations that for
any occupant(s) that choose to not receive
utility bill savings, the portion of the
financial value that would otherwise be
distributed to non-participating occupants
must be instead distributed equitably to
the participating occupants. Additionally,
no less than 50 percent of the Qualified
Residential Property’s occupants that are
designated as low-income must partici-
pate and receive utility bill savings for the
facility to utilize this method of benefit
distribution.
2. Gross Financial Value
A few commenters suggested changes
to the definition of gross financial value.
One commenter stated that for purposes
of building occupants compensating the
facility owner, gross financial value could
be calculated based on the average monthly
local utility rate for either residential or
low-income residential (from the previous
calendar year or trailing 12 months) mul-
tiplied by the average residential kilowatt
hour usage per square foot multiplied by
the per square footage of rentable residen-
tial space in the building. The commenter
provided variation and detail on how this
would be accomplished.
Another commenter requested clarifi-
cation on how to define “gross financial
value.” The commenter stated that it is
unclear whether the “price of electricity”
means only the energy costs or also all
the delivery costs and other charges that
may be charged on a per kilowatt hour
basis. Additionally, the commenter noted
that the “export compensation rate for . . .
kilowatt hours” may not be solely tied to
the energy but may also include additional
compensation such as the value of renew-
able energy certificates or other incentives
provided by States.
Finally, one commenter stated that cal-
culating the “gross financial value of the
annual energy produced,” as defined in
the Proposed Rules, would be difficult for
buildings due to the complexity of elec-
tricity rate structures in many jurisdic-
tions, which may vary depending on the
time of day and time of year.
The Treasury Department and the IRS
considered the commenters’ suggestions
but generally did not adopt them because
the Proposed Rules provide a clear and
accurate framework for defining “gross
financial value.” However, the final reg-
ulations clarify, consistent with the com-
ments received, that gross financial value
includes the sale of any renewable energy
credits or other attributes associated with
the facility’s production, if separate from
the metered price of electricity or export
compensation rate. The same definition of
gross financial value applies regardless of
the ownership structure.
One commenter requested clarification
about whether front of the meter (FTM)
volumetric tariff compensation rate, such
as Connecticut’s Residential Renewable
Energy Solutions Buy-All-Sell-All tariff
(BASA Tariff), may be included in the
gross financial value calculation when the
facility and Qualified Residential Property
have the same ownership. The commenter
believes that the BASA tariff $/kWh reve-
nue would be included in the definition of
gross financial value because it is included
in the definition as part of “the total
exported kilowatt-hours produced by the
qualified solar or wind facility multiplied
by the applicable building’s volumetric
export compensation rate for solar.”
The Treasury Department and the IRS
considered this comment but ultimately
concluded that additional clarification in
the final regulations to address specific
State tariff rates is not necessary. The defi-
nition of gross financial value included in
the final regulations, consistent with the
Proposed Rules, already includes the total
exported kilowatt-hours produced by the
qualified solar or wind facility multiplied
by the applicable building’s volumet-
ric export compensation rate for solar or
wind kilowatt-hours, which would include
compensation from the electricity pro-
duced from the facility.
Another commenter stated that it is not
appropriate to define financial benefits
in terms of the value of energy savings.
Instead, this commenter claimed that the
only financial benefit that can be gener-
ated by facilities in Category 3 would be
through net metering, where the facility
generates excess capacity that is sold back
to the grid for off-site consumption. The
commenter also implied that, in the case
of net metering credits, the credit would
go directly to the tenants, and that the
building owner will never receive any
financial benefit.
The Treasury Department and the IRS
considered this comment but did not adopt
it in the final regulations. The Treasury
Department and the IRS determined that
gross financial value from the electricity
produced from a qualified solar or wind
facility may stem from self-consumed
kilowatt-hours produced by the facility,
exported kilowatt-hours produced by
the facility, or the sale of any renewable
energy credits or other attributes associ-
ated with the facility’s production (if sep-
arate from the metered price of electricity
or export compensation rate). Further,
financial value of energy savings from the
electricity produced is a financial benefit
of the electricity produced by the facility
and section 48(e)(2)(B)(ii) provides that
the financial benefits of the electricity pro-
duced by such facility must be allocated
equitably among the occupants of the
dwelling units of a Qualified Residential
Property.
3. Net Financial Value
One commenter stated that rather
than creating two methods, the Treasury
Department and IRS should adopt a sin-
gle method to calculate net energy sav-
ings. The commenter stated that for both

August 28, 2023 610 Bulletin No. 2023–35
scenarios (commonly owned and third-
party owned), the final regulations should
adopt the method from the Proposed Rules
that was only proposed to apply when the
facility and Qualified Residential Property
have the same ownership. The Treasury
Department and the IRS considered this
comment but did not adopt it in the final
regulation because it is appropriate for
“net financial value” to be defined differ-
ently depending on whether the facility is
commonly owned or third-party owned
because in third-party owned scenarios
calculating the facility’s levelized cost
of energy would be overly complex and
potentially vulnerable to manipulation.
Instead, relying on the PPA rate is sim-
pler and more reliable. The final regula-
tions clarify that in case of a commonly
owned facility “net financial value” is
defined as the gross financial value of the
annual energy produced minus the annual
average (or levelized) cost of the quali-
fied solar or wind facility over the useful
life of the facility (including debt service,
maintenance, replacement reserve, capital
expenditures, and any other costs associ-
ated with constructing, maintaining, and
operating the facility). In the case of a
third-party owned facility, “net financial
value” is defined as gross financial value
of the annual energy produced minus any
payments made by the building owner
and/or building occupants to the facility
owner for energy services associated with
the facility in a given year.
Another commenter cited to the
Connecticut’s Residential Renewable
Energy Solutions BASA Tariff, which
involves FTM projects, and requested a
change to the net financial value defini-
tion for third-party owned facilities. The
commenter proposed that, to include FTM
projects in Category 3, the first defini-
tion of net financial value needs to be
amended to reference “the total financial
value of energy produced by the facility
that accrues to the owner of the qualified
residential property, or the facility owner,
the tenants, or a combination thereof.”
The commenter further provided that a set
percentage can be required to be provided,
like 25 percent, to the tenants, and the rest
of the revenue can be allocated between
the facility owner and the property
owner in whatever manner is requested.
This commenter also requested that the
second definition of net financial value
be amended to say that “the total finan-
cial value of the annual energy produced
by the facility that accrues to the owner
of the qualified residential property, or the
facility owner, the tenants, or a combina-
tion thereof minus any payments made,
or revenue allocated, to the facility owner
for energy services associated with the
facility in a given year” to consider solar
site lease structures (for FTM project like
BASA) in addition to PPAs.
Another commenter generally recom-
mended that the Treasury Department
and the IRS adopt a baseline requirement
of passing on at least 25 percent of net
energy savings to tenants, to ensure mean-
ingful financial benefits are afforded to
households in Category 3.
The Treasury Department and the IRS
considered these comments but did not
adopt them in the final regulations and
maintain the baseline of 50 percent of the
net energy savings calculated from a min-
imum of 25 percent of the gross financial
value of electricity produced as described
in the Proposed Rule, which is a higher
value of meaningful financial benefits
than the commenter suggests. The other
50 percent of the net energy savings can
be assumed to be dedicated to lowering
the operational costs of energy consump-
tion for common areas, which benefits
all building occupants. The Treasury
Department and the IRS determined
that the baseline of 50 percent of the net
energy savings is consistent with the statu-
tory intent for Category 3, which is to pro-
vide the financial benefits of the electricity
produced directly to building occupants.
4. Single Family Housing
One commenter generally noted
that the financial benefit definitions for
Category 3 only contemplate multi-family
housing. This commenter requests clarifi-
cation for Tribal housing programs, which
the commenter states primarily consist of
Tribal single-family residences that would
have their own meter.
In response to the comment, the
Treasury Department and the IRS have
modified the financial benefit definition
to provide clarity for single-family resi-
dences that meet the criteria of a Qualified
Residential Property. The final regulations
state that a Qualified Residential Property
could either be a multifamily rental prop-
erty or single-family rental property.
The same rules for financial benefits for
Category 3 apply to both property types.
5. Benefits Sharing Agreement
Several commenters expressed concern
over the signed benefits sharing agreement
between the building owner and the ten-
ants if the facility and building are com-
monly owned. Generally, commenters
suggested the elimination of this require-
ment. A few commenters noted the admin-
istrative burdens and challenges on the
building owner in obtaining signed agree-
ments from all tenants. Likewise, another
commenter said that this requirement is
overly burdensome, and that requiring
each resident to voluntarily sign a benefits
sharing agreement would prevent a facil-
ity from proceeding. This commenter also
noted the possibility that requiring such
an agreement may conflict with consumer
protection laws, and another commenter
agreed suggesting certain customer pro-
tection disclosures may be required. One
commenter also stated that this process
would potentially present a ‘false prom-
ise’ to residents should the project not be
selected for an allocation. Some comment-
ers offered alternatives to a signed benefits
sharing agreement. Several commenters
recommended that the facility owner or
building owner provide notice to all build-
ing occupants of the expected financial
benefits and the proposed method of allo-
cating the benefit. Similarly, another sug-
gested that owners be required to develop
a benefits sharing plan that must be com-
municated to tenants, with owners ensur-
ing that sufficient time is given for tenants
to provide feedback. Finally, a few com-
menters suggested that applicants instead
submit a self-attestation form certifying
that they will equitably distribute benefits
in accordance with the standards set forth
in HUD guidelines.
One commenter supported the require-
ment for a signed benefits sharing agree-
ment. However, the commenter requested
additional guidance on the contents of
such a benefits sharing agreement, includ-
ing specific required consumer protection
disclosures, such as resources tenants can
access to better understand or renegotiate

Bulletin No. 2023–35 611 August 28, 2023
the agreement. This commenter addition-
ally encouraged the Treasury Department
and the IRS to adopt a model affidavit
or agreement between building owners
and tenants based on the options con-
sidered and used in California’s Solar
on Multifamily Affordable Housing
(SOMAH) program. Another commenter
generally asked for clarification on how to
prove or attest that financial benefits are
due to cost savings associated with solar.
Several Tribal commenters requested
that facilities owned by Tribes or Tribal
housing authorities should be presumed
to result in an economic benefit to Tribal
members who reside on the reservation
or who live in Tribal-owned housing, and
thus should not be required to enter into
a benefits sharing agreement with Tribal
members to show the financial benefit to
Tribal members.
The Treasury Department and the IRS
agree that requiring a signed benefits shar-
ing agreement between the building owner
and the tenants is burdensome and not
necessary to demonstrate compliance with
Program requirements. Instead, to better
achieve the goal of verifying Program
compliance and to provide clarification to
applicants regarding how they can demon-
strate that statutory requirements are met
the final regulations require that facility
owners for all Category 3 facilities must
prepare a Benefits Sharing Statement,
which must include (1) a calculation of the
facility’s gross financial value using the
method described in the final regulations,
(2) a calculation of the facility’s net finan-
cial value using the method described in
the final regulations, (3) a calculation
of the financial value required to be dis-
tributed to building occupants using the
method described in the regulations, (4)
a description of the means through which
the required financial value will be distrib-
uted to building occupants, and (5) if the
facility and Qualified Residential Property
are separately owned, indication of which
entity will be responsible for the distribu-
tion of benefits to the occupants. In addi-
tion, the Qualified Residential Property
owner must formally notify the occu-
pants of units in the Qualified Residential
Property of the development of the facility
and planned distribution of benefits.
6. Impact of Metering on Delivery of
Financial Benefits
Regardless of ownership, residen-
tial buildings may have master-metered
or sub-metered utilities. Therefore, the
Proposed Rules provided that for sub-me-
tered buildings, the tenants must receive
the financial value associated with utility
bill savings in the form of a credit on their
utility bills. HUD has issued guidance for
residents of sub-metered HUD-assisted
housing that participate in community
solar, providing an analysis of how com-
munity solar credits may affect utility
allowance and annual income for rent cal-
culations.
3
The Proposed Rules provided
that applicants follow the HUD guidance
and future HUD guidance on this issue to
ensure that tenants’ utility allowances and
annual income for rent calculations are
not negatively impacted.
The Treasury Department and the IRS
are aware that in some States or jurisdic-
tions it may not be administratively, or
legally, possible to apply utility bill sav-
ings on residents’ electricity bills. The
Proposed Rules requested comments on
this issue and how financial benefits, such
as services and building improvements,
can be provided to residents in such res-
idential buildings.
For master-metered buildings, the
Proposed Rules provided that because res-
idents do not have individually metered
utilities and do not receive utility bills, the
building owner must pass on the savings
through other means, such as by providing
certain benefits to the building residents
beyond those provided prior to the qual-
ified solar or wind facility being placed
in service. HUD has issued guidance for
how residents of mastered-metered HUD-
assisted housing can benefit from owners’
sharing of financial benefits accrued from
an investment in solar energy generation.
4

The Proposed Rules provided that appli-
cants follow the HUD guidance and future
HUD guidance on this issue to ensure
that tenants’ utility allowances and annual
income for rent calculations are not nega-
tively impacted.
Many commenters noted that it is dif-
ficult for utility bill credits to be distrib
-
uted to residents even in sub-metered
buildings and suggested that the finan-
cial benefit structure available under the
Proposed Rules for master metered build-
ings be similarly applied to sub-metered
buildings. Several commenters noted that
it is not possible to distribute utility bill
credits to residents in sub-metered build-
ings because most States lack legislation
or regulations governing the allocation
of solar credits to consumer utility bills,
and, one commenter further stated, that
even in States that do, the utilities may
not have the administrative infrastructure
to allocate credits across bills. Another
commenter supported this by stating that
only 21 States and D.C. have statewide
policies that support sharing solar savings
in multi-family housing in the form of
utility bill credits. Many commenters also
voiced general concern that the process
of distributing utility credits is adminis-
tratively burdensome on the owner of the
facility. One commenter stated that many
of the residents who would be eligible to
receive bill credits on their utility bills
will already receive a subsidized electric-
ity price from their distribution company,
which would result in their cost of power
already being lower than other consumers
in their service territory. This commenter
asserts that it be more economical to “sell”
or “allocate” the bill credits to another
consumer in the same service territory and
offset their higher energy costs and pro-
vide a greater overall financial benefit to
tenants. The commenter states that this
system would be similar to the process
proposed for master-metered buildings.
Many commenters asked for flexibility
in providing financial benefits to residents.
A few commenters suggested that meter-
ing configuration should not be regarded
3
U.S. Department of Housing and Urban Development, Treatment of Community Solar Credits on Tenant Utility Bills (July 2022): MF Memo re Community Solar Credits, (https://www.hud.
gov/sites/dfiles/Housing/documents/MF_Memo_Community_Solar_Credits_signed.pdf) and
Community Solar Credits in PIH Programs (August 2022), (https://www.hud.gov/sites/dfiles/
documents/Solar%20Credits_PH_HCV.pdf).
4
U.S. Department of Housing and Urban Development, Treatment of Solar Benefits in Mastered-metered Buildings (May 2023), MF_Memo_re_Community_Solar_Credits_in_MM_
Buildings.pdf (https://www.hud.gov/sites/dfiles/Housing/documents/MF_Memo_re_Community_Solar_Credits_in_MM_Buildings.pdf).

August 28, 2023 612 Bulletin No. 2023–35
for purposes of defining financial benefits.
One commenter stated that financial bene-
fits should be defined by HUD, and should
be applicable to all properties, regardless
of whether the residential unit is sub-me-
tered or if the building is master-metered.
This commenter specifically stated that
financial benefits should be allowed to
accrue to the common area meters and
then be disbursed equitably to occupants
based upon any approved method – with-
out regard to metering configuration and
without requiring a bill credit allocation
method. Several other commenters sug-
gested, as alternatives, services such as
free or reduced cost high speed internet,
shuttle services, public transportation sub-
sidization, job training programs, commu-
nity events, and building improvements as
alternatives to be allowed instead of utility
bill credits.
One commenter suggested that if util-
ity bill credits are not available, applicants
could determine a baseline year and calcu-
late the average price per kilowatt hour for
that year and then for all subsequent years
(after placed in service date) and mul-
tiply it by the kilowatt hours of produc-
tion multiplied by an annual acceptable
adjustment. The commenter stated that
net energy savings from a given period
(month, quarter, or year) would then be
required to be spent on residential service
programs (available to the largest group
of residents), facility upgrades benefiting
residents, and other services that benefit a
large group of residents.
A few commenters, although support-
ive, noted that the HUD guidance allow-
ing for services or other benefits to be
provided in master metered buildings,
in lieu of direct financial savings to ten-
ants, is limited in scope. One commenter
pointed out that the HUD memorandum
cited in the Proposed Rules only covers
developments subsidized through HUD’s
multifamily programs. This commenter
noted that this guidance does not cover
HUD’s Project Voucher Program and that
the USDA does not provide matching
guidance for the USDA supported hous-
ing. Therefore, this commenter suggests
that the regulations directly define finan-
cial benefits for master metered housing,
rather than by reference to memoranda,
so that this provision is clearly applicable
to all master metered affordable housing
developments. Similarly, one commenter
stated that the types of benefits provided
under the HUD guidance for community
solar programs should be available as a
mechanism to distribute financial benefits
for all Category 3 applicants.
Similarly, another commenter noted
that certain financial benefits distributed
directly to residents may be includable in
a household’s annual income. The com-
menter noted that HUD has determined
that providing financial benefits in the form
of gift cards or cash payments would gen-
erally be included in income. Therefore,
this commenter supported the inclusion of
language in the rules that would state that
financial benefits can include credits on
utility bills or could include benefits that
can be equitably provided to residents but
are not direct payments to the residents,
such as resident services, free or reduced
cost internet, job training, or building
upgrades. However, another commenter
requested the opposite, stating that direct
payments or other financial benefits like
rent reductions should be the preferred
form of benefits.
In response to these comments, the
Treasury Department and the IRS modi-
fied the Proposed Rules in the final reg-
ulations to provide maximum flexibility
to equitably allocate financial benefits to
residents while also ensuring the statutory
requirements are satisfied. Accordingly,
the final regulations provide that finan-
cial value can be distributed to build-
ing occupants via utility bill savings or
through different means, and depending
on the method selected, the final regula-
tions prescribe the requirements that must
be met. For purposes of this via utility
bill savings provision, financial benefits
will be considered to be equitably allo-
cated if at least 50 percent of the finan-
cial value of the energy produced by the
facility is distributed as utility bill savings
in equal shares to each building dwell-
ing unit among the Qualified Residential
Property’s occupants that are designated
as low-income under the covered hous-
ing program or other affordable housing
program (described in section 48(e)(2)
(B)(i)) or alternatively distributed in pro-
portional shares based on each low-in-
come dwelling unit’s square footage, or
each low-income dwelling unit’s number
of occupants. For any occupant(s) that
choose to not receive utility bill savings
(for example, exercise their right to “opt
out” of a community solar subscription in
applicable jurisdictions), the portion of the
financial value that would otherwise be
distributed to non-participating occupants
must be instead distributed to all partici-
pating occupants. No less than 50 percent
of the Qualified Residential Property’s
occupants that are designated as low-in-
come must participate and receive utility
bill savings for the facility to utilize this
method of benefit distribution. If finan-
cial value is not distributed via utility
bill savings, financial benefits will be
considered to be equitably allocated if
at least 50 percent of the financial value
of the energy produced by the facility is
distributed to occupants using one of the
methods described in HUD guidance, or
other guidance or notices from the Federal
agency that oversees the applicable hous-
ing program identified in section 48(e)(2)
(B).
With respect to allocating financial
value via utility bill savings, commenters
addressed the language in the Proposed
Rules that provided an alternative method
for net energy savings to be distributed in
proportional shares based on each dwell-
ing unit’s electricity unit. The commenters
stated that this method is not permitted by
HUD. These commenters also proposed
a third option for equitable distribution,
which they claim is used in California’s
SOMAH program, where shares are dis-
tributed to each unit based on square
footage. In response to this comment, the
Treasury Department and the IRS added
language in the final regulations to clar-
ify that the financial value should be
distributed in equal shares to each build-
ing dwelling unit among the Qualified
Residential Property’s occupants that are
designated as low-income under the cov-
ered housing program or other affordable
housing program (described in section
48(e)(2)(B)(i)) or alternatively distrib-
uted in proportional shares based on each
low-income dwelling unit’s square foot-
age, or each low-income dwelling unit’s
number of occupants.
Another commenter suggested that in
a master-metered building, the facility
owner be allowed to allocate the value
of energy savings to the building’s tenant
association to distribute equally as the

Bulletin No. 2023–35 613 August 28, 2023
association sees fit. This was suggested
in addition to and as alternative to the
options provided in the HUD guidance.
In response to this comment, the
Treasury Department and the IRS con-
sidered but did not adopt this sugges-
tion. The Treasury Department and the
IRS have provided additional clarity on
the applicability of HUD guidance in the
final regulations to provide flexibility to
the applicant to determine the method-
ology most appropriate for allocation of
the value of energy savings based on the
circumstances of the Qualified Residential
Property. This includes options that have
been determined to not affect a tenants
utility allowance and annual income for
rent calculations.
B. Financial benefits in qualified low-
income economic benefit projects
For a facility to be treated as part of a
qualified low-income economic benefit
project, section 48(e)(2)(C) requires that
at least 50 percent of the financial benefits
of the electricity produced by the facility
be provided to qualifying low-income
households. To satisfy this standard, the
Proposed Rules required that the facility
serve multiple households and at least 50
percent of the facility’s total output is dis-
tributed to qualifying low-income house-
holds under section 48(e)(2)(C)(i) or (ii).
In addition, to further the overall goals of
the Program, the Proposed Rules reserved
allocations under this category exclu-
sively for applicants that would provide
at least a 20-percent bill credit discount
rate for all such low-income households.
The Proposed Rules defined a “bill credit
discount rate” as the difference between
the financial benefit distributed to the
low-income household (including util-
ity bill credits, reductions in the low-in-
come household’s electricity rate, or other
monetary benefits accrued by the house-
hold) and the cost of participating in the
Program (including subscription payments
for renewable energy and any other fees or
charges), expressed as a percentage of the
financial benefit distributed to the low-in-
come household. The bill credit discount
rate can be calculated by starting with the
financial benefit distributed to the low-in-
come household, subtracting all payments
made by the low-income customer to the
facility owner and any related third par-
ties as a condition of receiving that finan-
cial benefit, then dividing that difference
by the financial benefit distributed to the
low-income household.
1. Category 4 Community Solar
Because of the financial benefits
requirements that are structured for com-
munity solar projects, several commenters
thought that the Proposed Rules too nar-
rowly limited Category 4. Commenters
noted that the Proposed Rule precluded
otherwise eligible facilities from qualify-
ing under Category 4, including behind
the meter (BTM) facilities that meet the
Category 4 requirements. One commenter
suggested that Category 4 should be open
to projects that directly benefit Tribal
member small businesses. Similarly, a
commenter noted that Category 4 should
be open to all projects, whether FTM or
BTM, that directly benefit Tribal member
small businesses (where the small busi-
ness can apply for the section 48 credit) or
Tribal enterprises, located on Tribal lands,
that may want to deploy commercial
roof-top or ground-mount solar (such as
canopies) to offset energy costs, provide
energy security, or support job creation.
Another commenter also criticized the
narrow nature of Category 4 noting that
the Proposed Rules have made eligibility
for Category 4 solely applicable to multi-
family and community solar.
Some commenters also made sugges-
tions on how to define Category 4. One
commenter suggested that projects under
Category 4 allow only on-site commercial
and industrial projects to reach overall
deployment and savings goals. Similarly,
one commenter requested that Category
4 incentivize larger agribusiness projects
that employ residents living in these areas
and working at these agribusiness facili-
ties (or similar industries) and stated that
the 50 percent household requirement is
too complicated. This commenter felt that
residential facilities are being prioritized
in categories 1, 3, and 4, and, therefore,
that Category 4 should be modified to
incentivize facilities supplying power to
businesses but providing financial benefits
to low-income residents in the same area.
Another commenter recommended that
the Category 4 allocation give priority to
qualified low-income benefit projects less
than 1 MW that are located in low-income
communities.
The Treasury Department and the IRS
recognize the commenters’ concerns that
Category 4 is limited. However, projects
must meet the statutory requirements
under section 48(e)(2)(C) to be consid-
ered eligible for Category 4. To ensure
these requirements are not too narrowly
construed, the Treasury Department and
the IRS adopted a change to the FTM
definition in the final regulations appli-
cable to Category 4 to ensure that proj-
ects meeting the intent of Category 4, as
that intent was described in the Proposed
Rules, are not unintentionally disquali-
fied due to an overly strict definition of
FTM. The final regulations clarify that a
facility is FTM if it is directly connected
to a grid and its primary purpose is to
provide electricity to one or more offsite
locations via such grid or utility meters
with which it does not have an electrical
connection; alternatively, FTM is defined
as a facility that is not BTM. The final
regulations also clarify that for the pur-
pose of Category 4, a qualified solar or
wind facility is also FTM if 50 percent
or more of its electricity generation on an
annual basis is physically exported to the
broader electricity grid.
However, the Treasury Department
and the IRS emphasize that this does not
change the intent of Category 4 that proj-
ects falling under the definition of BTM
are not eligible for Category 4, and that
financial benefits to eligible low-income
households can only be delivered via util-
ity bill savings. Based on industry and
market research, community solar pro-
grams primarily use utility bill savings to
deliver financial benefits to households.
For this reason, the Treasury Department
and the IRS have defined financial bene-
fits in this manner.
At least one other commenter
requested allowing public and afford-
able housing buildings to participate in
Category 4 through the use of geo-el-
igibility to establish qualification for
a Category 4 site. One of these com-
menters mentioned the process being
adopted in New York for its Inclusive
Community Solar Adder, which will
allow anyone who lives in a designated
“Disadvantaged Community” to qualify

August 28, 2023 614 Bulletin No. 2023–35
upon demonstration that their address
is in one of the so-called DAC zones.
This commenter noted that the Climate
and Economic Justice Screening Tool
(CEJST) map is already being used to
qualify sites for Category 1 participation.
Because section 48(e)(2)(C) pro-
vides requirements for ensuring that
the financial benefits of the electricity
produced by a qualified solar or wind
facility are provided to qualifying house-
holds, establishing categorical eligibil-
ity for Category 4 based on geographic
location of the project is inappropriate.
Similarly, as discussed in more detail
later under part V.B.6. of this Summary
of Comments and Explanation of
Revisions section, qualifying households
based on geography is also inappropri-
ate because of statutory requirements.
Similarly, establishing eligibility for
multifamily buildings (including mas-
ter-metered buildings), agribusinesses,
or other arrangements that do not directly
result in utility bill savings for low-in-
come households is also inappropriate.
As discussed earlier, financial benefits to
eligible low-income households can only
be delivered via utility bill savings under
these regulations. Therefore, the final
regulations do not adopt these comments.
2. Twenty Percent Bill Credit Discount
One commenter urged the Treasury
Department and the IRS to require a higher
bill discount rate than 20 percent, stating
the programs in Illinois, Massachusetts,
and Maryland already provide discounts
at or above the proposed threshold
level. This commenter believes that the
increased credit for qualified low-income
economic benefit projects should allow
for an increase in the amount of financial
benefit delivered to low-income custom-
ers in these markets.
Another commenter supported the
method of requiring financial benefits in
the form of bill credits, but suggested an
additional requirement to be included in
cases where beneficiaries have no cost
of participation through a subscription
fee. In this situation, the commenter sug-
gested that the bill credit discount rate
should be calculated as the total savings
on a customer’s utility bill, annually,
divided by the total value of the electricity
produced by the project, as measured by
the income to the project paid by the util-
ity, independent system operator (ISO),
or other customer procuring power from
the project.
Another commenter requested clarifi-
cation on the interpretation of bill credit
discount rate, which the commenter
read to mean that 20 percent of the total
export credit rate would be the minimum
required revenue share with the low-in-
come customer, rather than 20 percent of
the customer’s pre-solar electricity bill.
This commenter also requested clarifica-
tion as to whether the calculation will be
annual, and whether the form of benefits
must specifically be “utility bill credits” or
could be other documented financial bene-
fits provided to tenants.
One commenter stated that a 20 per-
cent cost savings requirement will likely
be unattainable in some energy markets,
specifically States and localities that have
less amicable laws and utility regulations
for community solar. This commenter
recommended a 15 percent cost savings
for 2023, stating that 15 percent is still
on the higher end of the current industry
average for community solar cost sav-
ings. This commenter also requested that
the benefit should be an annual reduc-
tion (of 15 percent) because there can
be cost savings fluctuations throughout
a calendar year. Although the Treasury
Department and the IRS considered var-
ious percentages for required cost sav-
ings between 5 percent and 20 percent,
based on a review of various State pro-
gram rates and market information, the
Treasury Department and the IRS have
decided to maintain the 20 percent rate.
This rate will allow for the greatest sav-
ings to the low-income households and
further the requirement of section 48(e)
(2)(C) that 50 percent of the financial
benefits of the electricity produced by the
facility are provided to such households.
Additionally, in response to comments,
the Treasury Department and the IRS
clarified that the 20 percent bill discount
is an annual savings.
Tribal commenters requested that proj-
ects owned by Tribes or Tribal housing
authorities should be presumed to result
in an economic benefit to Tribal members
who reside on the reservation or who live
in Tribal-owned housing.
The Treasury Department and the IRS
decline to adopt the suggestion of pre-
sumption of economic benefit. The statu-
tory requirements for the Program require
that a qualified low-income economic
benefit project serves multiple households
and at least 50 percent of the facility’s
total output is distributed to qualifying
low-income households under section
48(e)(2)(C). To help applicants meet this
requirement, the Treasury Department and
the IRS have provided in the final regu-
lations an illustrative list of categorical
eligibility options to provide maximum
flexibility to qualify low-income house-
holds. This includes eligibility based on
Tribal programs and housing programs,
among many other options.
3. Single Household
Several commenters have requested
that the Treasury Department and the IRS
add eligibility under Category 4 for proj-
ects that benefit one single-family resi-
dence where 100 percent of the facility’s
total output is distributed to the qualify-
ing low-income household residing at that
residence, provided that the project meets
all other Category 4 criteria, and the facil-
ity provides at least a 20-percent utility
bill savings for such low-income house-
hold. Several commenters also added that
Congress’s use of the term “households”
is more properly read as a programmatic
term applying to all low-income house-
holds that can benefit from the Program,
rather than a narrower reading suggested
in the Proposed Rules. One commenter
argued that this narrow reading (excluding
single family households from Category
4) would unnecessarily and unfairly dis-
criminate against certain households.
After consideration of all these com-
ments, the final regulations do not adopt
the commenter’s suggestion. Section 48(e)
(2)(C) applicable to Category 4 facilities
requires that at least 50 percent of the finan-
cial benefits of the electricity produced by
the facility be provided to “households”
with certain income levels. Because the
statute uses the plural term “households,”
the Treasury Department and the IRS deter-
mined that providing financial benefits to a
single household is insufficient to meet the
requirements of section 48(e)(2)(C) appli-
cable to Category 4 facilities.

Bulletin No. 2023–35 615 August 28, 2023
4. Utility Bill Savings
Several Tribal comment letters request-
ed that Category 4 should not be limited to
projects that provide only individual ben-
efits or community-scale projects. These
commenters urged the Treasury De-
partment and the IRS to expand the
definition of “financial benefit” to include
community-wide benefits, such as direct
benefits to the Tribal government from
the additional tax credit (especially for
projects owned by the Tribe and receiv-
ing elective payments from the Treasury
Department), job creation and economic
benefits to low-income Tribal members.
These same commenters also stated that
Category 4 should be open to all projects,
regardless of metering, that directly bene-
fit Tribal member small businesses (where
the small business can apply for the sec-
tion 48 credit) or Tribal enterprises located
on Tribal lands. Additionally, some of the
Tribal comments requested flexibility
for Tribal housing or economic develop-
ment projects that are serving Tribal lands
and Tribal households to define benefits
collectively (rather than individually),
because many of the Tribal commenters
are located in States that do not allow for
community solar. These commenters stat-
ed that they will have to negotiate directly
with a utility to deploy community scale
projects on the Reservation.
To promote more flexibility with
respect to financial benefits require-
ments in Category 4, a few commenters
requested that the Treasury Department
and the IRS extend the same flexibility is
provided for Category 3 projects regarding
financial benefits to Category 4 projects as
well. These commenters requested that a
manner other than bill credits be permit-
ted to provide financial benefits directly
to low-income subscribers in Category 4
that still meets the nominal 20 percent dis-
count requirement, like gift cards, direct
payments, or checks. One commenter
asked whether master-metered projects
are eligible for Category 4 if a project
adheres to the same HUD guidance used
for Category 3 projects.
The Treasury Department and the
IRS considered the comments requesting
expansion or flexibility with respect to
financial benefits for Category 4 to allow
methods other than utility bill savings
but ultimately decided not to adopt the
commenters’ suggestions in these final
regulations. Requiring financial benefits
via utility bill savings is the only means
through which the Treasury Department
and the IRS can ensure that the provision
of financial benefits to qualifying house-
holds is sufficiently regulated such that the
requirements of section 48(e)(2)(C) are
satisfied. Therefore, the final regulations
clarify that financial benefits for Category
4 must be tied to a utility bill of a qualify-
ing household. The Treasury Department
and the IRS may consider other methods
of determining Category 4 financial bene-
fits in future years.
The final regulations, however, address
comments regarding the potential unsuit-
ably of the proposed rules to net-credit
billing, or other structures where the qual-
ifying household does not make a direct
payment to the project owner by providing
an alternative methodology for calculating
a 20 percent bill credit discount rate in this
scenario. In cases where the qualifying
household has no or only a nominal cost
of participation, the bill credit discount
rate should be calculated as the financial
benefit provided to a qualifying household
(including utility bill credits, reductions in
a qualifying household’s electricity rate,
or other monetary benefits accrued by a
qualifying household on their utility bill)
divided by the total value of the electricity
produced by the facility and assigned to
the qualifying household (including any
electricity services, products, and credits
provided in conjunction with the electric-
ity produced by such facility), as mea-
sured by paid by the utility, ISO, or other
off-taker procuring electricity (and related
services, products, and credits) from the
facility.
5. Fifty Percent of the Facility’s Total
Output to Low-Income Households
One commenter requested that the
facility should not have to provide power
to households, as long as the financial
benefits were distributed to residents of
qualifying households. In this case, the
commenter stated that a non-profit orga-
nization planned to build a facility on the
non-profit office building but distribute
the savings the non-profit derived from
the facility to the residents of apartments
the non-profit administers. Similarly,
another commenter noted that the use of
“distribute” rather than “assigned” in the
requirement in the Proposed Rules that
50 percent of the facility’s total output
is distributed to qualifying low-income
households may imply that beneficiaries
are expected to receive the physical flows
of electricity from the facility, which is
not how community solar works in most
cases, nor is it what the statute requires.
In response to these comments and to
clarify the intent of the Proposed Rules,
which was to structure Category 4 con-
sistent with the market as it exists today
(including community solar business
models), the final regulations adopt the
suggestion of the commenter to change
“distributed” to “assigned.” Therefore,
the full clause in the final regulations is
“at least 50 percent of the facility’s total
output must be assigned to Qualified
Households.”
6. Low-Income Verification
To ensure the requirements of sec-
tion 48(e)(2)(C) are met, verification of
households’ qualifying low-income sta-
tus is required. The Proposed Rules pro-
vided that applicants are responsible for
proof-of-income verification and would
be required to submit documentation upon
placing the qualified solar or wind facil-
ity in service that identifies each quali-
fying low-income household, the output
allocated to each qualifying low-income
household in kW, and the method of
income verification utilized.
The Proposed Rules provided that
applicants may use categorical eligibil-
ity or other income verification meth-
ods to qualify low-income households.
Categorical eligibility consists of obtain-
ing proof of household participation in a
needs-based Federal,
5
State, Tribal, or util-
ity program with income limits at or below
the qualifying income level for the specific
5
Federal programs may include, but are not limited to: Medicaid, Low-Income Home Energy Assistance Program (LIHEAP), Weatherization Assistance Program (WAP), Supplemental
Nutrition Assistance Program (SNAP), Section 8 Project-Based Rental Assistance, and the Housing Choice Voucher Program.

August 28, 2023 616 Bulletin No. 2023–35
facility (qualifying program). State agen-
cies (for example, State community solar/
wind program administrators) can also
provide verification of low-income status
if the State program’s income limits are at
or below the qualifying income level for
the qualified solar or wind facility. If a
household is not enrolled in a qualifying
program, additional income verification
methods can be used such as: paystubs,
tax returns, or income verification through
crediting agencies and commercial data
sources. Eligibility based on the applicant
(or contractors or subcontractors) collect-
ing self-attestations from households is
not permitted.
Several commenters commented
on the verification methods to qualify
low-income households. On self-attes-
tation, many commenters disagree with
the Proposed Rules prohibiting eligibil-
ity based on self-attestation. Many com-
menters were in favor of self-attestation,
which according to one commenter could
include an attestation to the effect that the
household either participates in one of the
programs that has the relevant standard as
a criterion or otherwise meets the standard
to the best of the resident’s knowledge.
One commenter stated that self-attesta-
tion is the fastest and most efficient way
to ensure maximum low-income customer
participation. This commenter noted that
many customers will be skeptical of pro-
viding documents, and that the process of
obtaining, processing, and verifying the
documentation is administratively bur-
densome and time consuming. Another
commenter noted a practical consideration
that by accepting self-certification, house-
holds who are not yet enrolled in Federal
or State energy assistance programs but
are eligible or in the process of enrolling
may still participate in qualified low-in-
come economic benefit projects. Another
commenter stated that only a fraction of
eligible households currently participate
in existing State, Federal, utility, or Tribal
programs for which they are eligible, and
many barriers – including knowledge,
time, documentation, and language flu-
ency – prevent many households from
participating.
Some of the commenters’ recommen-
dations also tied into the use of State
programs. One commenter suggested
removing the self-attestation limitation
where self-attestation is permitted by State
agencies. Two other commenters similarly
suggested the rules accept income ver-
ification via State-program verification
where States specifically accept self-at-
testation with one of the commenters not-
ing that subscribers and applicants should
not have to double verify a household if
self-attestation is used on the State level.
Another commenter encouraged that
applicants be allowed to use benefit cards
as sufficient evidence of participation in
qualifying programs where such cards
are the means by which a State makes the
benefit available to participants.
Another commenter requested that
the rules clarify whether the use of
State-approved geo-qualification maps
or CEJST are approved income verifica-
tion methods and recommended that, for
individuals who reside within a CEJST
or Persistent Poverty County (PPC), the
rules should consider allowing self-at-
testation as a means of income-qualifi-
cation in States where it is a permissible
method for income-qualification. Another
commenter asked for clarification about
the interaction between this Program and
State agency provided income verifica-
tion, as well as Department of Energy’s
(DOE) community solar subscription
tool tying eligibility, initially, to LIHEAP.
The commenter noted that some State
agencies allow self-attestation and/or
State-approved geo-qualification maps in
various programs and requested that the
rules allow self-attestation and geo-qual-
ification (including both State maps and
CEJST) meeting certain standards to
the maximum extent allowable by law.
Another commenter suggested expanding
those who can provide verification to not
just the State agencies but also utilities. In
contrast, another commenter instead rec-
ommended removing the concept of allow-
ing State agencies to provide verification
at all and proposed adding a requirement
to make clear that the requirement is on
applicants to receive verification directly
from the customers.
Some commenters asked for the expan-
sion of categorical eligibility. For example,
one commenter recommended that public
housing, USDA Rural Development, and
the Project Based Voucher Program be
added to the list of categorically eligi-
ble Federal assistance programs noted in
footnote 5 of the Proposed Rules. Another
commenter asked if the listed methods
are the only possible methods of verifi-
cation or if other State-approved meth-
ods may be considered as well. Another
commenter also suggested for purposes of
Category 4 that the rules allow participa-
tion in more programs as proof of income
and that paystubs, tax returns, and credit
checks should be removed as possibilities
as these could alienate low-income house-
holds. An additional commenter noted
their view on the importance of protecting
Tribal data sovereignty. This commenter
said the rules should not tie Tribes to
external sources of data. This commenter
believes that self-certification as to pov-
erty levels or other metrics by Tribes
should be sufficient.
A few commenters suggested adding
geographic eligibility to verify low-in-
come status. One commenter suggested
adding geographic eligibility to the “cat-
egory eligibility” and “other income ver-
ification methods” to qualify low-income
households, where “geographic eligi-
bility” is defined as a household that is
currently residing in a LIHTC Qualified
Census Tract (LIHTC Qualified Census
Tract) and where at least one adult in that
household has resided for at least the pre-
vious six months. The commenter claims
that the LIHTC Qualified Census Tract
household income standard is stricter than
that in section 48(e)(2)(C)(ii), and thus
this standard is an administratively effi-
cient method of qualifying low-income
households for a tax credit similar to the
Low-Income Communities Bonus Credit.
Another commenter recommended adding
the physical location of the customer’s
home as an additional qualifying criterion,
noting a reasonable criterion for inclusion
as areas where at least 20 percent of the
population falls below the poverty line,
with prevalent harmful environmental
impacts as outlined in the 2014-2018
5-year American Community Survey
(ACS), conducted by the US Census
Bureau. Moreover, one commenter sug-
gested including geo-qualification based
on State maps and the CEJST Tool.
In contrast, one commenter supported
the Proposed Rules noting that categorical
income verification decreases costs and
increases available low-income customer
benefits. Another commenter provided

Bulletin No. 2023–35 617 August 28, 2023
an entirely different suggestion stating
that income verification is a vestige of
the community solar subscription model
and is alternatively achieved by serving
communities in low-income areas as mea-
sured by area or State median income cen-
sus data. The commenter suggested that
income verification through the Statewide
Shared Clean Energy Facility (SCEF) pro-
gram (which is a Connecticut program)
relies on the distribution utilities deter-
mining customer eligibility.
After consideration of all of comments
on the verification methods to qualify
low-income households, the final regula-
tions adopt these comments in part. The
Treasury Department and the IRS con-
sidered numerous verification methods in
crafting the Proposed Rules and the final
regulations to strike a balance between
reducing administrative burden for tax-
payers and households and ensuring ade-
quate checks that the facilities receiving
a Capacity Limitation under Category 4
meet the requirements of section 48(e)
(2)(C). The final regulations adopt the
Proposed Rules’ prohibition on self-attes-
tations because they are not sufficiently
reliable or verifiable. However, this pro-
hibition on direct self-attestation from a
household does not extend to categorical
eligibility for needs-based Federal, State,
Tribal, or utility programs with income
limits that rely on self-attestation for ver-
ification of income. The final regulations
clarify that income verification is accepted
via program verification where the rel-
evant jurisdiction specifically accepts
self-attestation.
The Treasury Department and the IRS
agree that subscribers and applicants
should not have to double verify when
a State program accepts self-attestation.
The final regulations, consistent with the
Proposed Rules, provide flexibility for
applicants to qualify households through
several means, including categorical eligi-
bility and paystubs, tax returns, or income
verification through crediting agencies
and commercial data sources. Moreover,
the list of Federal programs included in
footnote 5 of the Proposed Rules is not
the exclusive list of Federal programs that
could be used to demonstrate categorical
eligibility, which provide additional flex-
ibility to qualify households. However, in
response to the comments, the final reg-
ulations will include additional examples
of programs that will be considered cate-
gorically eligible based on income status.
Therefore, in response to the commenter’s
request the following additional programs
will be added to the illustrative list that was
provided in the Proposed Rules: Federal
Communication Commission’s Lifeline
Support for Affordable Communications,
USDA’s National School Lunch Program;
U.S. Social Security Administration’s
Supplemental Security Income; or any
verified government or non-profit pro-
gram serving Asset Limited Income
Constrained Employed (ALICE) persons
or households. The final regulations also
clarify that to qualify for categorical eligi-
bility under one of these programs, an indi-
vidual in the household must be currently
enrolled or must have received an award
letter or other written documentation from
the program in the last 12 months.
With respect to State programs, the
final regulations, consistent with the
Proposed Rules, provide that categorical
eligibility also consists of obtaining proof
of household participation in a needs-
based State or utility program, so long
as the income limits are at or below the
qualifying income level for the specific
facility. The final regulations clarify that
the qualifying income level for a house-
hold is based on where such household is
located. Without additional information
or requirements, geographic-based eligi-
bility verification does not prove that a
particular household necessarily meets the
income parameters of section 48(e)(2)(C).
Although one commenter, for example,
noted that LIHTC Qualified Census Tracts
have stricter income requirements, this
does not address the concern that a partic-
ular household’s income may not qualify
under the statute but only that there are
households in the census tract that would
qualify.
Two commenters requested eligibility
of low-income households be established
only at the time of enrollment and remain
for the length of the subscription and that
there should not be a continual obligation
to verify households as low-income. This
request is consistent with the Proposed
Rules, which provided that applicants are
responsible for proof-of-income verifica-
tion and would be required to submit docu-
mentation once upon placing the qualified
solar or wind facility in service that iden-
tifies each qualifying low-income house-
hold as well as other information. The
final regulations maintain the Proposed
Rule but clarify that the low-income sta-
tus of a household is determined at the
time the household is enrolled in the com-
munity program and does not need to be
re-verified. Similarly, the recapture rules
discussed in part XIII of this Summary of
Comments and Explanation of Revisions
section are not imposed if the low-income
status of households change in later years;
however, the Treasury Department and
the IRS determined that a change in the
final regulations to clarify this point is
unnecessary.
VII. Annual Capacity Limitation
Under section 48(e)(4)(C), the total
annual Capacity Limitation is 1.8 giga-
watts (GW) of DC capacity for each of the
calendar year 2023 and 2024 programs.
Consistent with section 4.02 of Notice
2023–17, the Proposed Rules specified how
the annual Capacity Limitation would be
allocated across the four facility categories
for 2023. The Proposed Rules, consistent
with Notice 2023–17, reserved a portion of
the total annual Capacity Limitation of 1.8
GW of DC capacity for each facility cate-
gory for calendar year 2023 as follows:
Category 1: Located in a Low-Income Community 700 megawatts
Category 2: Located on Indian land 200 megawatts
Category 3: Qualified Low-Income Residential Building Project 200 megawatts
Category 4: Qualified Low-Income Economic Benefit Project 700 megawatts

August 28, 2023 618 Bulletin No. 2023–35
The Proposed Rules also provided
that the Treasury Department and the IRS
would retain the discretion to reallocate
Capacity Limitation across categories and
sub-reservations to maximize allocation in
the event one category or sub-reservation
is oversubscribed and another has excess
capacity.
One commenter suggested eliminat-
ing the 1.8 GW Capacity Limitation alto-
gether, in favor of the same uncapped
allocation that they view other solar cus-
tomers, typically customers in a higher
income bracket, have previously received.
However, section 48(e)(4)(C) provides the
1.8 GW Capacity Limitation, and it can-
not be modified by the final regulations.
Therefore, the final regulations do not
adopt this comment.
Another commenter suggested re-al-
locating the Capacity Limitation under
Category 3 to Category 4 to increase the
total number of MW that can be deployed
efficiently while yielding the highest
economic benefit. Similarly, a different
commenter recommended increasing
Category 4 by combining Category 1 and
4 into a single 1.4 GW category applica-
ble to both. In addition, this commenter
suggested that the Treasury Department
and the IRS should layer on preferences
for economic benefits over location in
facility selection, similar to its prefer-
ences around ownership and location
(discussed in part VII of this Summary of
Comments and Explanation of Revisions
section). Procedurally, an applicant would
submit an application for this combined
category in the applicable sub-allocation
and indicate under which category qual-
ification, and thus bonus level, for the
project is sought. The commenter added
that the Treasury Department and the
IRS can apply a similar approach to the
Proposed Rules to sub-allocate capacity
among facility types within that combined
category, subdividing among commercial,
community, and single-family residential
solar as strongly recommended by both
industry and environmental justice groups
since last year. Another commenter also
had recommendations about how to re-al-
locate capacity taking into account the
Additional Selection Criteria (ASC). The
commenter suggested that the Treasury
Department and the IRS reallocate unused
capacity in the same year. Specifically,
the commenter suggested that if there is
unused capacity from a category or an
ASC reservation that it be allocated in the
same year to ensure all 1.8 GW of proj-
ects can be efficiently deployed annually.
The commenter encouraged the Treasury
Department and the IRS to consider
implementing subcategory capacity car-
veouts within each category to effectively
allow for a rolling application system. For
example, in Category 4, there should be
more capacity dedicated to certain projects
over others. Two commenters expressed
disagreement for the large total reserva-
tion in Category 1. These commenters
suggested that some of the Category 1 res-
ervation should be moved to Category 4.
After consideration of these comments,
the final regulations, consistent with the
Proposed Rules, provide that the total
Capacity Limitation for each Program year
will be divided across the 4 facility cate-
gories and that the Treasury Department
and the IRS retain the discretion to reallo-
cate Capacity Limitation across categories
and sub-reservations to maximize alloca-
tion in the event one category or sub-res-
ervation is oversubscribed and another has
excess capacity. The Treasury Department
and the IRS continue to believe that the
reservations based on facility category
best allow a wide variety of facilities and
benefits to go to low-income communities
to further the intent of the statute. Absent
category reservations, all the annual
Capacity Limitation could get allocated
to one facility category, which is con-
trary to the statute providing four distinct
categories.
The final regulations clarify that the
specific reservations for a Program year
are provided in guidance published in the
Internal Revenue Bulletin. For Program
year 2023, Notice 2023-17 and Revenue
Procedure 2023-27 provide the specific
reservation amounts for each category. As
clarified in the final regulations, the spe-
cific reservation amounts are established
based on factors such as the anticipated
number of applications that are expected
for each category and the amount of
Capacity Limitation that needs to be
reserved for each category to encourage
market participation in each category con-
sistent with statutory intent.
One commenter stated that sub-al-
locations should be adaptable in future
Program years to account for lessons
learned. However, the commenter said that
the 200 MW for Indian land should not be
reallocated to other categories even if not
fully claimed by applications in any given
year, nor should any shortfall of appli-
cations be used to justify smaller future
allocations. The Treasury Department and
the IRS understand the importance of all
of the categories provided by Congress
in the statute and agree that the Capacity
Limitation allocated to each facility cat-
egory should be adaptable. Accordingly,
the Treasury Department and the IRS have
retained discretion to reallocate Capacity
Limitation and to revise amounts reserved
for each category in each Program year.
After the 2023 Program year, the Treasury
Department and the IRS will determine
whether to change the facility category
reservation amounts for the 2024 Program
year based on the factors provided in the
final regulations and will announce the
specific reservation amounts in Program
guidance applicable to 2024.
VIII. Additional Selection Criteria
The Proposed Rules provided that
facilities that meet at least one of the two
categories of Ownership and Geographic
Criteria, collectively the ASC, would
receive priority for an allocation within
each facility category described in section
48(e)(2)(A)(iii). The Proposed Rules also
provided that at least 50 percent of the
total Capacity Limitation in each facility
category would be reserved for facilities
meeting ASC.
The Proposed Rules provided that in
evaluating applications received during
the initial application window, priority
would be given to eligible applications
for facilities meeting at least one of the
two ASC. If the eligible applications for
Capacity Limitation for facilities that
meet at least one of the two ASC criteria
exceed the Capacity Limitation for a cate-
gory, facilities meeting both ASC criteria
would be prioritized for an allocation.
Several commenters expressed overall
agreement and support for the inclusion of
ASC, and the purpose behind these crite-
ria, which commenters feel will promote
community ownership. One commenter
expressed disagreement with the use of
ASC in the Program or that it should not

Bulletin No. 2023–35 619 August 28, 2023
be used for the 2023 Program. Another
commenter echoed this by saying that the
Treasury Department and the IRS should
first assess the Program and applications
received for 2023, and then consider
including the ASC and a corresponding
capacity reserve amount.
Other commenters suggested that if
ASC is used, the percentage of the total
Capacity Limitation in each facility cat-
egory for ASC should be reduced from
50 percent to 25 percent or to 10 per-
cent. Another commenter stated that the
Ownership Criteria is too restrictive, and
few applicants will be able to meet the high
standard. This commenter recommended
giving preferential allocation of capacity
limitation to groups that meet one or both
of the ASC, without reserving 50 percent
of the capacity under each category on a
rolling basis. One commenter similarly
stated that an inflexible reservation of 50
percent of the total Capacity Limitation
in each category for facilities meeting
ASC may result in potentially hundreds
of MW of unclaimed Capacity Limitation
for 2023. This commenter suggested that
a smaller amount of reservation should
be reserved for ASC projects in 2023,
and that the amount of reservation should
be increased in future years. A few other
commenters, similarly, suggested that in
the first year of the Program, ten percent
of the capacity in each sub-reservation
should be reserved for ASC applicants,
with the Treasury Department and the IRS
retaining authority to reallocate the capac-
ity and expand the capacity reservations in
future Program years.
One commenter separately stated that
except for reallocations (meaning real-
locations of capacity between catego-
ries) for facilities meeting the ASC, the
Treasury Department and the IRS should
ensure that proposed reallocations more
than 50 MW are subject to public notice
and comment.
A few commenters who supported
reduction of the ASC reservation amounts,
stated that it will take significant time and
coordinated effort for new community
solar markets to emerge where efforts
to establish Program frameworks have
been lacking to date. These comment-
ers stated that it is likely that there will
be few applicants who meet the ASC, or
that the projects developed by owners that
would qualify tend to be small scale proj-
ects. Some commenters also asserted that
the restrictive Ownership Criteria would
likely encourage gaming.
In contrast, some commenters exp-
ressed support for at least 50 percent of the
total Capacity Limitation being reserved
for facilities meeting ASC. Additionally,
one of the commenters supporting the
reduction in the ASC reservation amounts
stated that the Treasury Department and
the IRS should prioritize reallocations to
facility categories with more than 25 per-
cent of the facilities meeting the ASC.
One commenter suggested that a third
set of “Market-based” criteria should be
added to ASC. The commenter stated
that these criteria would prioritize proj-
ects that maximize the benefit delivered
to the largest number of low-income
customers. The two criteria provided
by the commenter under this category
are: 1. Proposed discount rate: Savings
delivered to low-income customers; and
2. Percentage of project reserved for
low-income customers: The percentage
of the output capacity that will service
low-income customers. However, the
commenter only includes community
solar projects in discussing the reason for
this proposal. Two other commenters also
proposed a third set of criteria focused on
prioritizing projects that are participating
in State low-income renewable energy
programs, with one commenter specif-
ically naming programs funded under
the Environmental Protection Agency’s
(EPA) Greenhouse Gas Reduction Fund
Solar For All Program. However, one of
the comments specifically limits these
criteria to Category 1 projects. Neither
of the comments explain how these cri-
teria would be equitably applied to facil-
ities applying from all States, especially
States that do not have such programs,
nor do the commenters explain how wind
facilities would be eligible under the
previously recommended criteria. Other
commenters provided additional crite-
ria that could be considered including
the use of minority and woman-owned
businesses as contractors and employ-
ment of workers from low-income com-
munities. Finally, a group of commenters
suggested that the Treasury Department
and the IRS consider applicants under
ASC if the applicant signs a binding
commitment to provide financial bene-
fits for longer than the statute requires;
or if the applicant sign a binding com-
mitment promising to provide greater
financial benefits than required. Another
commenter, similarly, suggested incor-
porating a new category of ASC based
on whether the project provides benefits
to the local community and its mem-
bers. The commenter suggested that this
would better ensure that Category 1 and
Category 2 projects are providing direct
benefits to households or the local com-
munity. This comment gives examples
of criteria for this “provision of benefits”
category including: targeted hiring pro-
visions, local procurement standards for
Minority, Women and Disadvantaged
owned Business Enterprises, Community
Workforce Agreements, and Community
Benefit Agreements; provision of direct
financial benefits to community members,
such as energy bill savings or reduction of
energy burden; and for Category 1 proj-
ects, actual low-income status of house-
holds who would be benefited.
After consideration of these comments,
the final regulations, consistent with the
Proposed Rules, maintain that at least 50
percent of the total Capacity Limitation
be reserved for facilities meeting ASC to
help achieve the Treasury Department and
the IRS’s stated goals of the Program in
Notice 2023-17 to (1) increase adoption
of and access to renewable energy facil-
ities in low-income communities and
communities with environmental justice
concerns; (2) encourage new market par-
ticipants in the clean energy economy; and
(3) provide social and economic benefits
to people and communities that have been
marginalized from economic opportuni-
ties and overburdened by environmental
impacts. While many of the comments
provide suggestions for alternative or addi-
tional ASC, many of the suggestions could
not be applied to all categories or applied
nation-wide such as the use of enrollment
in a specific State energy program. Other
suggestions are infeasible due to statutory
conflict such as providing benefits for a
longer duration than the statute requires.
Lastly, the Treasury Department and the
IRS are anticipating upwards of 100,000
applications annually for the Program.
Selection criteria that is qualitative, sub-
jective, and would require significant

August 28, 2023 620 Bulletin No. 2023–35
review such as a Community Benefits
Agreement, Workforce Agreement, or pro-
curement or hiring targets are administra-
tively infeasible to have timely decisions
made throughout the year. The Treasury
Department and the IRS heard from many
stakeholders that timely decisions will be
key to Program success. The ASC pro-
posed by the Treasury Department and
the IRS are also directly connected to
the applicant (ownership) or the facility
(geography), which allows objective crite-
ria. The Treasury Department and the IRS
may consider other ASC in future guid-
ance that help achieve these goals and are
administratively feasible for the Program.
However, the Treasury Department and
the IRS did not adopt the commenters’
suggestions to add other ASC at this time
because the Treasury Department and the
IRS determined the ASC provided in the
Proposed Rules best promote the Program
goals discussed earlier and should be the
focus of the Program.
The final regulations maintain that at
least 50 percent of the Capacity Limitation
in each facility category will be reserved
for facilities meeting the ASC but clar-
ify that the method for utilizing the ASC
and the specific amount of the reservation
(at or above 50 percent) will be provided
in guidance published in the Internal
Revenue Bulletin. For program year 2023,
those procedures are provided in Revenue
Procedure 2023-27. The final regulations
clarify that the total Capacity Limitation
in each facility category reserved for qual-
ified facilities meeting the ASC may be
reevaluated in future guidance provided
at least 50 percent is reserved. The final
regulations also clarify that after the res-
ervation for qualified facilities meeting
the ASC is established in guidance, it may
later be re-allocated across facility catego-
ries and sub-reservations in the event one
category or sub-reservation within a cat-
egory is oversubscribed and another has
excess capacity.
One commenter stated that most, if not
all, categories, will be oversubscribed,
and acknowledged that there will need to
be a selection process other than a first-
come, first-served application process.
However, this commenter recommended
against using the proposed Ownership
and Geographic Criteria as a means for
prioritizing applications. This commenter
asserted that criteria related to the own-
ership or location of a project provides
no indication of project viability. This
commenter stated that instead, applicants
should be prioritized based on project
maturity, providing a list of factors that
are already included in the Proposed Rules
for the Program, for some or all catego-
ries, such as site control and possession
of all non-ministerial permits. The com-
menter suggested that a lottery be used
in oversubscribed categories for projects
that meet the commenters stated project
maturity factors. A few other commenters
requested that applicants who have made
meaningful financial investments in rel-
atively mature projects should be shown
preference for an allocation. Specifically,
this group of commenters suggested that
the Treasury Department and the IRS, in
addition to the Ownership and Geographic
Criteria, prioritize projects that have
signed agreements with income-qualified
customers representing 10 percent of a
project’s capacity.
After consideration by the Treasury
Department and the IRS, these comments
are not adopted. The project maturity
selection criteria that these commenters
suggest are already part of the minimum
Program requirements to apply that were
provided in the Proposed Rules. ASC are
selection factors for prioritizing projects in
addition to the already required minimum
project maturity level that this commenter
requests. Prioritizing signed agreements
with customers would not work for all
categories, and applicants in Category 4.
A. Ownership criteria
The Proposed Rules provided that the
Ownership Criteria category is based on
characteristics of the applicant that owns
the qualified solar or wind facility. A
qualified solar or wind facility will meet
the Ownership Criteria if it is owned by
a Tribal enterprise, an Alaska Native
Corporation, a renewable energy cooper-
ative, a qualified renewable energy com-
pany meeting certain characteristics, or a
qualified tax-exempt entity. If an applicant
wholly owns an entity that is the owner of
a qualified solar or wind facility, and the
entity is disregarded as separate from its
owner for Federal income tax purposes
(disregarded entity), the applicant, and
not the disregarded entity, is treated as the
owner of the qualified solar or wind facil-
ity for purposes of the Ownership Criteria.
The Proposed Rules provided that
a Tribal enterprise, for purposes of the
Ownership Criteria, (1) is an entity that is
owned at least 51 percent, either directly
or indirectly (through a wholly owned
corporation created under its Tribal laws
or through a section 3 or section 17
Corporation)
6
, by an Indian Tribal gov-
ernment (as defined in section 30D(g)(9)
of the Code), and (2) the Indian Tribal
government has the power to appoint and
remove a majority (more than 50 percent)
of the individuals serving on the entity’s
board of directors or equivalent governing
board.
The Proposed Rules provided that an
Alaska Native Corporation, for purposes
of the Ownership Criteria, is defined in
section 3 of the Alaska Native Claims
Settlement Act, 43 U.S.C. 1602(m).
The Proposed Rules provided that a
Renewable Energy Cooperative, for pur-
poses of the Ownership Criteria, is an
entity that develops qualified solar and/
or wind facilities and owns at least 51
percent of a facility and is either (1) a
consumer or purchasing cooperative con-
trolled by its members who are low-in-
come households (as defined in section
48(e)(2)(C)) with each member having an
equal voting right, or (2) a worker coop-
erative controlled by its worker-members
with each member having an equal vot-
ing right.
The Proposed Rules provided that a
Qualified Renewable Energy Company
(QREC), for purposes of the Ownership
Criteria, is an entity that serves low-in-
come communities and provides pathways
for the adoption of clean energy by low-in-
come households. In addition to its gen-
eral business purpose, the Proposed Rules
noted that the Treasury Department and
the IRS were considering the following
requirements and specifically requested
6
A ‘‘section 17 corporation’’ is a corporation incorporated under the authority of section 17 of the Indian Reorganization Act of 1934, 25 U.S.C. 5124. A ‘‘section 3 corporation’’ is a corpo-
ration that is incorporated under the authority of section 3 of the Oklahoma Indian Welfare Act, 25 U.S.C. 5203.

Bulletin No. 2023–35 621 August 28, 2023
comments on these potential requirements
that a QREC would need to satisfy:
(1) At least 51 percent of the entity’s
equity interests are owned and controlled
by (a) one or more individuals, (b) a
Community Development Corporation
(as defined in 13 CFR 124.3), (c) an agri-
cultural or horticultural cooperative (as
defined in section 199A(g)(4)(A) of the
Code), (d) an Indian Tribal government
(as defined in section 30D(g)(9)), (e) an
Alaska Native corporation (as defined
in section 3 of the Alaska Native Claims
Settlement Act, 43 U.S.C. 1602(m)), or
(f) a Native Hawaiian organization (as
defined in 13 CFR 124.3);
(2) After applying the controlled group
rules under section 52(a) of the Code, the
entity has less than 10 full-time equivalent
employees (as determined under section
4980H(c)(2)(E) and (c)(4) of the Code)
and less than $5 million in annual gross
receipts in the previous calendar year;
(3) The entity first installed or operated
a qualified solar or wind facility as defined
in section 48(e)(2)(A) two or more years
prior to the date of application; and
(4) The entity has installed and/or oper-
ated qualified solar or wind facilities as
defined in section 48(e)(2)(A) with at least
100 kW of cumulative nameplate capac-
ity located in one or more Low-Income
Communities as defined in section 48(e)
(2)(A)(iii)(I).
The Proposed Rules provided that a
“qualified tax-exempt entity”, for pur-
poses of the Ownership Criteria, is (1)
An organization exempt from the tax
imposed by subtitle A of the Code by rea-
son of being described in section 501(c)
(3) or section 501(d); (2) Any State, the
District of Columbia, or political subdi-
vision thereof, any territory of the United
States, or any agency or instrumentality
of any of the foregoing; (3) An Indian
Tribal government (as defined in section
30D(g)(9)), political subdivision thereof,
or any agency or instrumentality of any
of the foregoing; or (4) Any corporation
described in section 501(c)(12) operating
on a cooperative basis that is engaged in
furnishing electric energy to persons in
rural areas.
The final regulations modify the defi-
nition of “qualified tax-exempt entity”
by striking “any territory of the United
States.” The Treasury Department and the
IRS made this change to correct a drafting
error. The tax rules in section 50(b) related
to investment tax credits (ITCs), such as
section 48, generally provide that cred-
it-eligible property cannot be used pre-
dominantly outside the United States (the
fifty States and the District of Columbia)
unless the property is owned by a US cor-
poration or US citizen (other than a citi-
zen entitled to the benefits of section 931
(Guam, American Samoa, or the Northern
Mariana Islands) or section 933 (Puerto
Rico)). Therefore, property used in the
territories and owned by a territory gov-
ernment, or an entity created in or orga-
nized under the laws of a U.S. territory,
generally would not qualify for a section
48 credit.
Another commenter stated that the
Ownership Criteria should be eliminated
because Congress indicated no intent
in the IRA to prefer applications for the
Program on project ownership. This com-
menter asserts that the Ownership Criteria
results in non-profits organizations receiv-
ing outright allocation awards, while qual-
ified business taxpayers will be subject to
a lottery system for any remaining credit.
Similarly, another commenter stated that
the ASC and the reservations for ASC
are not grounded in the statute. Although
Congress did not include Ownership
Criteria directly in the statute, it did
direct the Treasury Department to create
a Program to allocate the annual Capacity
Limitation of 1.8 GW as measured in
DC. As discussed earlier, the Treasury
Department and the IRS stated three goals
for the Program: (1) increase the adop-
tion of and access to renewable energy
facilities in low-income communities and
communities with environmental justice
concerns; (2) encourage new market par-
ticipants in the clean energy economy;
and (3) provide social and economic ben-
efits to people and communities that have
been marginalized from economic oppor-
tunities and overburdened by environ-
mental impacts. Based on the breadth of
research around the barriers to adoption of
renewable energy technology by low-in-
come communities and to meet statutory
objectives and Program goals, the inclu-
sion of Ownership Criteria will allow the
participation of institutions that are well
positioned to increase adoption of clean
energy in low-income communities and
by low-income households. Moreover,
all applicants, with limited exception, in a
given category and sub-category, are gen-
erally required to meet the same require-
ments to be awarded an allocation amount
based on the projected net output of the
facility. No applicant is being awarded
the actual bonus credit amount during the
application and selection period. All facil-
ity owner-applicants who are awarded an
allocation will then have to place the facil-
ity in service and meet certain require-
ments before the owner can claim the
section 48(e) Increase for the section 48
credit.
A few commenters stated that it is not
appropriate to apply the ASC to Category
3 facilities. One commenter said that
multi-family affordable housing guaran-
tees that the benefits in Category 3 will
be provided to low-income households.
Another commenter claimed that Category
3 facilities are subject to existing rules that
conflict with the ASC.
Several commenters stated that the
current Ownership Criteria may conflict
with ownership structures typically used
for LIHTC projects. One commenter
expressed concern that a tax-exempt
applicant who is an owner of a facility
through a partnership structured as a lim-
ited liability company or a limited partner-
ship for State law purposes would not be
considered a qualified tax-exempt entity
because the tax-exempt applicant is not
the sole owner. This commenter requested
revision of the Ownership Criteria to
ensure that tax‐exempt entities (and
other prioritized owner types) remain eli-
gible if the entity controls the managing
member or general partner of the part-
nership that owns the facility for Federal
income tax purposes. Another commenter
suggested that additional language should
state that a qualified tax-exempt entity
would still meet the Ownership Criteria
if the tax-exempt entity directly serves as
the managing member or general partner
of the partnership that owns the facility
for Federal income tax purposes. A few
commenters also stated that most tax-ex-
empt entities entering into a renewable
energy tax credit transaction related to a
LIHTC project will enter into a partner-
ship with a tax equity investor where the
tax-exempt entity is a general partner or
managing member and has control over

August 28, 2023 622 Bulletin No. 2023–35
the partnership’s operations, but is not the
majority owner. The tax equity investor is
usually the majority owner to allow the
investor to claim most of the tax credits
generated by the project.
The Treasury Department and the IRS
understand that for tax credit monetization
purposes, LIHTC projects and solar and
wind facilities are often financed using
tax equity partnership structures where
a tax-exempt entity (or other Ownership
Criteria entities) owns a minority inter-
est (either directly or indirectly) in an
entity treated as a partnership for Federal
income tax purposes that owns the project
or facility. In response to these comments,
the Treasury Department and the IRS have
clarified through additional language in
the final regulations that a qualified solar
or wind facility owned by an entity treated
as a partnership for Federal income tax
purposes is eligible for ASC consider-
ation if an entity that meets the Ownership
Criteria has at least a one percent inter-
est (either directly or indirectly) in each
material item of partnership income, gain,
loss, deduction, and credit of the partner-
ship and is a managing member or general
partner (or similar title) under State law of
the partnership (or directly owns 100 per-
cent of the equity interests in the manag-
ing member or general partner) at all times
during the existence of the partnership.
Because indirect ownership is permissi-
ble, this means an entity that meets the
Ownership Criteria can hold its partner-
ship interest through a taxable subsidiary.
This clarification should allow tax partner-
ships formed for the purpose of monetiz-
ing LIHTCs or section 48 credits that are
directly or indirectly owned and managed
by an entity that satisfies the Ownership
Criteria to meet the ASC and thus better
reflect potential applicants and financing
structures for all Categories. The final reg-
ulations also clarify that a facility that has
received a Capacity Limitation allocation
based, in part, on meeting the Ownership
Criteria will not be disqualified and lose
its allocation if it is transferred by the
original applicant to a tax partnership,
prior to being placed in service, in which
the original applicant retains the requisite
direct or indirect ownership of the tax
partnership and is a managing member
or general partner (or similar title) under
State law of such partnership (or directly
owns 100 percent of the equity interests
in the managing member or general part-
ner) at all times during the existence of the
partnership.
One commenter specifically noted that
some Tribal enterprises do not have a
“board of directors or equivalent governing
board,” but the corresponding Tribes own
utilities and have the power to appoint and
remove the utility’s leadership. Therefore,
the commenter asked that the Treasury
Department and the IRS to clarify Tribally
owned utilities (or those Tribally owned
entities that do not have a “board,” such as
an LLC) meet the Ownership Criteria set
forth in the Program. The commenter also
stated that “Ownership” should stem from
a Tribe’s sovereign decision to construct a
project rather than how a managing entity
is structured and stated that Tribes should
be able to attest to ownership control
without further documentation. Several
commenters included a similar statement.
Another commenter further requested that
the Tribe be considered the applicant and
not the LLC, but that the LLC should also
be allowed to apply, if it is a disregarded
entity, and wholly owned by the Tribe (or
Tribal enterprise).
In response to these comments, the
Treasury Department and the IRS have
modified the definition of Tribal enter-
prise in the final regulations by providing
that a Tribal enterprise for purposes of the
Ownership Criteria is an entity that (1)
an Indian Tribal government (as defined
in section 30D(g)(9) of the Code) owns
at least a 51 percent interest in, either
directly or indirectly (through a wholly
owned corporation created under its Tribal
laws or through a section 3 or section 17
Corporation), and (2) is subject to Tribal
government rules, regulations, and or
codes that regulate the operations of the
entity.
Several commenters requested revi-
sions to the definition of QREC. One
commenter requested that QREC be
further defined but did not provide spe-
cific language to further define the term.
Additionally, a few commenters recom-
mended that the Treasury Department
and the IRS change the “and” at the end
of the list of requirements that a QREC
must satisfy to “or” so that the applicant
only needs to meet one requirement,
inclusive of the general business purpose
to serve low-income communities. One
commenter added that this would be
more inclusive for new market entrants.
Another commenter requested that the
criteria for QREC be modified to include
trusts as individuals, and that the require-
ment that 51 percent of the equity interest
be controlled by an individual be reduced
to 45 percent or, alternatively, at least 25
percent employee owned, and that the
second requirement be expanded to pro-
vide that the company must have less than
100 full time employees and less than $30
million in annual gross receipts from the
previous calendar year. The same com-
menter also suggested that the definition
of a QREC be expanded to include pub-
lic benefit corporations. One commenter
suggested that Category 1(a) of the QREC
definition, which currently reads as “one
or more individuals,” should be replaced
with “renewable energy cooperative,”
claiming that this keeps the consistency
of the definition with the previous sec-
tion and requires more rigorous working
agreements.
A few commenters variously com-
mented on employee requirements for
QRECs. Two commenters, also comment-
ing on the gross receipts threshold, sug-
gested that a QREC maintain less than 10
full time employees and less than $30.4
million in annual gross receipts from the
previous calendar year. Another com-
menter stated that requiring a QREC to
have fewer than ten full-time equivalent
employees is excessively restrictive and
unrealistic. This commenter also stated
that the less than $5 million threshold
for annual gross receipts in the previous
calendar year may be unrealistically low.
One commenter stated that the small size
requirement appears to be arbitrary and
suggested that the Treasury Department
and the IRS use the Small Business
Administration (SBA) small business
size and revenue requirement to promote
small business entrants. Further, another
commenter stated that imposing an addi-
tional requirement to employ workers in
certain low-income communities would
be too onerous. Additionally, one com-
menter stated that it is unclear whether
the requirement to employ low-income
persons would be applicable at the time
of application or through the life of the
project. This commenter requested that

Bulletin No. 2023–35 623 August 28, 2023
the Treasury Department and the IRS
clarify that this requirement is applicable
at the time of application, and then con-
sider allowing State or Federally approved
workforce training programs, supported
through the project, as a means of qual-
ification. However, another commenter,
who generally opposed the inclusion of
QRECs as an ASC Ownership Criteria
category, requested that the Treasury
Department and the IRS require such
companies to enter into Community
Workforce Agreements to ensure work-
ers within low-income and disadvantaged
communities benefit from the wealth
building opportunities provided by the
Program. This commenter also provided a
list of the community benefits that should
be incorporated into the commenter’s sug-
gested agreements.
Additionally, one commenter stated
that new market entrants are altogether
barred from meeting this definition.
Overall, the same commenter suggested
as modification adding other consumer
protection measures, minority- or wom-
en-owned business enterprise criteria,
individual rather than company-based
experience thresholds, and providing flex-
ibility with regard to size, so as to enable
more local clean energy business growth.
A separate commenter also noted that new
entrant companies, that would otherwise
meet the QREC definition, will not qual-
ify due to the specific experience require-
ment. Another commenter requested the
Treasury Department and the IRS update
the definition of QREC to include qual-
ified rooftop lessors. This commenter
provided an example of projects installed
by small businesses that otherwise meet
the definition but are counterparties to a
lease provided by a third-party project
developer. This commenter said that many
single-family residential rooftop facilities
use third-party ownership (TPO) models
to meet the requirements of section 48 but
claims that in many States legal title to
such facilities is not possible for entities
meeting the definition of a QREC, which,
by virtue of their small size, do not have
access to a lease fund. One commenter
also noted that many new market entrants
have prior experience as part of other
solar projects that they do not own and
suggested that companies that have been
subcontractors be included for criteria (3)
and (4), and that the scope be broadened
to be “any solar provider.” A Tribal com-
ment letter also stated that the definition of
a QREC is too limited and does not sup-
port newly formed entities that are owned
in part by Tribes. This commenter claims
that, prior to the IRA, Tribes were not able
to create joint ventures to deploy solar or
wind projects.
After consideration of all comments
on the definition of QREC, the final reg-
ulations adopt some changes and do not
adopt others. The Treasury Department
and the IRS will maintain the inclusion of
QREC in the final regulations. However,
to provide increased flexibility and to
encourage new market participants, the
Treasury Department and the IRS have
modified the QREC definition to allow
for previous participation in a renew-
able energy project as a service provider
(either as an individual or a company)
to demonstrate a track record for serving
low-income communities. While some
commenters stated that brand new entities
may not meet the criteria for QREC, the
Treasury Department and the IRS devel-
oped the QREC criteria to support compa-
nies or entrepreneurs with a commitment
and track record of serving low-income
communities that have not been able to
grow their market share. The Treasury
Department and the IRS also increased
the annual gross receipts threshold based
on the comments and additional market
research to allow for flexibility to growing
companies that may still not have signif-
icant market-share. After careful assess-
ment of all the proposals provided in the
comments and current market informa-
tion, the final regulations provide addi-
tional flexibility to new market entrants by
modifying the requirements that a QREC
would need to satisfy:
(1) At least 51 percent of the entity’s
equity interests are owned and con-
trolled by (a) one or more individu-
als, (b) a Community Development
Corporation (as defined in 13 CFR
124.3), (c) an agricultural or horti-
cultural cooperative (as defined in
section 199A(g)(4)(A) of the Code),
(d) an Indian Tribal government (as
defined in section 30D(g)(9)), (e) an
Alaska Native corporation (as defined
in section 3 of the Alaska Native
Claims Settlement Act, 43 U.S.C.
1602(m)), or (f) a Native Hawaiian
organization (as defined in 13 CFR
124.3);
(2) Has less than 10 full-time equivalent
employees (as determined under sec-
tion 4980H(c)(2)(E) and (c)(4) of the
Code) and less than $20 million in
annual gross receipts in the previous
calendar year;
(3) First installed or operated a qualified
solar and or facility as defined in sec-
tion 48(e)(2)(A) two or more years
prior to the date of application; or
(4) Has provided solar services as a con-
tractor or subcontractor to qualified
solar or wind facilities as defined in
section 48(e)(2)(A) with at least 100
kW of cumulative nameplate capacity
located in one or more Low-Income
Communities as defined in section
48(e)(2)(A)(iii)(I).
The Treasury Department and the IRS
may consider other changes to the defini-
tion of a QREC in future guidance based
on updated market information and what is
administratively feasible for the Program.
Another commenter suggested that the
definition of QREC be revised to provide
that the 51 percent ownership requirement
applies as an average over the life of the
project because of tax credit equity part-
nerships that may change facility owner-
ship for a period of time.
In response to these comments, the
Treasury Department and the IRS have
clarified through additional language in
the final regulations that a partnership
for Federal income tax purposes is eligi-
ble for ASC consideration so long as an
entity that meets the Ownership Criteria
has at least a one percent interest (either
directly or indirectly) in each material
item of partnership income, gain, loss,
deduction, and credit of the partnership
that owns the qualified solar or wind facil-
ity and is a managing member or general
partner (or similar title) under State law
of the partnership (or directly owns 100
percent of the equity interests in the man-
aging member or general partner) at all
times during the existence of the partner-
ship. Therefore, there is no need to revise
the 51 percent ownership requirement as
it applies as an average over the life of the
project as the commenter suggests. This
also allows more flexibility for all appli-
cants that meet the Ownership Criteria to

August 28, 2023 624 Bulletin No. 2023–35
enter financing arrangements such as tax
equity partnerships.
This commenter also suggested that
the definition of Renewable Energy
Cooperatives be revised to require not
only that each member have an equal
voting right, but also that each member
have rights to profit distributions based on
patronage as defined by the proportion of
either (i) volume of energy or energy cred-
its purchased (kWh), (ii) volume of finan-
cial benefits delivered ($), or (iii) volume
of financial payments made ($), and in
which at least 50 percent of the patron-
age in the qualified project is by coop-
erative members who are low-income
households. The commenter noted that
the second requested change clarifies that
the Renewable Energy Cooperative as a
whole does not need to be made up solely
of low-income households, but only that
for qualified projects that are seeking the
Low-Income Bonus Credit, over 50 per-
cent of the participating member interests
(and corresponding member benefits)
must accrue to households that qualify as
low-income (as defined in section 48(e)(2)
(C)).
One commenter stated, regarding
Renewable Energy Cooperatives, that it
may be difficult for cooperatives to ensure
income verification of their members,
and suggested adding eligibility path-
ways, potentially based on geography or
charter documents, that retain an equity
and justice focus while allowing greater
flexibility.
Based on these comments, the Treasury
Department and the IRS have modified the
definition of Qualified Renewable Energy
Cooperative in the final regulations to
account for different energy cooperative
models where profits could be distributed
to members based on volume of energy,
volume of financial benefits delivered, or
volume of financial payments made. The
modified language states that a Qualified
Renewable Energy Cooperative is an
entity that develops qualified solar and/or
wind facilities and is either (1) a consumer
or purchasing cooperative controlled by
its members with each member having an
equal voting right and with each member
having rights to profit distributions based
on patronage as defined by the proportion
of either (i) volume of energy or energy
credits purchased (kWh), (ii) volume of
financial benefits delivered ($), or (iii)
volume of financial payments made ($),
and in which at least 50 percent of the
patronage in the qualified project is by
cooperative members who are low-in-
come households (as defined in section
48(e)(2)(C)) or (2) a worker cooperative
controlled by its worker-members with
each member having an equal voting right.
One commenter expressed that quali-
fied tax-exempt entity should not include
all section 501(c)(3) entities without addi-
tional guardrails. This commenter fur-
ther suggests that if QRECs are required
to submit documentation of “general
business purpose,” then section 501(c)
(3) organizations applying as a qualified
tax-exempt entity should be required to
provide minimal documentation showing
relevant charitable purposes. This com-
menter additionally requested clarifica-
tion about the manner of application for
tax-exempt entities in Puerto Rico and
other territories. Similarly, one commenter
noted that many large corporations have
section 501(c)(3) organizations that could
deploy renewable energy projects with-
out tax credits but will be eligible under
the definition in the Proposed Rules. This
commenter proposed adding to the defini-
tion the following requirements: annual
gross receipts of no more than $30.4 mil-
lion (consistent with recommendations for
QRECs); prior experience owning, oper-
ating, or consulting on a renewable energy
project; and an organizational mission
statement and/or values that show align-
ment with the Program.
One commenter requested more clarity
on how Tribal enterprises, as well as Tribal
governments, political sub-divisions,
and agencies or instrumentalities thereof
under the qualified tax-exempt entity defi-
nition and Tribally owned QRECs can sat-
isfy the Ownership Criteria.
The Treasury Department and the IRS
have not adopted any changes in the final
regulations regarding qualified tax-exempt
entities. The addition of guardrails such as
requiring a particular business or charitable
purpose is infeasible. All tax-exempt orga-
nizations that qualify for ASC will need to
demonstrate a charitable purpose through
their tax-exempt designation. The Treasury
Department and the IRS anticipate that
a wide variety of qualified tax-exempt
entities may participate in the Program
that may include community-based orga-
nizations, educational institutions of all
sizes, and State and local governments,
among others. Accordingly, there is no
one business or charitable purpose for
qualified tax-exempt entities that would
apply to the range of entities that support
meeting the stated goals of the Program.
The Treasury Department and the IRS
may consider changes in future guidance
based on updated market information and
what is administratively feasible for the
Program. The Treasury Department and
the IRS are also providing clarity through
modifications in the definition of Tribal
enterprise, and the circumstances in which
Tribal governments, political sub-divi-
sions, and agencies or instrumentalities
thereof would meet the criteria of the qual-
ified tax-exempt entity definition and other
Ownership Criteria based on a variety of
comments provided by Tribes.
B. Geographic criteria
The Proposed Rules provided that the
Geographic Criteria category is based on
where the facility will be placed in ser-
vice. To meet the Geographic Criteria, a
facility would need to be located in a PPC
7

or in a census tract that is designated in the
CEJST as disadvantaged based on whether
the tract is either (a) greater than or equal
to the 90th percentile for energy burden
and is greater than or equal to the 65th per-
centile for low income, or (b) greater than
or equal to the 90th percentile for PM
2.5

exposure and is greater than or equal to
the 65th percentile for low income.
8
The
7
https://www.ers.usda.gov/data-products/poverty-area-measures/
8
https://screeningtool.geoplatform.gov/en/#3/33.47/-97.5. The CEJST website provides further detail on the terms used in identifying census tracts for the Energy category. ‘‘Energy cost’’
is defined as ‘‘Average household annual energy cost in dollars divided by the average household income.’’ PM2.5 is defined as ‘‘Fine inhalable particles with 2.5 or smaller micrometer
diameters. The percentile is the weight of the particles per cubic meter.’’ ‘‘Low income’’ is defined as ‘‘Percent of a census tract’s population in households where household income is at or
below 200% of the Federal poverty level, not including students enrolled in higher education.’’ See Methodology & data—Climate & Economic Justice Screening Tool (geoplatform.gov.)

Bulletin No. 2023–35 625 August 28, 2023
Proposed Rules provided that applicants
who meet the Geographic Criteria at the
time of application are considered to con-
tinue to meet the Geographic Criteria for
the duration of the recapture period, unless
the location of the facility changes.
The Proposed Rules defined a PPC
generally as any county where 20 percent
or more of residents have experienced
high rates of poverty over the past 30
years. For the purposes of the Program,
the Proposed Rules provided that the PPC
measure adopted by the USDA should
be used to make this determination. The
most recent measure, which would apply
for the 2023 Program year, incorporates
poverty estimates from the 1980, 1990,
2000 censuses, and 2007–11 ACS 5-year
average.
Generally, commenters were supportive
of the Geographic Criteria, including sev-
eral commenters who had concerns with
Ownership Criteria. However, one com-
menter stated that the Geographic Criteria
conflict with existing Federal housing
policy because it would encourage facil-
ities to be built in connection with hous-
ing in certain areas, rather than supporting
low-income residents no matter where they
live. Another commenter stated that the
Geographic Criteria is imprecise because
it does not take into account disadvantaged
communities in certain areas, especially
those that are highly disadvantaged but
border affluent communities.
Several commenters on behalf of Tribes
stated that Geographic Criteria should
not be applied to Category 2 Projects.
However, a few Tribal commenters asked
that the Treasury Department and the IRS
retain Geographic Criteria for Category 3
and Category 4 projects that are located on
Indian land so that Tribal projects can better
compete. In response to these comments,
the Treasury Department and the IRS have
decided to not include Geographic Criteria as
an ASC for Category 2 but maintain the use
of Geographic Criteria as an ASC as stated
in the Proposed Rules in all other categories.
Another commenter provided several
suggestions for revising the Geographic
Criteria, stating that the Treasury
Department and the IRS should consider
broadening the Geographic Criteria by
including all Indian land or not applying
additional Geographic Criteria to them;
adding LIHTC and New Markets Tax
Credit designations; applying all or at
least more of CEJST’s burden thresholds
as well as the Environmental Protection
Agency’s EJScreen’s thresholds; allowing
State screening tools and maps; providing
for community self-nomination; or per-
haps including adjacent tracts.
Another commenter, providing a com-
ment on Category 3 projects, generally
supported the use of Geographic Criteria
to prioritize allocations, but recommended
reconsideration of the use of the PPCs as
a poverty measure. This commenter stated
that the PPCs provide data at a coun-
ty-level designation and that this masks
significant variation within counties and
does not capture persistent poverty within
counties not registering as PPCs. This
commenter instead recommended that
the LIHTC Qualified Census Tract geo-
graphic definition be utilized as an option
to determine whether a project meets the
Geographic Criteria, stating that the QCT
designation denotes census tracts where
either (1) 50 percent or more of the house-
holds have an income less than 60 percent
of the Area Median Gross Income, or (2)
the poverty rate is over 25 percent. One
Tribal commenter recommended that the
Treasury Department and the IRS use a
geographic determination based on the
LIHTC, or the NMTC because Tribes have
been using these to build new Tribal hous-
ing or invest in clean energy. Additionally,
another commenter suggested that the
Geographic Criteria should be expanded
to include: disadvantaged communities
in other burdened categories; a process
for communities to be recognized as
communities with environmental justice
concerns based on State environmental
justice screening tools; and a self-nomi-
nation process for communities to submit
additional information to demonstrate that
they are communities with environmental
justice concerns that may not be captured
by CEJST or other screening tools. This
commenter additionally requested the pro-
vision of a publicly accessible mapping
tool to identify the areas that meet the
geographic criteria.
After consideration of these com-
ments, the Treasury Department and the
IRS have not adopted the suggestions.
The intent of the Geographic Criteria as
applied to Category 3 and to other cate-
gories is to encourage the construction
of energy facilities in areas across the
country that have high energy costs and
that might otherwise suffer from under-
investment. This includes areas of the
country where affordable housing cur-
rently exists but where the adoption of
renewable energy technology may be
challenging. The Treasury Department
and the IRS have determined ASC based
on their applicability across all categories.
While LIHTC Qualified Census Tract as a
Geographic criteria may meet some goals
of the program, it is a methodology that
is used primarily in the LIHTC industry
and not widely known or used by other
housing programs or in energy programs.
Therefore, its inclusion as a Geographic
Criteria is not adopted. Additionally, an
allocation based on Geographic Criteria
in Category 3 for a facility built in con-
nection with an existing Federally subsi-
dized housing building does not impact
the Federal housing policy with regards to
siting of the housing itself. The Treasury
Department and the IRS may consider
other metrics for Geographic Criteria
in future guidance that help achieve the
Program goals and are administratively
feasible for the Program. A publicly acces-
sible mapping tool will be available on
DOE’s Program website.
IX. Sub-Reservation of Allocation for
Facilities Located in a Low-Income
Community
The Proposed Rules provided that
the 700 MW Capacity Limitation reser-
vation for facilities seeking a Category
1 allocation would be sub-divided with
560 MW reserved specifically for eligi-
ble residential BTM facilities, includ-
ing rooftop solar. The Proposed Rules
provided that the remaining 140 MW of
Capacity Limitation would be available
for applicants with FTM facilities as well
as non-residential BTM facilities.
Several commenters opposed to the
reservation of capacity in Category 1 for
BTM residential facilities. Generally,
these commenters requested that the 560
MW capacity reserved for BTM resi-
dential facilities be eliminated (leaving
a general 700 MW reservation) or that
the amounts should be revised. The main
concern of commenters is that the pro-
posed 140 MW will provide very limited

August 28, 2023 626 Bulletin No. 2023–35
eligibility for FTM projects, including
community solar projects that would oth-
erwise qualify under the statute. One com-
menter strongly recommended against
subdividing the Category 1 Capacity
Limitation into BTM and FTM MW
blocks. This commenter stated that a BTM
project typically requires a credit review
and/or a long-term financial commitment
from the customer, which the commenter
believes is antithetical to the objective
of a Program intended to ease financial
burdens on low-income households, not
impose them. The commenter suggested
to instead require that a certain percent-
age of all generating facilities’ capacity
be allocated to low-income, residential
subscribers. Another commenter pointed
out that location is the only requirement in
Category 1 under the statute, and that the
focus on BTM residential facilities does
not fit with the statute.
Other commenters have noted that
this focus on BTM residential facilities
limits the potential of other applicants to
benefit from Category 1. For example, at
least two commenters have noted that the
prioritization of residential facilities lim-
its the potential for non-profit organiza-
tions and municipalities from obtaining
an allocation for facilities built to power
schools, libraries, food pantries, shel-
ters, houses of worship, education facil-
ities, local community-based non-profits,
assisted living facilities, performing arts
centers, and community development
corporations. One of these commenters
explains that these organizations play
crucial roles in their communities, pro-
viding necessary services and support to
the residents of the surrounding area, and
the sub-reservation overlooks the fact
that commercial and industrial scale solar
benefits may be more impactful. In argu-
ing against the sub-reservation, another
commenter noted the belief that Category
1 should be reserved specifically for
facilities that are “Located in a Low-
Income Community,” which directly
benefit the residents of that community.
As an alternative, the commenter asks
that non-profits, public facilities, and
municipalities be included in the larger
sub-reservation. Another commenter, in
its suggestion to revisit this sub-reser-
vation, stated their view that community
facilities represent the “highest and best
use” of the 10 percent low-income adder
from the standpoint of ensuring meaning-
ful community benefit. Similarly, another
commenter stated that the reservation of
560 MW exclusively for residential BTM
ignores the fact that most agrivoltaic and
agribusiness BTM projects that benefit
farmers (and thus consumers) would also
benefit from Category 1. This commenter
states that the benefit of using renewable
energy solar and storage is an emerging
renewable agribusiness industry that
would benefit America significantly by
lowering energy input costs and lowering
food prices for the nation by extension.
One commenter suggested to amend
the requirements from focusing on
FTM versus BTM to instead distinguish
“on-site usage of credits” from “off-site
usage of credits” to more accurately pri-
oritize residential projects. Similarly,
another commenter had concerns with the
limitation of defining residential rooftop
solar as BTM. The commenter appreci-
ated the efforts to set aside an allocation
for residential rooftop solar, but the com-
menter believed that the Proposed Rules
go too far by defining residential rooftop
solar as solely BTM. This commenter
explained that Connecticut’s regulated
utilities offer a FTM solar tariff for res-
idential and commercial solar projects
and that FTM residential solar projects,
though somewhat rare in Connecticut,
are particularly attractive for projects
in low-income communities. Therefore,
this commenter suggested an updated
definition that accounted for single fam-
ily or multi-family residential that does
not qualify under Category 3 and has a
maximum net output (and is not limited
as BTM). Another commenter noted that
BTM arrangements are not achievable in
States like Vermont and offered sugges-
tions for redefining BTM.
Commenters had other suggestions
on how to handle the sub-reservations
in Category 1. One commenter recom-
mended expanding the criteria for qual-
ifying Category 1 projects to allow 600
MW (85 percent) of the allocated MW
for FTM facilities. Another commenter
noted that if the concern is that the 700
MW capacity allocation will be monopo-
lized by businesses in low-income areas,
the rules could reserve a portion of the
total allocation for businesses, but that the
rules should consider a larger reservation
for commercial and industrial scale solar
projects for non-profit community organi-
zations, public entities, and other impact-
ful entities that play a key role in these
low-income communities. This com-
menter suggests considering, in addition
to the 140 MW reservation for businesses,
a 280 MW carve out for residential solar
and a separate 280 MW carve out for com-
munity-based not-for-profit organizations.
Another commenter suggested a sub-allo-
cation of at least 400 MW for BTM instal-
lations at community facilities.
One commenter suggested that if the
560 MW amount cannot be changed, the
rules should allow any facility that serves
at least 50 percent residential customers
to qualify. This commenter noted that the
goal of the sub-reservation is a laudable
intent, but that community solar, though
predominantly deployed FTM, is also
positioned to serve residential custom-
ers, especially low-income customers.
Another commenter recommended alter-
ing the sub-reservations by providing a
third sub-reservation in Category 1 of
at least 150-200 MW for eligible com-
munity solar projects that are located on
(non-residential) rooftops or parking lots
in low-income communities, are less than
1 MW, reserve at least 50 percent of off-
take for low-income households, and offer
a minimum 20 percent discount to low-in-
come subscribers.
Two commenters had additional
concerns with Category 1, particularly
related to consumer protections for resi-
dential customers. While this commenter
is opposed to prioritization of residential
rooftop solar over other types of solar
installations within Category 1, the com-
ment implied this is because of serious
consumer protection issues associated
with how these allocations are being
implemented by the private marketplace.
This commenter provided an example of
solar installers telling potential customers
that the IRS will send them a check for 70
percent of the cost of the solar installation
if they sign up with the installer. Therefore,
this commenter encourages the Treasury
Department and the IRS to be vigilant and
to ensure that companies awarded these

Bulletin No. 2023–35 627 August 28, 2023
credits are held accountable within the
scope of the Treasury Department and the
IRS’s authority.
After consideration of the comments
recommending elimination or significant
modification of the rules regarding the
Category 1 sub-reservation, the comments
are not adopted. The purpose of the res-
idential BTM sub-reservation is to pre-
serve capacity for projects that directly
benefit residential customers and would
not otherwise be eligible for Category 3
or Category 4, while also recognizing
the large and established market share of
companies using the TPO single-family
residential business model. Additionally,
residential BTM (of which the major-
ity is expected to be single-family) have
faster development timelines, allowing
this capacity to be efficiently allocated.
Moreover, a separate set-aside allows
like-projects to compete for capacity and
will allow for more streamlined applica-
tion processing.
Accordingly, the final regulations
provide that the Program includes a
sub-reservation for eligible BTM resi-
dential facilities but clarifies that the spe-
cific amount of the sub-reservation for a
Program year will be provided in guid-
ance published in the Internal Revenue
Bulletin. The final regulations also clarify
that the amount of the sub-reservation is
established based on factors such as pro-
moting efficient allocation of Capacity
Limitation and allowing like-projects
to compete for an allocation. Revenue
Procedure 2023-27 provides the Category
1 sub-reservation for eligible BTM res-
idential facilities for the 2023 Program
year.
In response to the commenters’ con-
cerns about restrictions on FTM facilities
and the ability of community facilities to
apply for Category 1, FTM community
facilities serving residential customers
may apply for an allocation of the remain-
ing Capacity Limitation in Category 1
and receive a section 48(e) Increase of
10 percentage points, assuming they do
not meet Category 4 requirements, or
apply for an allocation under Category
4 if they meet all of the requirements of
Category 4 and receive a section 48(e)
Increase of 20 percentage points. The
Treasury Department and the IRS note
that the rules do not impose additional
requirements on Category 1 beyond the
statutory location requirement, given the
importance of creating an objective and
administrable process that will allow tax-
payers to quickly receive feedback on
their applications. However, the Treasury
Department and the IRS seek to encour-
age community solar projects to apply
in Category 4 as opposed to Category 1
because, although Category 1 facilities
must be located in low-income commu-
nities, they do not necessarily have to
serve low-income customers and do not
have to comply with Category 4 finan-
cial benefits requirements. Therefore,
directing more community solar projects
to Category 4 where there is a protected
set aside of 700 MW better promotes pro-
grammatic goals.
In response to comments, the Treasury
Department and the IRS agree that the
560 MW carve-out for residential BTM
limits the potential for community orga-
nizations such as non-profit organizations
and municipalities that serve communities
from obtaining an allocation, and they
will need to compete for limited capacity
with for-profit nonresidential businesses
(and all other projects that are located in a
low-income community). As a result, the
Treasury Department and the IRS modi-
fied the Category 1 sub-reservation for
BTM residential in Revenue Procedure
2023-27 to reduce this sub-reservation to
490 MW for the 2023 Program. Therefore,
a larger portion of the Capacity Limitation
in Category 1 (210 MW) will be avail-
able to FTM and non-residential BTM
projects. The Treasury Department and
the IRS may change this sub-reservation
amount for future years.
The Proposed Rules defined a FTM
facility as a facility that is directly con-
nected to a grid, and its sole purpose is to
provide electricity to one or more offsite
locations via such grid; alternatively, FTM
is defined as a facility that is not BTM.
The Proposed Rules defined an eligible
residential BTM facility as single-family
or multi-family residential qualified solar
or wind facility that does not meet the
requirements for Category 3 and is BTM.
A qualified wind and solar facility is BTM
if: (1) it is connected with an electrical
connection between the facility and the
panelboard or sub-panelboard of the site
where the facility is located, (2) it is to be
connected on the customer side of a utility
service meter before it connects to a dis-
tribution or transmission system (that is,
before it connects to the electricity grid),
and (3) its primary purpose is to provide
electricity to the utility customer of the
site where the facility is located. This also
includes systems not connected to a grid
and that may not have a utility service
meter, and whose primary purpose is to
serve the electricity demand of the owner
of the site where the system is located.
Commenters requested clarification on the
meaning of “residential.”
The final regulations generally adopt
the definition of BTM from the proposed
rules, but the final regulations clarify that
a qualified solar or wind facility is resi-
dential if it generates electricity for use in
a dwelling unit used as a residence. The
final regulations also clarify that a facil-
ity is FTM if it is directly connected to a
grid and its primary purpose is to provide
electricity to one or more offsite locations
via such grid or utility meters with which
it does not have an electrical connection;
alternatively, FTM is defined as a facil-
ity that is not BTM. For the purposes of
Category 4, a qualified solar or wind facil-
ity is also FTM if 50 percent or more of its
electricity generation on an annual basis
is physically exported to the broader elec-
tricity grid.
X. Application Process
A. Documentation and attestations
The Proposed Rules provided the gen-
eral framework for evaluating applications
for Capacity Limitation, including that
applicants would be required to submit
with each application certain information,
documentation, and attestations specified
in Program guidance.
The Proposed Rules described the
following required documents and
attestations.

August 28, 2023 628 Bulletin No. 2023–35
Documentation and Attestations To Be Submitted for All Facilities
Proposed Document RequirementFTMBTM <= 1 MW ACBTM > 1 MW AC
An executed contract to purchase the facility, an executed contract to
lease the facility, or an executed PPA for the facility.
NoYesYes
A copy of the final executed interconnection agreement, if
applicable.
9
YesNoYes
Proposed Attestation Requirement FTMBTM <= 1 MW ACBTM > 1 MW AC
The applicant has site control through ownership, an executed lease
contract, site access agreement or similar agreement between the
property owner and the applicant.
YesNoNo
The facility has obtained all applicable Federal, State, Tribal, and
local non-ministerial permits, or that the facility is not required to
obtain such permits.
YesYesYes
The applicant is in compliance with all Federal, State, and Tribal
laws, including consumer protection laws (as applicable).
YesYesYes
The applicant has appropriately sized the facility (to meet no more
than 110 percent of historical customer load).
NoYesYes
The applicant has appropriately sized the customer’s facility output
share and has based facility output share on historical customer load.
YesNoNo
The applicant has inspected installation sites for suitability (for
example, roofs).
YesYesYes
Documentation and Attestations To Be Submitted for Certain Facilities Depending on Category and ASC
Proposed Document RequirementCategory 1Category 2Category 3Category 4
Documentation demonstrating property will be installed on
an eligible residential building
NoNoYesNo
Plans to ensure tenants receive required financial benefitsNoNoYesNo
If applying under ASC: Documentation demonstrating
applicant meets Ownership Criteria
YesYesYesYes
Proposed Attestation Requirement Category 1Category 2Category 3Category 4
Facility location is eligible
10
YesYesNoNo
Consumer disclosures informing customers of their legal
rights and protections have been provided to customers that
have signed up and will be provided to future customers
YesYes
Yes
(provided to
tenants)
Yes
The applicant will ensure at least 50 percent of the facility’s
total output will be provided to qualifying low-income
households and that each receive at least a 20 percent bill
credit discount rate
NoNoNoYes
If applying under ASC: Facility location is eligible based
on PPC/CEJST
YesNoYesYes
9
If an interconnection agreement is not applicable to the facility (for example, due to utility ownership), this requirement is satisfied by a final written decision from a Public Utility
Commission, cooperative board, or other governing body with sufficient authority that financially authorizes the facility. If the facility is located in a market where the interconnection
agreement cannot be signed prior to construction of the facility or interconnection facilities, this requirement is satisfied by a signed conditional approval letter from the jurisdictional utility
and an affidavit from a senior corporate officer of the applicant (or someone with authority to bind the applicant) stating that an interconnection agreement cannot be executed until after
construction of the facility.
10
Facility location would be reviewed using latitude and longitude coordinates when possible.

Bulletin No. 2023–35 629 August 28, 2023
The final regulations adopt the require-
ment that applicants must submit spec-
ified information, documentation, and
attestations to demonstrate Program eligi-
bility and project viability but clarify that
the specific information, documentation,
and attestations will be provided in guid-
ance published in the Internal Revenue
Bulletin. For the 2023 Program year,
Revenue Procedure 2023-27 provides the
application requirements. The specific
information, documentation, and attesta-
tions that applicants are required to submit
may get updated in future Program guid-
ance for Program years following 2023.
In developing the application require-
ments for the 2023 Program year pro-
vided in Revenue Procedure 2023-27, the
Treasury Department and the IRS care-
fully considered the comments submitted
in response to the Proposed Rules.
One commenter requested that the
Treasury Department and the IRS design
the application intake mechanism to
allow for bulk application submissions,
including attestations. For example, the
commenter stated that applicants could
potentially be allowed to submit a spread-
sheet for many projects at one time, along
with required attestations. The commenter
also cited to the efficient allocation lan-
guage at section 48(e)(4)(A), which states
“...the Secretary shall provide procedures
to allow for an efficient allocation process,
including, when determined appropriate,
consideration of multiple projects in a
single application if such projects will be
placed in service by a single taxpayer.”
One commenter cited to the language in
the Proposed Rules that states a Category
1 or Category 2 facility that also qualifies
as a Category 3 or Category 4 facility is
considered a Category 3 or Category 4
facility, and requested that these facil-
ities be automatically reviewed under
Category 1 if their application is denied
for an allocation in Category 4. As pro-
vided in Revenue Procedure 2023-27, the
Treasury Department and the IRS will not
move applications from the category and
sub-reservation under which the facility
owner applied for an allocation. The state-
ment the commenter cited was intended
to remind applicants that if their facility
meets the requirements under Category 1
or 2 and under Category 3 or 4, the appli-
cant should apply under Category 3 or
4, as applicable, to be considered for the
section 48(e) Increase of 20 percentage
points. Additionally, as provided in Notice
2023-17 and Revenue Procedure 2023-27
each applicant may only apply for consid-
eration of its facility, or for each facility
if the applicant owns multiple facilities,
under one category in 2023. If the facil-
ity is not awarded an allocation under the
category in which the applicant applies,
the facility will not be considered for an
allocation in another category.
1. Permits
Several commenters were concerned
with the required attestation that the facil-
ity has obtained all applicable Federal,
State, Tribal, and local non-ministerial
permits, or that the facility is not required
to obtain such permits. A few commenters
suggested alternatively that the rule instead
require applicants to provide sufficient
documentation that the project “expects
to receive” or has received all necessary
permits to comply with and Federal, State,
or local requirements. Another commenter
uses the phrase “proof of initiating” in its
suggestion.
Commenters provided reasons for their
concerns about the required permits. For
example, a commenter stated that the
requirement to have all necessary permits
in place as a requirement for application
(given the limited application window) as
out of their direct control and not neces-
sary given the other requirements of the
guidelines. Another commenter consid-
ering the same issue noted that because
there is tremendous variation in the scope
and applicability of State and local permit
requirements that eligible projects may be
subject to depending on their geographic
location, a completed permit requirement
would serve to disqualify projects in loca-
tions that have suitable and appropriate
permitting requirements and potentially
advantage projects either already advanc-
ing without the benefit of Federal support
or projects in jurisdictions with the lowest
State and local permitting requirements.
Additionally, commenters requested
guidance on the definition of non-min-
isterial permits. For example, a com-
menter requested clarity on whether
“local non-ministerial permits” includes
such things as building and/or electrical
permits. The commenter noted their agree-
ment with the need to ensure applications
for projects that are likely to move forward
but that obtaining such permits requires
significant expenditure of funds and
investment of time in a project and that if
all permits are required, many developers
will be unlikely to invest in projects that
need the low-income community bonus
credit. Other commenters assumed build-
ing permits are required as non-ministe-
rial permits and noted their disagreement
with the requirement. Another commenter
suggested that the Treasury Department
and the IRS should clarify whether the
appeals period for non-ministerial permits
must have lapsed prior to application sub-
mission. Finally, a commenter noted that
given the uncertainty of a competitive
program, projects should not be required
to secure building permits. Another com-
menter said rooftops particularly should
not require building permits in the appli-
cation. Further, one commenter requested
that if a roof is found to be unsuitable for
installation of a facility, after an inspec-
tion, that the application to the Program
allow for the inclusion of a scope of work
contract to make the roof suitable, in lieu
of attesting that the roof is suitable. The
commenter additionally requested that the
cost of such construction work be allowed
to be included in the cost of the overall
installation.
The Treasury Department and the IRS
considered these comments but deter-
mined that a standard such as “expects
to receive” or has “proof of initiating”
with respect to required permits is not
enough to demonstrate sufficient proj-
ect maturity to give assurances of the
viability of the project. As explained in
the Proposed Rules, section 48(e)(4)(A)
directs the Secretary to provide proce-
dures to allow for an efficient allocation
process. Additionally, section 48(e)(4)
(E)(i) requires that facilities allocated an
amount of Capacity Limitation be placed
in service within four years of the date of
allocation. Therefore, as explained in the
Proposed Rules, the Treasury Department
and the IRS determined that to promote
efficient allocation and to ensure that allo-
cations will be awarded to facilities that
are sufficiently viable and well defined to
allow for a review for an allocation and
sufficiently advanced such that they are

August 28, 2023 630 Bulletin No. 2023–35
likely to meet the four-year placed in ser-
vice deadline, applicants are required to
submit certain documentation and attes-
tations when applying for an allocation.
This requirement includes an attestation
that the facility has obtained all applicable
Federal, State, Tribal, and local non-min-
isterial permits, or that the facility is not
required to obtain such permits, which
demonstrates completion of a critical proj-
ect milestone.
In response to the concerns comment-
ers raised regarding the lack of clarity
with respect to the definition of non-min-
isterial permits, the Treasury Department
and the IRS included the following defini-
tion of non-ministerial permits in Revenue
Procedure 2023-27, clarifying that build-
ing and electrical permits are not consid-
ered non-ministerial permits. Revenue
Procedure 2023-27 provides that non-min-
isterial permits are defined as: “Permits in
which one or more officials or agencies
consider various factors and exercise some
discretion in deciding whether to issue or
deny permits. This does not include minis-
terial permits based upon a determination
that the request complies with established
standards such as electrical or building
permits. Non-ministerial permits typically
come with conditions and usually require
public notice or hearings. Examples of
non-ministerial permits include local
planning board authorization, condi-
tional use permits, variances, and special
orders.” Lastly, on the question of whether
the appeals period for non-ministerial per-
mits must have lapsed prior to application
submission, the lapse of this period is not
a requirement for application submission.
With respect to the comment about
unsuitable roofs, applicants will continue
to be required to attest that the location
of the qualifying facility has been deter-
mined suitable for installation at appli-
cation, to give assurances of the viability
of the project. Additionally, the Treasury
Department and the IRS cannot accommo-
date the request for the cost of roof repairs
to be includable in the overall cost of the
project, presumably, so that the repair
costs are eligible costs for determining the
bonus credit amount. The statutory lan-
guage provides for the energy percentage
increase with respect to eligible property
that is part of a solar or wind facility. The
roof of a building is not part of a solar or
wind facility, and therefore, costs associ-
ated with building improvements are not
includable in the basis of the solar or wind
facility to determine the section 48(e)
Increase.
2. Interconnection Agreements
Several commenters disagree with
the documentation requirement in the
Proposed Rules that for FTM and BTM
larger than 1 MW, a copy of the final exe-
cuted interconnection agreement, if appli-
cable, is required. Commenters suggested
that requiring negotiated or approved
interconnection agreements is prema-
ture for the first application period. Some
commenters suggested an interconnection
proxy, such as a submitted interconnec-
tion application or some other documen-
tation from the utility that acknowledges
the interconnection process has formally
begun.
Many commenters noted practical con-
siderations. For example, a commenter
pointed out that an executed interconnec-
tion agreement and all applicable permits
are typically received up to the date (and
often after) a financial closing on a transac-
tion occurs; it is not anticipated that a debt
and equity investor will close on financing
without prior receipt of an award letter by
the IRS. Therefore, the commenter argues
that requiring such documents at time of
application will slow down the develop-
ment process, increase the cash require-
ments of a developer prior to financial
closing, and lengthen the construction
timing. The commenter instead suggests
that these documents be required when the
facility is placed in service. As an alter-
native for the application, this commenter
suggests requiring teaming agreements
be in place and that each of the teaming
parties provide a resume outlining at least
3 years of experience obtaining permits
and interconnection agreements within
the specified jurisdictions along with the
number of renewable energy facilities that
each of the parties has placed in service in
such jurisdictions. Echoing that concern,
another commenter suggested that this
requirement of mandating signed inter-
connection agreements sets a high bar and
would only make the Program accessible
to those developers with financing read-
ily available for upgrades before being
accepted into the Program. Another com-
menter provided that an applicant should
not be disadvantaged due to stricter
requirements on permitting and intercon-
nection agreements in one locality versus
another. Another commenter said that by
requiring eligible projects to submit final
executed interconnection agreements,
the Treasury Department and the IRS
prevent taxpayers in certain States from
being able to apply for capacity under
the Program. The commenter explained
that in California, Connecticut, North
Carolina, and Washington, D.C., utilities
often do not execute or sign interconnec-
tion service agreements until after a proj-
ect has received permission to operate
(PTO). The commenter noted that a foot-
note in the Proposed Rules elaborates that
if a taxpayer is not able to present a signed
interconnection agreement, the taxpayer
can instead submit a final written decision
from the Public Utilities Commission or
other governing body or a signed con-
ditional interconnection approval letter
that authorizes the facility. However, the
commenter said that these alternatives to
providing an executed interconnection
agreement are infeasible in States and
regions like those listed. The commenter
suggests as an alternative to the proposed
rulemaking, the Treasury Department and
the IRS should allow taxpayers to submit
an unsigned or customer-signed contin-
gent approval to interconnect for projects
located in utility zones that don’t provide
executed interconnection agreements until
PTO.
Other commenters suggested addi-
tional alternatives. For example, instead
of an executed interconnection agree-
ment, a commenter suggested allowing
FTM facilities to submit interconnection
applications and studies. Another com-
menter also suggested proof of an inter-
connection application stating it should
be adequate given the differing processes
across utilities districts (which reiterates
the comment earlier describing limitations
in certain States and Washington, D.C.)
Another suggestion for a larger project
is proof that such project has an active
queue position and an attestation from the
applicant that the project is not in default,
payment or otherwise, with the relevant
transmission and distribution companies.
This commenter pointed out that with the

Bulletin No. 2023–35 631 August 28, 2023
time required, most applicants with an
actual executed interconnection agree-
ment started their projects before the IRA
was enacted. This commenter suggested
that for future application rounds for
larger projects, an “executed interconnec-
tion agreement” may be a more feasible
expectation. Another commenter similarly
suggested that projects that are actively in
the queue for interconnection, and projects
with a proposed timeline for site intercon-
nection application should suffice. Lastly,
a commenter recommended that for BTM
projects smaller than 1 MW, a “limited
notice to proceed” with an EPC (engineer-
ing, procurement and construction) con-
tractor authorizing the EPC to produce a
design for a renewable energy facility and
apply for interconnection should be con-
sidered adequate documentation in lieu
of an executed contract to purchase the
energy facility.
The Treasury Department and the IRS
considered these comments but ultimately
decided not to make a change to the inter-
connection agreement requirements, and
the proposed requirements are included
in Revenue Procedure 2023-27. For the
same reasons explained earlier under part
X.A1. of this Summary of Comments
and Explanation of Revisions section, the
interconnection agreement documentation
requirements are necessary to achieve
Program goals including ensuring appli-
cations represent mature, viable projects.
In response to the comment that these
projects with executed interconnection
agreements would have begun prior to the
implementation of the IRA, the Treasury
Department and the IRS believe that this
issue will be mitigated as the Program
progresses.
Additionally, in response to the com-
menters who raised scenarios where inter-
connection agreements are not possible or
feasible, footnote 9 of the Proposed Rules
explained that if the facility is located
in a market where the interconnection
agreement cannot be signed prior to con-
struction of the facility or interconnection
facilities, the interconnection agreement
requirement is satisfied by a signed con-
ditional approval letter from the jurisdic-
tional utility and/or an affidavit from a
senior corporate officer of the applicant
(or someone with authority to bind the
applicant) stating that an interconnection
agreement cannot be executed until after
construction of the facility. The Treasury
Department and the IRS determined that
this alternative provided in the Proposed
Rules covers the scenarios identified
by commenters. Lastly, a commenter
requested clarification if an interconnec-
tion service agreement (ISA) is amended
after submission of the initial application,
whether this amendment must be submit-
ted to the Treasury Department and the
IRS. Details on these procedural require-
ments will be provided in later Program
information.
3. 110 Percent Historical Customer Load
Generally, commenters requested elim-
inating the attestation that the applicant
has appropriately sized the facility (to
meet no more than 110 percent of histori-
cal customer load). One commenter stated
that many utility rules for net metering
already have a limit (typically 125 per-
cent), and the Program rules should defer
to those local rules. The commenter said
these limits can be verified or validated
through the approved interconnection
agreement (or utility approval of rooftop
solar projects). Furthermore, this com-
menter, similar to others described previ-
ously, agrees with the idea that size should
be able to increase noting that if a Tribal
housing authority or Tribal member also
implements electrification efforts, the
electric load of a Tribal residence will
increase and that rooftop solar projects
should be allowed to “oversize” with the
expectation that the load will increase.
At least one commenter recognized
that the purpose of a limitation may be to
prevent abuse or waste in connection with
the ability to claim section 48 credits, but
the commenter anticipated there would
also be renewable energy projects that
could feasibly produce and benefit from
more than 110 percent of historical cus-
tomer load. Another commenter argued
that after the IRA, energy usage is likely
to increase with the adoption of heat pump
technology, electric vehicle chargers, and
induction stoves, for example, so appli-
cants need to build solar facilities that
account for increased future usage. The
commenter believed that the flexibility to
oversize facilities relative to customers’
current demand could be a way to provide
direct financial benefits to residents of
affordable housing properties noting that
the commenters’ particular technology
allows facilities to maximize the size of
the roof to produce net energy metering
credit beyond the host properties’ con-
sumptions. The commenter explained the
credits can then be allocated to qualifying
low-income customers in the surrounding
neighborhood including those who live in
buildings that cannot support solar facili-
ties. Similarly, focusing on arguments that
the limitation prevents greater benefits
to low-income individuals, another com-
menter agreed that facility sizing require-
ments should be set at the local/utility
level and not specified in the Program
requirements because limiting the size of
the facility will reduce the benefits avail-
able to tenants. Another commenter men-
tioned the need to expand the limitation
due to the need to accommodate the instal-
lation of defined electrification projects.
Another commenter gave additional
reasons why it views the limitation as
problematic noting that a Category 3
residential building may have multiple
historical customer loads; this concept
of limiting facility size to historical cus-
tomer loads has previously been proposed
to reduce the size of onsite solar facilities,
limit financial benefits, and hinder over-
all distributed generation, which contra-
dicts the intent of the statute; and that a
limit to BTM facilities creates significant
inconsistencies with other provisions of
guidance referring to the fact that in cer-
tain States a Category 3 facility may only
be allowed to interconnect to the local
utility grid through a BTM configuration
and this rule might be inconsistent with
the requirement on 50 percent financial
benefits.
Comments on behalf of Tribal entities
also disagreed with the limitation. These
commenters said that for Tribal housing
clean energy projects that qualify under
Category 3, the rule should not limit the
size of a BTM project to 110 percent of
load. Additionally, one commenter stated
that many utility rules for net metering
already have a limit (typically 125 per-
cent of historical load) and another com-
menter said that several States permit
facilities of up to 200 percent historical
load, and the rules should defer to those
local rules. The commenter said these

August 28, 2023 632 Bulletin No. 2023–35
limits can be verified or validated through
the approved interconnection agreement
(or utility approval of roof top solar proj-
ects). Furthermore, this commenter, simi-
lar to others described previously, agrees
with the idea that size should be able to
increase, noting that if a Tribal housing
authority or Tribal member also imple-
ments electrification efforts the electric
load of a Tribal residence will increase
and that rooftop solar projects should be
allowed to “oversize” with the expectation
that the load will increase.
While some commenters recom-
mended removing the limitation, other
commenters suggested modifications. One
commenter suggested slightly increasing
the historical customer load limitation
to 120 percent based on rules in place in
Minnesota for BTM facilities. Another
commenter seemed to agree with keep-
ing the attestation but removing the limit,
noting that the rules simply require attes-
tation that the project is appropriately
sized based on applicable State and local
solar program or utility interconnection
rules, which they generally must already
comply with, and that this would better
accommodate concurrent or future addi-
tions of electrical load. Another com-
menter agreed with keeping the attestation
and removing the limitation but noted that
if the 110 percent of historical customer
load requirement is retained, it should be
clarified to allow for reasonable estimates
of customer usage in cases where the cus-
tomer does not have a full 12 months of
historical usage at the specific location.
Lastly, one of the commenters suggested
as an alternative, and to maintain a rule
that will preclude gaming, the following
attestation requirement along the lines of
the Category 4 attestation: “For any facil-
ity that is projected to produce more than
110 percent of the its host property’s his-
toric annual kWh energy consumption, the
applicant will ensure that either (A) any
exported kWh will be provided to occu-
pants of a qualified residential property
at a 20 percent or greater bill credit dis-
count related to the host property’s volu-
metric export compensation rate for solar
kWh, or (B) the applicant has reasonably
accounted for an anticipated increase
of the applicable building’s energy con-
sumption.” Similarly, another commenter
also thought the attestation for Category
3 should be similar to that for Category 4
noting that “applicants should not be con-
strained to “110 percent of the historical
customer load” for rooftop projects for
Categories 3 and 4. A more reasonable
approach would be to size the “customer’s
facility output share” appropriately as is
proposed for FTM projects.
One commenter asked for clarification
on how the Treasury Department and the
IRS plan to define “appropriately sized”
for purposes of the requirement applica-
ble to FTM projects that the “applicant
has appropriately sized the customer’s
facility output share and has based facility
output share on historical customer load.”
This commenter suggested as an example
that their standard process for determin-
ing subscribers’ allocation sizing is to size
allocations at 85-90 percent of the cus-
tomer’s 12-month historical average kWh
usage. The final regulations will not adopt
a more detailed standard on this term and
will use a reasonableness approach on
whether an output share is appropriately
sized.
In response to these comments, the
Treasury Department and the IRS believe
that the attestation for BTM facilities
related to the host properties’ historic
energy usage should be retained to pre-
vent Capacity Limitation allocations
from going to facilities that are oversized.
However, the Treasury Department and
the IRS recognize the need to modify
the attestation requirement to account for
future load projections and to not limit
sizing to 110 percent where State and
local requirements may allow for more.
Accordingly, Revenue Procedure 2023-27
includes the following revised attestation
requirement: “The applicant has appropri-
ately sized the facility, or the customer/
offtaker subscriptions will be sized to
meet the customer’s energy needs, con-
sidering historical customer load and/
or reasonable future load projections, in
accordance with applicable State and local
requirements.”
4. Tribal Documentation Requirements
Some Tribal commenters requested
modifications specifically regarding Tribal
documentation requests. Commenters stat-
ed that development on certain Category 2
Indian land are subject to Tribal approv-
al and regulatory authority and involve
the co-management of the Department of
Interior. To ensure applicants on Indian
land understand documentation require-
ments, these commenters requested that
the attestation requirements reflect a
Tribal approval or a Tribal resolution for
projects on lands subject to Tribal civil ju-
risdiction under 25 USC 3501(2)(A)-(B).
The United States has a trust relation-
ship with Tribal governments whereby
the Federal government manages certain
Indian land for Tribal governments and
Tribal citizens as the beneficial owners
based on the cessation of Tribal lands.
11

As a component of this relationship,
Tribal governments are recognized as
nations with inherent sovereignty and
the ability to exercise criminal and
civil jurisdiction over lands classified
as Indian Country, which includes all
lands identified in 25 U.S.C. 3501(2)
(A)-(B).
12
This civil authority includes
the right to regulate activities on their
lands including taxation, and the ability
to condition consent for development
on Indian land via regulatory processes
that might include approvals, permitting,
and the right of exclusion.
13
With regard
to land described in 25 U.S.C. 3501(2)
(C), Alaska Native Corporations have
management and regulatory author-
ity over their lands under the Alaskan
Native Claims Settlement Act.
14
Because
Tribal governments and Alaska Native
Corporations must approve develop-
ment on Indian land described in 25
U.S.C. 3501(2)(A)-(C) under existing
legal authorities, the comment to include
Tribal approval as an attestation require-
ment for applications for a Category 2
allocation on such lands is adopted.
11
See Johnson v. M’Intosh, 21 U.S. 543 (1823); Cherokee Nation v. Georgia, 20 U.S. 1 (1831); Worcester v. Georgia, 31 U.S. 515 (1832) (setting forth foundational principles of Federal
Indian law).
12
Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, 147 (1982).
13
See 25 CFR § 169.10 and 25 CFR Part 162.
14
See 43 U.S.C 1601

Bulletin No. 2023–35 633 August 28, 2023
One commenter also suggested that
Tribally owned qualified solar or wind
facilities have priority [for an allocation]
over other third-party facility owners
with respect to Category 2. Another com-
menter stated that Category 2 allocation
should be fully reserved (not 50 percent
reserved) for projects that meet the Tribal
Ownership Criteria.
Commenters provided that projects
owned directly by a Tribe, Tribal enter-
prise, Tribal utility, or Tribal housing
authority, regardless of the category,
should not have to comply with certain doc-
umentation and attestation requirements,
such as site control, customer disclosures,
benefit sharing agreement requirements,
leases, contracts to purchase, PPAs (which
should only be required if the project is
structured to include a third-party owner),
permits, and compliance with Tribal law.
Another commenter agreed that for trans-
actions not involving third parties, Tribes
should not be required to provide certain
application or attestation documents, and
that Tribes should be able to self-certify
that qualifying projects are compliant.
Other Tribal commenters support the abil-
ity to self-certify and additionally advised
the Treasury Department and the IRS not
to rely on external census data to track
poverty levels on Indian land. Similarly,
another commenter agreed that documen-
tation requirements should be tailored for
Category 3 and Tribal-enterprise owned
projects should be allowed more flexibil-
ity, based on Tribal recommendations.
The Treasury Department and the IRS
considered these comments but did not
adopt them in Revenue Procedure 2023-
27 because, as explained in the Proposed
Rules, the documentation and attestation
requirements are critical for all projects to
ensure an efficient allocation process (that
is, to ensure that projects receiving an allo-
cation are viable and can satisfy Program
requirements). Moreover, some of the
requirements, such as site control, permits,
and compliance with Tribal laws are attes-
tations that merely require Tribal entities
to attest that the Program requirements are
satisfied, similar to self-certification.
5. Other Documentation Requirements
A commenter suggested that the
Treasury Department and the IRS require
applicants to submit documentation that
they have received (or have contracted
with a service provider that will be han-
dling beneficiary personally identifiable
information and that has received) a third-
party cybersecurity assessment against a
technology industry-standard framework
such as SOC 2 Type II (sponsored by the
American Institute of Certified Public
Accountants), and that the assessment
does not include unaddressed or unreme-
diated material findings.
The Treasury Department and the
IRS recognize that the Program requires
information and documentation that may
contain confidential information. The IRS
and DOE are following all required pro-
tocols to protect information submitted to
the IRS or DOE. However, the Treasury
Department and the IRS think that it
would be administratively impractical to
impose cybersecurity assessment require-
ments on applicants, so this suggestion is
not included in Program guidance.
Another commenter provided that
the final regulations should confirm that
executed contracts and other documents
containing personally identifying and/
or business confidential information sub-
mitted in connection with the applications
constitute trade secrets and/or commercial
or financial information that is exempt
from disclosure under the Freedom of
Information Act (FOIA).
After consideration of this comment, it
is not adopted in these final regulations.
Commenting on the IRS, DOE, or the
Treasury’s Department’s response to any
FOIA request is outside the scope of what
can be appropriately addressed in Program
guidance.
In contrast to the commenters who
requested relaxing or eliminating certain
documentation and attestation require-
ments, three commenters were supportive
of the project maturity requirements and
some suggested that the final regulations
should impose additional requirements.
One commenter is pleased that maturity
requirements for all capacity categories
are included and recommends further
strengthening these maturity require-
ments by necessitating a documentation
requirement providing an interconnection
agreement or State approved intercon-
nection process, a community solar State
program capacity award or a PPA, and
proof of non-ministerial permits rather
than an attestation. The other commenter
suggested enhancing application require-
ments for the initial application period and
subsequent rolling application process.
The commenter suggests that demonstra-
tion of site control (for example, an exe-
cuted contract, lease, or option to lease or
purchase or similar agreement between
the property owner and the developer/
installer) and all non-ministerial per-
mits should be included as a “Proposed
Document Requirement,” rather than
a “Proposed Attestation Requirement”
for FTM and BTM that are smaller than
1 MW. The commenter says these mile-
stones, as well as an executed intercon-
nection agreement, are clearest and most
efficient. The final commenter was sup-
portive as long as the information submit-
ted was kept strictly confidential and not
subject to public disclosure as discussed
earlier.
For Category 3 specifically, one com-
menter suggested that the Documentation
and Attestations table should be updated
to add a line for “An executed contract to
purchase the facility, an executed contract
to lease the facility, or an executed power
purchase agreement for the facility.” This
same commenter also suggested that for
Category 3, there should be a multifam-
ily building financial benefits assignment
plan to illustrate how the financial benefits
will reach the tenants. Additionally, this
commenter said the rules should imple-
ment milestone requirements along this
four-year period to ensure the complete
and efficient usage of the annual capacity
limitation (speed timeline for placing in
service).
Other commenters included sugges-
tions for documentation alternatives or
requests for clarification on documentation
requirements. One commenter suggested
that for BTM projects, site control should
also be accepted through other recordable
documents such as “Option Agreements”
or “Memoranda of Understanding,”
including attestation that such documents
exist, similar to what the transmission
and distribution companies accept for
site control. The commenter stated that
the three documents listed as required in
Table 1 for BTM are all proprietary to an
applicant and contain business sensitive
information. In addition, executing these

August 28, 2023 634 Bulletin No. 2023–35
documents may depend on if the applicant
receives the “adders (bonus).” To clarify,
the site control document attestations are
required for FTM; these attestations are
not required for BTM so this commenter’s
particular concerns do not arise. Another
commenter asked for clarification whether
a lease option agreement satisfies the
requirement for FTM facilities, which
requires showing that the applicant has
site control through ownership, an exe-
cuted lease contract, site access agree-
ment or similar agreement between the
property owner and the applicant. The
same commenter asked also for clarifi-
cation that a submitted executed contract
may have an execution date of August 16,
2022, or later. Lastly, a commenter urged
the Treasury Department and the IRS to
consider a guaranteed maximum price
contract or other design/build contract in
lieu of the requirement that BTM facilities
provide documentation in the form of an
executed contract to purchase the facility,
an executed contract to lease the facility,
or an executed PPA for the facility. This
commenter said that in most cases, the
commenter expects to develop the proj-
ect themselves and hire a contractor to
install the solar arrays, and so there would
be no need for a purchase, lease, or PPA
contract.
The Treasury Department and the IRS
considered these comments but decided
not to impose additional requirements.
The Treasury Department and the IRS
view the Proposed Rules as striking the
right balance between requiring adequate
documentation and attestations to ensure
projects are viable and well defined to
allow for a review for an allocation, and
sufficiently advanced such that they are
likely to meet the four-year placed in
service deadline, while not being unduly
burdensome for applicants. Additional
documentation and attestations suggested
by these commenters do not appear nec-
essary to verify compliance with Program
requirements.
On the requests for alternatives (a
lease option agreement requested by one
commenter and guaranteed maximum
price contract or other design/build con-
tract requested by another), the Treasury
Department and the IRS also considered
these suggestions but believe the origi-
nal documents described in the Proposed
Rules are best able to demonstrate a proj-
ect is viable and well defined to allow for
a review for an allocation, and sufficiently
advanced such that they are likely to meet
the four-year placed in service deadline,
while not being unduly burdensome for
applicants. Lastly, on the question of tim-
ing and whether a submitted executed
contract may have an execution date of
August 16, 2022, or later, the rules do not
have any date restrictions on the docu-
mentation required.
B. Lottery
The Proposed Rules also provided a
that a lottery system may be used in over-
subscribed categories to decide among
similarly situated applications.
A few commenters requested that the
lottery process be eliminated, and that the
application process be entirely on a first-
come, first-served basis. One commenter
advised against a lottery system and
advised that in the event the Program is
oversubscribed, the Treasury Department
and the IRS should select projects based
on “project readiness”, which, the com-
menter states, in most existing solar
markets, uses the earliest-in-time date
of permit or ISA as a proxy for project
maturity. Other commenters stated that
they understand the purpose of a lottery
in tie-breaker situations, but caution that
a lottery may incentivize speculative proj-
ect developers. The Treasury Department
and the IRS made the decision to retain
the lottery to provide an equitable review
process for similarly situated applications.
Due to the anticipated volume of appli-
cations, it would not be administratively
feasible to select between applications for
similar situated facilities that are submit-
ted during the same time period for review
without a lottery process that objectively
prioritizes projects for review. The lottery
process will allow for an efficient alloca-
tion process by ordering applications for
review and allowing applications to be
divided among reviewers for simultane-
ous review.
The final regulations adopt the lot-
tery system from the Proposed Rules to
be used if a facility category or sub-res-
ervation is oversubscribed but clarifies
that details regarding how the lottery
procedures will operate are specified
in guidance published in the Internal
Revenue Bulletin. The final regulations
also clarify that a category or sub-cate-
gory is oversubscribed if it receives appli-
cations in excess of Capacity Limitation
reserved for the facility category or reser-
vation within a facility category. For the
2023 Program year, Revenue Procedure
2023-27 provides the application review
and selection procedures. The specific
review and selection procedure may be
updated in future Program guidance for
Program year 2024.
C. Application window
The Treasury Department and the
IRS proposed an approach that includes
an initial application window in which
applications received by a certain time
and date would be evaluated together, fol-
lowed with a rolling application process if
Capacity Limitation is not fully allocated
after the initial application window closes.
Several commenters requested a first-
come, first-served application process,
with a few commenters adding that it
should be first-come, first-served with
respect to projects that are similarly situ-
ated. Additionally, several comment letters
referred to the 60-day application period
previously provided for the Program
under Notice 2023-17. These comment
letters generally state that a 60-day period
is too short and request instead that the
Program accept applications on a rolling
basis. The Proposed Rules already pro-
vided for a change from the 60-day win-
dow under Notice 2023-17. This change
was noted under “Selection Process” in
the Proposed Rules.
As provided in Revenue Procedure
2023-27, for Program year 2023 there will
be an initial 30-day window followed by
a rolling application process thereafter for
any capacity that remains in a given cate-
gory or sub-reservation. At the end of the
initial window, any category or sub-reserva-
tion that is oversubscribed will be subject
to the lottery system. Applications may still
be submitted in oversubscribed categories
or for the Category 1 sub-reservation after
the 30-day period and until the close of a
Program year. Those applications may be
reviewed in the order received only after
DOE’s review and the IRS’s award determi-
nations regarding all applications submitted

Bulletin No. 2023–35 635 August 28, 2023
within the first 30 days. Applications sub-
mitted will only be reviewed if there is
remaining Capacity Limitation. Applicants
should refer to Revenue Procedure 2023-27
for additional details regarding the Program
application process.
A few commenters additionally sug-
gested that any category that has remain-
ing capacity at the close of the Program
for a particular capacity year should enter
into a continuous rolling application pro-
cess, rather than requiring a new appli-
cation window. One commenter further
specified that if the category remains in
a rolling application process through the
end of the calendar year, then on January
1 of the following year, new annual capac-
ity should be allocated to the category and
the rolling application process should con-
tinue. Otherwise, these commenters state
that there will be a backlog of applica-
tions. One of the commenters also urged
the Treasury Department and the IRS to
create a waitlist for the following year’s
capacity allocation, with applications pri-
oritized in the order received. This com-
menter stated that this would obviate the
need for a lottery system for similarly
situated applications in oversubscribed
categories. Finally, a few commenters
expressed concern about the short appli-
cation period for the 2023 Program year.
These commenters generally stated their
belief that the 2023 Program will close on
December 31, 2023 and that any unallo-
cated Capacity Limitation will immedi-
ately rollover and be added to the 2024
Capacity Limitation on January 1, 2024.
The Treasury Department and the IRS
will assess the 2023 Program and ini-
tial applications before determining any
capacity changes to the 2024 Program
and any changes to the application pro-
cess. The Treasury Department and the
IRS can also adjust Capacity Limitation
among categories within a Program year.
Moreover, although the statute provides
for a Capacity Limitation for each calen-
dar year, with the ability to rollover unused
Capacity Limitation to the next year, there
is no requirement to close the application
and allocation period for the 2023 Program
year on December 31, 2023. Applicants
should refer to Revenue Procedure 2023-
27 for additional details regarding the
Program application process.
XI. Documentation and Attestations to be
Submitted when Placed in Service
The Proposed Rules also required facil-
ities that received a Capacity Limitation
allocation to report to DOE that the facil-
ity has been placed in service, and to sub-
mit additional documentation or complete
additional attestations with this reporting.
The Proposed Rules provided that an
owner must submit documentation or
attest to the following:
Proposed Attestation RequirementCategory
Confirmation of material ownership and/or facility changes from application or that there has been no change
from the application.
All
Proposed Document Requirement
Permission to Operate (PTO) letter (or commissioning report verifying for off-grid facilities) that the facility
has been placed in service and the location of the facility being placed in service.
All
Final, Professional Engineer (PE) stamped as-built design plan, PTO letter with nameplate capacity listed, or
other documentation from an unrelated party verifying as-built nameplate capacity.
All
Benefits Sharing Agreement for qualified residential building projects between building owner and tenants
(including for facilities that are third- party owned, additional sharing agreement between the facility owner
and the building owner).
3
Final list of households or other entities served with name, address, subscription share, and income status of
qualifying low-income households served, and the income verification method used.
4
Spreadsheet demonstrating the expected financial benefit to low-income subscribers to demonstrate the 20
percent bill credit discount rate
4
The final regulations adopt the require-
ment that the owner of a facility must
report to DOE that the facility has been
placed in service, and to submit additional
documentation or complete additional
attestations with this reporting but clarify
that the specific information, documen-
tation, and attestations that applicants
are required to submit will be specified
in guidance published in the Internal
Revenue Bulletin. For the 2023 Program
year, Revenue Procedure 2023-27 pro-
vides the placed in service documenta-
tion procedures. The specific information,
documentation, and attestations that appli-
cants are required to submit when a qual-
ified facility is placed in service may get
updated for Program year 2024.
One commenter provided that a final,
PE stamped as-built design plan is unnec-
essary. The commenter stated that appli-
cants should instead be able to rely upon
the as-built design plan for the project
(without a PE stamp, at least in jurisdic-
tions where such a stamp is not required),
or other permitting documentation from
the authority having jurisdiction, demon-
strating the nameplate capacity. This sug-
gestion is partially adopted in the Revenue
Procedure 2023-27, allowing as-built
design plans to be submitted without a
PE stamp in cases where the local juris-
diction does not require such a stamp. The

August 28, 2023 636 Bulletin No. 2023–35
Treasury Department and the IRS further
note that the as-built design plan is only
one of three options for verifying as-built
nameplate capacity, which provides flex-
ibility for applicants. A PTO letter with
nameplate capacity listed or other docu-
mentation from an unrelated party veri-
fying as-built nameplate capacity are also
reliable and acceptable options.
Also, as discussed in part V.5 of this
Summary of Comments and Explanation
of Revisions section, the Treasury
Department and the IRS determined that
to better achieve the goal of verifying
Program compliance, the final regulations
will require that facility owners must pre-
pare a Benefits Sharing Statement, which
must include certain information, and that
the Qualified Residential Property owner
must formally notify the occupants of
units in the Qualified Residential Property
of the development of the facility and
planned distribution of benefits. Therefore,
this Benefits Sharing Statement, instead
of a Benefits Sharing Agreement, will be
required documentation upon placing a
Category 3 property in service.
XII. Placed in Service Prior to Allocation
Award
The Proposed Rules, consistent with an
earlier statement in section 4.05 of Notice
2023–17, provided that facilities placed in
service prior to being awarded an alloca-
tion of Capacity Limitation would not be
eligible to receive an allocation.
Some commenters disagreed with the
proposal that facilities must be placed in
service after being awarded an allocation
of Capacity Limitation to be eligible to
receive an allocation. These comment-
ers focused on the impact this will have
on the economics of their projects for the
Program as well as timing issues they
argue arise due to waiting for allocation.
For example, one commenter stated that
they will not be able to complete projects
without the bonus credit because the “eco-
nomics” of their projects will be “severely
impacted”, and if they must apply first
to get an award, that the projects will be
delayed to 2024. Another commenter
noted specifically for Category 3 that mul-
tifamily affordable housing owners have
been relying on the initial guidance and
the February 13, 2023, statutory due date,
and they have been planning on deploy-
ing solar power and storage that benefits
residents of affordable housing since the
day the IRA became law. The commenter
added that these projects would not be
economically viable without the Low-
Income Communities Bonus Credit, and
absent the bonus credit, these same devel-
opers would have planned to develop sig-
nificantly smaller solar installations that
offset common area electric loads only
and would not have planned larger solar
and storage facilities that also provide a
direct economic benefit to low-income
residents. This commenter disagreed with
the statement that facilities placed in ser-
vice prior to the allocation process do not
increase adoption of and access to renew-
able energy facilities. Additionally, two
commenters noted that the rationale for
not allowing projects placed into service
after January 1, 2023, but before receiving
an allocation, to be eligible for the bonus
allocation is insufficient, and should be
rescinded.
Some commenters expressed con-
cern over the potential impact that this
proposal would have on low-income
residents, including Tribal members.
Likewise, another commenter suggested
that the Treasury Department and the IRS
should reconsider the placed into service
requirements due to reliance concerns
and negative economic impacts on Tribes.
The commenter explained that many new
Tribal projects were planned, developed
and started construction after the IRA
passed in anticipation of qualifying for the
bonus credit. This expectation escalated
Tribal projects that might not otherwise
have been developed - just as the statute
intended. This commenter specifically
suggested that Tribal projects that are
placed in service after January 1, 2023,
should be eligible for this bonus alloca-
tion. Another commenter noted a particu-
lar project for which they would be able to
provide 25 percent energy savings directly
to low-income families if they receive the
allocation, and without that bonus amount,
their financing costs would rise (due to
increased returns provided to their equity
investor) and consequently they would
have to reduce the economic savings to 20
percent. In this example, the commenter
believed that providing an additional 5
percent in direct economic benefits to
low-income families would increase
adoption and access to renewable energy.
Similarly, another commenter contended
that, due to this requirement that a project
must be placed in service after an alloca-
tion award, it would be more burdensome
and therefore less likely that low-income
communities with environmental justice
concerns will benefit from the Program.
Two commenters suggested allow-
ing facilities that were placed in service
after the date of the initial guidance,
February 13, 2023. Another commenter
suggested including facilities for which
construction began after the enactment of
the IRA on August 16, 2022. One com-
menter made some specific recommen-
dations depending on the type of project.
This commenter suggested allowing
all facilities (in addition to Category 1
facilities) that have allocations awarded
under the rolling application process to
be placed in service prior to an allocation
award. Alternatively, this commenter
suggested allowing single-family resi-
dential rooftop facilities in Category 1
that have allocations awarded under the
rolling application process to be placed
in service prior to allocation award. This
commenter also agreed with other com-
menters that 2023 capacity allocations
be allowed for any qualifying Category
3 facility placed in service after final
Program rules are issued noting that this
suggestion is based on the longer devel-
opment timelines and unique cost consid-
erations for Category 3 projects.
Another commenter suggested modify-
ing the requirement to instead provide that
projects must be placed in service after
application, rather than after allocation.
After consideration of the comments
described herein, the final regulations
adopt the Proposed Rule providing that
projects must be placed in service after
allocation. The Treasury Department and
the IRS considered these comments but
ultimately decided not to make a change
because requiring projects be placed in
service after allocation provides the best
way to promote the increase of, and access
to, renewable energy facilities that would
not be completed in the absence of the
Program. Although Treasury and IRS rec-
ognize the economic and business-model
concerns raised by commenters, these
issues are largely the result of allocations

Bulletin No. 2023–35 637 August 28, 2023
not being readily available before the
Program opens. These issues are there-
fore expected to significantly diminish in
the future. Further, section 48(e)(4)(E)(i)
provides a lengthy window of four years
to place a facility in service following an
allocation of Capacity Limitation, sup-
porting that statutory intent is for alloca-
tions to go to new facilities that have not
yet been placed in service. The Treasury
Department and the IRS therefore believe
that this rule best accomplishes Congress’s
intent of the Program to encourage new
development of renewable energy and
the corresponding benefits to low-income
communities. The Program cannot encour-
age additional renewable energy facilities
in connection with low-income communi-
ties if those facilities were already placed
in service without the Program.
XIII. Disqualification After Receiving an
Allocation
The Proposed Rules provided that
a facility that was awarded a Capacity
Limitation allocation is disqualified from
receiving that allocation if prior to or upon
the facility being placed in service: (1) the
location where the facility will be placed
in service changes; (2) the nameplate
capacity of the facility increases such
that it exceeds the less than 5 MW AC
maximum net output limitation provided
in section 48(e)(2)(A)(ii) or decreases
by the greater of 2 kW or 25 percent of
the Capacity Limitation awarded in the
allocation; (3) the facility cannot satisfy
the financial benefits requirements under
section 48(e)(2)(B)(ii) as planned (if
applicable) or cannot satisfy the financial
benefits requirements under section 48(e)
(2)(C) as planned (if applicable); (4) the
eligible property that is part of the facil-
ity that received the Capacity Limitation
allocation is not placed in service within
four years after the date the applicant
was notified of the allocation of Capacity
Limitation to the facility; or (5) the facility
received a Capacity Limitation allocation
based, in part, on meeting the Ownership
Criteria and ownership of the facility
changes prior to the facility being placed
in service such that the Ownership Criteria
is no longer satisfied, unless (a) the orig-
inal applicant retains an ownership inter-
est in the entity that owns the facility and
(b) the successor owner attests that after
the five year recapture period, the original
applicant that met the Ownership Criteria
will become the owner of the facility or
that this original applicant will have the
right of first refusal.
Commenters expressed concern over
some of the disqualification factors set
forth in the Proposed Rules. In response
to the proposal that a certain decrease in
nameplate capacity results in a disqualifi-
cation, one commenter suggested increas-
ing the threshold for disqualification due
to a size reduction from 25 percent to at
least 30 percent. Another commenter rec-
ommended that the 2 kW or 25 percent
threshold be applicable to both increasing
and decreasing the system’s size.
Based on an assessment of other simi-
lar State programs and because this is an
allocated credit with a finite amount of
capacity awarded each year, the Treasury
Department and the IRS have declined to
adopt the comment to increase the size
reduction to 30 percent.
For a different disqualification factor
that would occur when the eligible prop-
erty that is part of the facility that received
the Capacity Limitation allocation is not
placed in service within four years after
the date the applicant was notified of the
allocation, a commenter suggested that
projects receiving an allocation of bonus
credits be allowed to show alternative
forms of completion within the four-year
window apart from “placed in service,”
which commenter says unfairly depends
on the utility’s timeline for signing off
on the project. Another commenter rec-
ommended adding additional require-
ments for the topic of placed in service for
Category 1. This commenter suggested
that for BTM projects that are smaller than
1 MW, these projects be required to attest
that the project is active and moving for-
ward towards being placed in service on
an annual basis after receiving an alloca-
tion, or until the eligible property is placed
in service. The commenter proposed that
if the applicant is non-responsive or
declines to attest that the project is active,
then the allocation should be forfeited and
the capacity returned and that applicants
should also be able to proactively forfeit
an allocation. The commenter’s reasoning
for this is that in commenter’s view four
years is far beyond the necessary time
frame for smaller projects that can be
completed in months instead of years.
The Treasury Department and the IRS
did not adopt these recommendations.
Section 48(e)(4)(E) sets the placed in ser-
vice deadline for the Program by provid-
ing that section 48(e)(1) does not apply
with respect to any property that is placed
in service after the date that is four years
after the date of the allocation with respect
to the facility of which such property is a
part. Therefore, providing any type of
alternative forms of completion within
the four-year window apart from “placed
in service” is inconsistent with the statute
and not allowed. Similarly, additional bur-
dens (and repercussions for non-compli-
ance) of annual attestation requirements
for smaller Category 1 projects should not
be imposed.
The Proposed Rules provided that if
the facility received a Capacity Limitation
allocation based, in part, on meeting the
Ownership Criteria and ownership of the
facility changes prior to the facility being
placed in service such that the Ownership
Criteria is no longer satisfied, unless (a)
the original applicant retains an ownership
interest in the entity that owns the facility
and (b) the successor owner attests that
after the five year recapture period, the
original applicant that met the Ownership
Criteria will become the owner of the
facility or that this original applicant will
have the right of first refusal. Commenters
observed that put options, which are
often used in tax equity structures, were
excluded from the proposed rule. The
Treasury Department and the IRS have
modified this rule to better reflect con-
tractual arrangements used with tax
equity financing structures and to avoid
unintended complications with other tax
guidance. The final regulations eliminate
the attestation regarding a call, put, or
right of first refusal is that such contrac-
tual rights exist. Rather, the final regula-
tions provide that if the facility received
a Capacity Limitation allocation based,
in part, on meeting the ownership criteria
and if ownership of the facility changes
prior to the facility being placed in service
the facility is disqualified, unless the orig-
inal applicant transfers the facility to an
entity treated as a partnership for Federal
income tax purposes and retains at least
a one percent interest (either directly or

August 28, 2023 638 Bulletin No. 2023–35
indirectly) in each material item of part-
nership income, gain, loss, deduction, and
credit of such partnership and is a manag-
ing member or general partner (or similar
title) under State law of the partnership (or
directly owns 100 percent of the equity
interests in the managing member or gen-
eral partner) at all times during the exis-
tence of the partnership.
XIV. Recapture of Section 48(e) Increase
In accordance with section 48(e)(5),
the Proposed Rules provided for recap-
turing the benefit of any section 48(e)
Increase with respect to any property that
ceases to be property eligible for such sec-
tion 48(e) Increase (but that does not cease
to be investment credit property within
the meaning of section 50(a)). In accor-
dance with section 48(e)(5), the Proposed
Rules provided that the period and per-
centage of such recapture is determined
under rules similar to the rules of section
50(a). In accordance with section 48(e)
(5), the Proposed Rules acknowledged
such recapture may not apply with respect
to any property if, within 12 months after
the date the applicant becomes aware (or
reasonably should have become aware) of
such property ceasing to be property eligi-
ble for such section 48(e) Increase, the eli-
gibility of such property for such section
48(e) Increase is restored. In accordance
with section 48(a)(5), the Proposed Rules
provided that such restoration of a section
48(e) Increase is not available more than
once with respect to any facility.
The Proposed Rules provided that
the following circumstances result in a
recapture event if the property ceases to
be eligible for the increased credit under
section 48(e): (1) property described in
section 48(e)(2)(A)(iii)(II) fails to pro-
vide financial benefits over the 5-year
period after its original placed in service
date; (2) property described under sec-
tion 48(e)(2)(B) ceases to allocate the
financial benefits equitably among the
occupants of the dwelling units, such as
not passing on to residents the required
net energy savings of the electricity; (3)
property described under section 48(e)(2)
(C) ceases to provide at least 50 percent
of the financial benefits of the electricity
produced to qualifying households as
described under section 48(e)(2)(C)(i)
or (ii), or fails to provide those house-
holds the required minimum 20 percent
bill credit discount rate; (4) for property
described under section 48(e)(2)(B), the
residential rental building the facility is
a part of ceases to participate in a cov-
ered housing program or any other hous-
ing program described in section 48(e)
(2)(B)(i), if applicable; and (5) a facility
increases its output such that the facili-
ty’s output is 5 MW AC or greater, unless
the applicant can prove that the output
increase is not attributable to the origi-
nal facility but rather is output associated
with a new facility under the 80/20 Rule
(the cost of the new property plus the
value of the used property). See Rev. Rul.
94–31, 1994–1 C.B. 16.
Commenters submitted recommenda-
tions and questions related to the recap-
ture provisions in the Proposed Rules.
One commenter suggested stricter rules
by requiring attestations that the owner of
the facility will maintain eligibility under
the Program for a minimum of 15 years,
or the lifetime of the project. This com-
menter said if it is not possible to require
this sort of covenant or attestation, the
Treasury Department and the IRS should
instead implement continual and spon-
taneous audits of projects. The Treasury
Department and the IRS did not adopt
this suggestion. Under the recapture pro-
visions of section 48(e)(5), Congress pro-
vided that the period and percentage of
such recapture must be determined under
rules similar to the rules of section 50(a).
Section 50(a) generally provides that this
is a five year period with differing appli-
cable percentages depending on when
the property ceases to qualify. Therefore,
under section 48(e)(5), stricter restric-
tions related to recapture should not be
imposed.
Two commenters raised concerns
about the recapture event that occurs
when the property ceases to provide at
least 50 percent of the financial benefits
of the electricity produced to qualifying
households as described under section
48(e)(2)(C). Another commenter raised a
similar issue regarding the Proposed Rule
that projects can only cure an issue relat-
ed to low-income verification one time if
the 50 percent financial benefits thresh-
old is not met. This commenter stated
that, due to the complexity of subscrip-
tion management, potential defaults, and
subscription termination, it is possible
that projects will dip below this 50 per-
cent threshold more than once due to no
fault of the project owner. This comment-
er recommended that the rules be revised
to allow projects to dip below the 50 per-
cent threshold if there is proven effort to
restore the low-income percentage. The
Treasury Department and the IRS did not
adopt these recommendations because
it is inconsistent with section 48(e)(5).
Section 48(e)(5) allows only a one-time
restoration of section 48(e) eligibility per
facility if the facility ceases to qualify
for an allocation of Capacity Limitation
before recapture of the section 48(e)
Increase is triggered.
A different commenter suggested an
additional recapture event that rooftop
solar lease and PPA providers should attest
that they will adhere to the provisions of
the Consumer Leasing Act (15 U.S.C. §§
1667-1667f), and the rules should make
documented violations of the Consumer
Leasing Act an event that would trigger
recapture of the allocation. While the
Treasury Department and the IRS under-
stand the commenter’s concern, the stat-
ute provides no requirements related to
the Consumer Leasing Act, and therefore,
the final regulations do not impose this
requirement on the applicants.
The final regulations related to recap-
ture adopt the requirements from the
Proposed Rules but also include a clarifi-
cation that any event that results in recap-
ture under section 50(a) will also result in
recapture of the benefit of the section 48(e)
Increase. The exception to the application
of recapture provided in §1.48(e)-1(n)(2)
does not apply in the case of a recapture
event under section 50(a).
Special Analyses
I. Regulatory Planning and Review—
Economic Analysis
Pursuant to the Memorandum of
Agreement, Review of Treasury Regul-
ations under Executive Order 12866 (June
9, 2023), tax regulatory actions issued by
the IRS are not subject to the requirements
of section 6 of Executive Order 12866, as
amended. Therefore, a regulatory impact
assessment is not required.

Bulletin No. 2023–35 639 August 28, 2023
II. Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(44 U.S.C. 3501–3520) (PRA) requires
that a Federal agency obtain the approval
of OMB before collecting information
from the public, whether such collec-
tion of information is mandatory, vol-
untary, or required to obtain or retain a
benefit. The collections of information
in these final regulations contain report-
ing and recordkeeping requirements that
are required to obtain the section 48(e)
Increase. This information in the collec-
tions of information would generally be
used by the IRS and DOE for tax com-
pliance purposes and by taxpayers to
facilitate proper reporting and compli-
ance. A Federal agency may not conduct
or sponsor, and a person is not required
to respond to, a collection of information
unless the collection of information dis-
plays a valid control number.
The recordkeeping requirements men-
tioned within this final regulation are con-
sidered general tax records under Section
1.6001–1(e). These records are required
for the IRS to validate that taxpayers have
met the regulatory requirements and are
entitled to receive a section 48(e) Increase.
For PRA purposes, general tax records
are already approved by OMB under
1545–0123 for business filers, 1545–0074
for individual filers, and 1545–0047 for
tax-exempt organizations.
The final regulations also describe
reporting requirements for providing attes-
tations and supporting documentation for
the initial application, providing support-
ing documentation for specific facilities,
and confirming a facility is placed in ser-
vice as detailed in these final regulations.
These attestations and documentation
would allow IRS to allocate Capacity
Limitation and ensure taxpayers maintain
compliance. To assist with the collections
of information, DOE will provide certain
administration services for the Program.
Among other things, DOE will establish
a website portal to review the applications
for eligibility criteria and will provide rec-
ommendations to the IRS regarding the
selection of applications for an allocation
of Capacity Limitation. These collection
requirements will be submitted to the
Office of Management and Budget (OMB)
under 1545–2308 for review and approval
in accordance with 5 CFR 1320.11. The
likely respondents are business filers,
individual filers, and tax-exempt orga-
nization filers. A summary of paperwork
burden estimates for the application, sup-
porting documentation, and attestations is
as follows:
Estimated number of respondents: 70,000.
Estimated burden per response: 60
minutes.
Estimated frequency of response: 1 for
initial applications, 1 for supporting doc-
umentation, and 1 for projects placed in
service.
Estimated total burden hours: 210,000
burden hours.
The IRS solicited feedback on the collec-
tion requirements for the application, sup-
porting documentation, and attestations.
Although no public comments received by
the IRS were directed specifically at the
PRA or on the collection requirements,
several commenters generally expressed
concerns about the burdens associated
with the documentation requirements con-
tained in the Proposed Rules. As described
in the relevant portions of this preamble,
the Treasury Department and IRS believe
that the documentation requirements are
necessary to administer the Program.
III. Regulatory Flexibility Act
The Regulatory Flexibility Act (5
U.S.C. 601 et seq.) (RFA) imposes certain
requirements with respect to Federal rules
that are subject to the notice and comment
requirements of section 553(b) of the
Administrative Procedure Act (5 U.S.C.
551 et seq.) and that are likely to have a
significant economic impact on a substan-
tial number of small entities. Unless an
agency determines that a proposal will not
have a significant economic impact on a
substantial number of small entities, sec-
tion 604 of the RFA requires the agency
to present a final regulatory flexibility
analysis (FRFA) of the final regulations.
The Treasury Department and the IRS
have not determined whether the final reg-
ulations will have a significant economic
impact on a substantial number of small
entities. This determination requires fur-
ther study and an FRFA is provided in
these final regulations.
Pursuant to section 7805(f) of the
Code, these final regulations were submit-
ted to the Chief Counsel of Advocacy of
the Small Business Administration, and
no comments were received.
1. Need for and Objectives of the Rule
The final regulations would provide
guidance for purposes of participation in
the Program to allocate the environmental
justice solar and wind capacity limitation
under section 48(e) for the Program. The
final regulations are expected to encour-
age applicants to invest in solar and wind
energy. Thus, the Treasury Department
and the IRS intend and expect that the final
regulations will deliver benefits across the
economy and environment that will bene-
ficially impact various industries.
2. Significant Issues Raised by Public
Comments in Response to the IRFA
There were no comments filed that
specifically addressed the Proposed
Rules and policies presented in the IRFA.
Additionally, no comments were filed by
the Chief Counsel of Advocacy of the
Small Business Administration
3. Affected Small Entities
A total of 1800 MW of capacity are
eligible for the section 48(e) bonus credit
annually. Assuming the average size of
each successful application is near 1 MW,
then there will be approximately 2,000
successful applications each year. The
Treasury Department and the IRS expect
the total number of applications to be sig-
nificantly higher than this. In addition, the
Treasury Department and the IRS also
assume that some successful applicants
will submit more than one successful
application. The Treasury Department and
the IRS do not have information on the
expected business entity size distribution
of successful applicants but will continue
to examine this issue when data is col-
lected during the first round of allocations.
4. Impact of the Rules
The recordkeeping and reporting
requirements would increase for appli-
cants that participate in the Program.

August 28, 2023 640 Bulletin No. 2023–35
Although the Treasury Department and
the IRS do not have sufficient data to
determine precisely the likely extent of
the increased costs of compliance, the
estimated burden of complying with the
recordkeeping and reporting requirements
are described in the Paperwork Reduction
Act section of this preamble. In particu-
lar, the Paperwork Reduction Act section
of this preamble contains a summary of
paperwork burden estimates for the appli-
cation, supporting documentation, and
submissions when projects are placed in
service. The IRS solicited feedback on
the collection requirements for the appli-
cation, supporting documentation, and
attestations. Although no public com-
ments received by the IRS were directed
specifically at the PRA or on the collection
requirements, several commenters gener-
ally expressed concerns about the bur-
dens associated with the documentation
requirements contained in the Proposed
Rule. As described in the relevant portions
of this preamble, the Treasury Department
and IRS believe that the documentation
requirements are necessary to administer
the Program.
5. Steps Taken to Minimize Impacts
on Small Entities and Alternatives
Considered
The Treasury Department and the
IRS considered alternatives to the final
regulations. For example, the Treasury
Department and the IRS considered
exclusively using a lottery system for all
over-subscribed categories, rather than
creating reservations for facilities meet-
ing ASC. Although a lottery system may
ultimately need to be used for an oversub-
scribed category, the Treasury Department
and the IRS decided that it was important
to propose reserving Capacity Limitation
for facilities that meet certain ASC that
further the policy goals of the Program.
Additionally, when considering
how to define “in connection with,” the
Treasury Department and the IRS were
mindful that the statute requires the
energy storage technology to be installed
in connection with a qualifying solar or
wind facility to be eligible for an increase
in the energy percentage used to calcu-
late the amount of the section 48 credit.
Different alternatives were considered on
how to address this definition. For exam-
ple, the Treasury Department and the IRS
considered but ultimately decided not to
incorporate the safe harbor (deeming the
energy storage technology to be charged
at least 50 percent by the facility if the
power rating of the energy storage tech-
nology is less than 2 times the capacity
rating of the connected wind or solar)
as part of the general rule to define “in
connection with.” The final regulations
instead generally require the energy stor-
age technology to have a sufficient nexus
to the other eligible property because it
is part of the single project and is signifi-
cantly charged by the eligible property.
The Treasury Department and the IRS
maintain the safe harbor in the final reg-
ulations, but only as a means of deeming
the energy storage technology charging
requirement to be satisfied.
Another example where different alter-
natives were considered was with respect
to application materials. Section 48(e)(4)
(A) directs the Secretary to provide pro-
cedures to allow for an efficient allocation
process, and section 48(e)(4)(E)(i) allows
an applicant up to four years after receiving
a Capacity Limitation allocation to place
eligible property into service. Alternatives
were considered on how best to balance
these statutory requirements, considering
practical issues for taxpayers and resi-
dents as well as the traditional structure
and arrangement of these solar or wind
transactions, including considerations on
the type of facility (BTM or FTM) and
the capacity of the facility. Among other
things, the Treasury Department and the
IRS considered whether an application for
an interconnection agreement or an exe-
cuted interconnection agreement should
be required as part of the application
materials. The final regulations are based
on the view that the executed interconnec-
tion agreement, if applicable, is essential
documentation to demonstrate sufficient
project maturity.
Additionally, the Treasury Department
and the IRS considered a variety of bill
credit discounts for Category 4 quali-
fied low-income benefit project facili-
ties. The bill credit discounts considered
included 10 percent, 15 percent, or 20
percent. Alternatively, the Treasury
Department and the IRS considered the
option of a range of discounts from 10
percent to 20 percent from which appli-
cants could choose the discount rate to
provide low-income customers. However,
to ensure that low-income customers are
receiving meaningful financial benefits,
the Treasury Department and the IRS
decided to propose a 20 percent discount.
IV. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates
Reform Act of 1995 (UMRA) requires
that agencies assess anticipated costs and
benefits and take certain other actions
before issuing a final rule that includes
any Federal mandate that may result in
expenditures in any one year by a State,
local, or Tribal government, in the aggre-
gate, or by the private sector, of $100 mil-
lion in 1995 dollars, updated annually for
inflation. This final rule does not include
any Federal mandate that may result in
expenditures by State, local, or Tribal
governments, or by the private sector in
excess of that threshold.
V. Executive Order 13132: Federalism
Executive Order 13132 (Federalism)
prohibits an agency from publishing
any rule that has federalism implica-
tions if the rule either imposes substan-
tial, direct compliance costs on State and
local governments, and is not required
by statute, or preempts State law, unless
the agency meets the consultation and
funding requirements of section 6 of the
Executive Order. These regulations do
not have federalism implications and do
not impose substantial direct compliance
costs on State and local governments or
preempt State law within the meaning of
the Executive Order.
VI. Executive Order 13175: Consultation
and Coordination With Indian Tribal
Governments
Executive Order 13175 (Consultation
and Coordination With Indian Tribal
Governments) prohibits an agency from
publishing any rule that has Tribal impli-
cations if the rule either imposes substan-
tial, direct compliance costs on Indian
Tribal governments, and is not required by
statute, or preempts Tribal law, unless the
agency meets the consultation and funding

Bulletin No. 2023–35 641 August 28, 2023
requirements of section 5 of the Executive
Order. These regulations do not have
substantial direct effects on one or more
federally recognized Indian Tribes and do
not impose substantial direct compliance
costs on Indian Tribal governments within
the meaning of the Executive Order.
Nevertheless, on June 26, 2023, the
Treasury Department and the IRS held a
consultation with Tribal leaders request-
ing assistance in addressing questions
related to Low-Income Communities
Bonus Credit Program, which informed
the development of these regulations.
VII. Congressional Review Act
Pursuant to the Congressional Review
Act (5 U.S.C. 801 et seq.), the Office of
Information and Regulatory Affairs desig-
nated this rule as a major rule as defined
by 5 U.S.C. 804(2).
Statement of Availability of IRS
Documents
Guidance cited in this preamble is pub-
lished in the Internal Revenue Bulletin and
is available from the Superintendent of
Documents, U.S. Government Publishing
Office, Washington, DC 20402, or by vis-
iting the IRS website at https://www.irs.
gov.
Drafting Information
The principal author of these reg-
ulations is the Office of the Associate
Chief Counsel (Passthroughs and Special
Industries), IRS. However, other person-
nel from the Treasury Department and the
IRS participated in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and record-
keeping requirements.
Amendments to the Regulations
Accordingly, the Treasury Department
and IRS amend 26 CFR part 1 as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 is amended by adding an entry
for § 1.48(e)-1 in numerical order to read
in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 1.48(e)-1 issued under 26
U.S.C. 48.
* * * * *
Par. 2. Sections 1.48(e)-0 and 1.48(e)-1
are added to read as follows:
§1.48(e)-0 Table of contents.
This section lists the captions con-
tained in §1.48(e)-1.
§1.48(e)-1 Low-Income Communities
Bonus Credit Program.
(a) In general.
(b) Qualified solar or wind facility
defined.
(1) In general.
(2) Facility categories.
(i) Category 1 Facility.
(ii) Category 2 Facility.
(iii) Category 3 Facility.
(iv) Category 4 Facility.
(3) Single project treated as single
facility.
(c) Eligible property.
(1) In general.
(2) Energy storage technology installed
in connection with qualified solar or wind
facility.
(3) Safe harbor for requirement of
paragraph (c)(2)(ii) of this section.
(d) Location.
(1) In general.
(2) Nameplate Capacity Test.
(i) Nameplate capacity for purpose of
Nameplate Capacity Test.
(ii) Exclusion of energy storage
technology.
(e) Financial benefits for a Category 3
Facility.
(1) In general.
(2) Threshold requirement.
(3) Financial value of the energy pro-
duced by the facility.
(4) Gross financial value.
(5) Net financial value defined.
(i) Common ownership.
(ii) Third-party ownership.
(iii) Equitable allocation of financial
benefits.
(A) If financial value distributed via
utility bill savings.
(B) If financial value is not distributed
via utility bill savings.
(6) Benefits Sharing Statement.
(i) In general.
(ii) Notification requirement.
(f) Financial benefits for a Category 4
Facility.
(1) In general.
(2) Bill credit discount rate.
(i) In general.
(ii) No or nominal cost of participation.
(iii) Calculation on annual basis.
(iv) Examples.
(A) Example 1.
(B) Example 2.
(3) Low-income verification.
(i) In general.
(ii) Methods of verification.
(A) Categorical eligibility.
(B) Other income verification methods.
(C) Impermissible verification method.
(g) Annual Capacity Limitation.
(h) Reservations of Capacity Limitation
allocation for facilities that meet certain
additional selection criteria.
(1) In general.
(2) Ownership criteria.
(i) In general.
(ii) Indirect ownership.
(A) Disregarded entities.
(B) Partnership.
(iii) Tribal enterprise.
(iv) Alaska native corporation.
(v) Renewable energy cooperative.
(vi) Qualified renewable energy
company.
(vii) Qualified tax-exempt entity.
(3) Geographic criteria.
(i) In general.
(A) Persistent Poverty County.
(B) Certain census tracts.
(ii) Applicable terms for certain census
tracts.
(A) Energy burden or cost.
(B) Exposure.
(C) Energy cost.
(D) PM2.5.
(E) Low-income.
(i) Sub-reservations of allocation for
Category 1 facilities.
(1) In general.
(2) Definitions
(i) Behind the meter (BTM) facility.
(ii) Eligible residential BTM facility.
(iii) Eligible FTM facility.
(j) Process of application evaluation.
(1) In general.

August 28, 2023 642 Bulletin No. 2023–35
(2) Information required as part of
application.
(3) No administrative appeal of capac-
ity limitation allocation decisions.
(k) Placed in service.
(1) Requirement to report date placed
in service.
(2) Requirement to submit final eli-
gibility information at placed in service
time.
(3) DOE confirmation.
(4) Definition of placed in service.
(l) Facilities placed in service prior to
an allocation award.
(1) In general.
(2) Rejection or rescission.
(m) Disqualification.
(n) Recapture of section 48(e) increase
to the section 48(a) credit.
(1) In general.
(2) Exception to application of
recapture.
(3) Recapture events.
(4) Section 50(a) Recapture.
(o) Applicability date.
§1.48(e)-1 Low-Income Communities
Bonus Credit Program.
(a) In general. For purposes of section
48 of the Internal Revenue Code (Code),
the energy percentage used to calculate
the amount of the energy investment credit
determined under section 48(a) (section 48
credit) is increased under section 48(e)(1)
in the case of eligible property (as defined
in paragraph (c) of this section) that is
part of any qualified solar or wind facility
(as defined in paragraph (b) of this sec-
tion) placed in service in connection with
low-income communities with respect to
which an allocation of the environmental
justice solar and wind capacity limitation
(Capacity Limitation) is made under the
Low-Income Communities Bonus Credit
Program (Program) established under sec-
tion 48(e)(4) of the Code on February 13,
2023. See Notice 2023-17, 2023-10 I.R.B.
505. In this section, the terms applicant
and taxpayer are used interchangeably as
the context may require.
(b) Qualified solar or wind facility
defined—(1) In general. A qualified solar
or wind facility means any facility that—
(i) Generates electricity solely from a
wind facility (described in section 45(d)
(1) of the Code) for which an election to
treat the facility as energy property was
made under section 48(a)(5) (wind facil-
ity), solar energy property (described
in section 48(a)(3)(A)(i)) (solar energy
property), or small wind energy property
(described in section 48(a)(3)(A)(vi))
(small wind energy property);
(ii) Has a maximum net output of less
than 5 megawatts (MW) (as measured in
alternating current (AC)); and
(iii) Is described in at least one of the
four categories described in section 48(e)
(2)(A)(iii) and paragraph (b)(2) of this
section.
(2) Facility categories—(i) Category 1
Facility. A facility is a Category 1 Facility
if it is located in a low-income community.
The term low-income community is gen-
erally defined under section 45D(e)(1) of
the Code as any population census tract if
the poverty rate for such tract is at least 20
percent based on the 2011-2015 American
Community Survey (ACS) low-income
community data currently used for the
New Markets Tax Credit (NMTC) under
section 45D, or, in the case of a tract
not located within a metropolitan area,
the median family income for such tract
does not exceed 80 percent of statewide
median family income, or, in the case of
a tract located within a metropolitan area,
the median family income for such tract
does not exceed 80 percent of the greater
of statewide median family income or the
metropolitan area median family income.
The term low-income community also
includes the modifications in section
45D(e)(4) and (5) for tracts with low pop-
ulation and modification of the income
requirement for census tracts with high
migration rural counties. Low-income
community information for NMTC can be
found at https://www.cdfifund.gov/cims3.
For purposes of this paragraph (b)(2)(i),
if updated ACS low-income community
data is released for the NMTC program,
a taxpayer can choose to base the pov-
erty rate for any population census tract
on either the 2011-2015 ACS low-income
community data for the NMTC program or
the updated ACS low-income community
data for the NMTC program for a period
of 1 year following the date of the release
of the updated data. After the 1-year tran-
sition period, the updated ACS low-in-
come community data for the NMTC
program must be used to determine the
poverty rate for any population census
tract. Populations census tracts that satisfy
the definition of low-income community
at the time of application are considered to
continue to meet the definition of low-in-
come community for the duration of the
recapture period described in paragraph
(n)(1) of this section unless the location of
the facility changes.
(ii) Category 2 Facility. A facility
is a Category 2 Facility if it is located
on Indian land. The term Indian land is
defined in section 2601(2) of the Energy
Policy Act of 1992 (25 U.S.C. 3501(2)).
(iii) Category 3 Facility. A facility is a
Category 3 Facility if it is part of a quali-
fied low-income residential building proj-
ect. A facility will be treated as part of a
qualified low-income residential building
project if such facility is installed on a res-
idential rental building that participates in
a covered housing program or other afford-
able housing program described in sec-
tion 48(e)(2)(B)(i) (Qualified Residential
Property) and the financial benefits of the
electricity produced by such facility are
allocated equitably among the occupants
of the dwelling units of such building as
provided in paragraph (e) of this section.
A facility is considered installed on a
Qualified Residential Property even if not
on the building if the facility is installed
on the same or an adjacent parcel of land
as the Qualified Residential Property, and
the other requirements to be a Category 3
Facility are satisfied.
(iv) Category 4 Facility. A facility is a
Category 4 Facility if it is part of a quali-
fied low-income economic benefit project.
A facility will be treated as part of a qual-
ified low-income economic benefit proj-
ect if, as provided in paragraph (f) of this
section, at least 50 percent of the financial
benefits of the electricity produced by
such facility are provided to households
with income of less than—
(A) Two-hundred percent of the pov-
erty line (as defined in section 36B(d)(3)
(A) of the Code) applicable to a family of
the size involved, or
(B) Eighty percent of area median
gross income (as determined under sec-
tion 142(d)(2)(B) of the Code).
(3) Single project treated as single
facility. Multiple solar or wind facilities
or energy properties that are operated as
part of a single project are aggregated

Bulletin No. 2023–35 643 August 28, 2023
and treated as a single facility or energy
property for purposes of determining if it
is a qualified solar or wind facility under
paragraph (b)(1) of this section. Any facil-
ity or energy property treated as part of a
single facility under this paragraph (b)(3)
will also be treated as a single facility for
all other purposes under this section and
all other guidance applicable to section
48(e) published in the Internal Revenue
Bulletin. See §601.601 of this chapter.
Whether multiple facilities or energy
properties are operated as part of a single
project will depend on the relevant facts
and circumstances and a single factor may
not be dispositive. Factors indicating that
multiple facilities or energy properties are
operated as part of a single project may
include—
(i) The facilities or energy properties
are owned by a single legal entity;
(ii) The facilities or energy properties
are constructed on contiguous pieces of
land;
(iii) The facilities or energy proper-
ties are described in a common power
purchase agreement (PPA) or more than
one common power purchase agreements
(PPAs);
(iv) The facilities or energy properties
have a common interconnection;
(v) The facilities or energy properties
share a common substation;
(vi) The facilities or energy properties
are described in one or more common
environmental or other regulatory permits;
(vii) The facilities or energy properties
were constructed pursuant to a single mas-
ter construction contract; or
(viii) The facilities or construction of
the energy properties was financed pursu-
ant to the same loan agreement.
(c) Eligible property—(1) In general.
Eligible property is energy property that
is part of a qualified solar or wind facility
described in paragraph (b) of this section.
Eligible property also includes energy
storage technology (as described in sec-
tion 48(a)(3)(A)(ix)) installed in connec-
tion with such qualifying energy property.
(2) Energy storage technology installed
in connection with qualified solar or wind
facility. Energy storage technology is
installed in connection with other eligible
property if the requirements of both para-
graph (c)(2)(i) of this section and para-
graph (c)(2)(ii) of this section (including
by reason of paragraph (c)(3) of this sec-
tion) are satisfied.
(i) The requirements of this paragraph
(c)(2)(i) are satisfied if the energy storage
technology and other eligible property are
considered part of a single qualified solar
or wind facility based on the energy stor-
age technology and other eligible property
being:
(A) Owned by a single legal entity,
(B) Located on the same or contiguous
pieces of land,
(C) Having a common interconnection
point, and
(D) Described in one or more common
environmental or other regulatory permits.
(ii) The requirement of this paragraph
(c)(2)(ii) is satisfied if the energy stor-
age technology is charged no less than an
annual average of 50 percent by the other
eligible property.
(3) Safe harbor for requirement of
paragraph (c)(2)(ii) of this section. For
purposes of paragraph (c)(2)(ii) of this
section, energy storage technology is
deemed to be charged at least 50 percent
by the facility if the power rating of the
energy storage technology (in kW) is less
than 2 times the capacity rating of the con-
nected wind facility (in kW AC) or solar
facility (in kW direct current (DC)).
(d) Location—(1) In general. A qual-
ified solar or wind facility is treated as
located in a low-income community or
located on Indian land under section
48(e)(2)(A)(iii)(I) if the qualified solar
or wind facility satisfies the Nameplate
Capacity Test of paragraph (d)(2) of this
section. Similarly, a qualified solar or
wind facility is treated as located in a geo-
graphic area under the additional selec-
tion criteria described in paragraph (h) of
this section if it satisfies the Nameplate
Capacity Test.
(2) Nameplate Capacity Test. A qual-
ified solar or wind facility is considered
located in or on the relevant geographic
area described in paragraph (d)(1) of
this section if 50 percent or more of the
facility’s nameplate capacity is in a qual-
ifying area. The percentage of a facility’s
nameplate capacity (as defined in para-
graph (d)(2)(i) of this section) that is in a
qualifying area is determined by dividing
the nameplate capacity of the facility’s
energy-generating units that are located in
the qualifying area by the total nameplate
capacity of all the energy-generating units
of the facility.
(i) Nameplate capacity for purpose
of Nameplate Capacity Test. Nameplate
capacity for an electricity generating unit
means the maximum electricity generat-
ing output that the unit is capable of pro-
ducing on a steady state basis and during
continuous operation under standard con-
ditions, as measured by the manufacturer
and consistent with the definition provided
in 40 CFR 96.202. Where applicable, the
International Standard Organization con-
ditions are used to measure the maximum
electricity generating output or usable
energy capacity. For purposes of assessing
the Nameplate Capacity Test, qualified
solar facilities use the nameplate capacity
in DC and qualified wind facilities use the
nameplate capacity in AC.
(ii) Exclusion of energy storage tech-
nology. The nameplate capacity of any
energy storage technology installed in
connection with the qualified solar or
wind facility is disregarded in applying
the Nameplate Capacity Test.
(e) Financial benefits for a Category
3 Facility—(1) In general. To satisfy the
requirements of a Category 3 Facility
as provided in paragraph (b)(2)(iii) of
this section, the financial benefits of
the electricity produced by the facil-
ity must be allocated equitably among
the occupants of the dwelling units of
the Qualified Residential Property. A
Qualified Residential Property could
either be a multifamily rental property or
single-family rental property. The same
rules for financial benefits for Category 3
Facilities apply to both types of Qualified
Residential Property.
(2) Threshold requirement. At least
50 percent of the financial value of the
energy produced by the facility (as defined
in paragraph (e)(3) of this section) must
be equitably allocated to the Qualified
Residential Property’s occupants that
are designated as low-income occupants
under the covered housing program or
other affordable housing program.
(3) Financial value of the energy pro-
duced by the facility. For purposes of this
paragraph (e), the financial value of the
energy produced by the facility is defined
as the greater of:
(i) Twenty-five percent of the gross
financial value (as defined in paragraph

August 28, 2023 644 Bulletin No. 2023–35
(e)(4) of this section) of the annual energy
produced by the energy property, or
(ii) The net financial value (as defined
in paragraph (e)(5) of this section) of the
annual energy produced by the energy
property.
(4) Gross financial value. For purposes
of this paragraph (e), gross financial value
of the annual energy produced by the
facility is calculated as the sum of:
(i) The total self-consumed kilo-
watt-hours produced by the qualified solar
or wind facility multiplied by the applica-
ble building’s metered volumetric price of
electricity,
(ii) The total exported kilowatt-hours
produced by the qualified solar or wind
facility multiplied by the applicable build-
ing’s volumetric export compensation rate
for solar or wind kilowatt-hours, and
(iii) The sale of any attributes associ-
ated with the facility’s production (includ-
ing, for example, any Federal, State, or
Tribal renewable energy tax credits or
incentives), if separate from the metered
price of electricity or export compensation
rate.
(5) Net financial value defined—(i)
Common ownership. For purposes of this
paragraph (e), if the facility and Qualified
Residential Property are commonly
owned, net financial value is defined as
the gross financial value of the annual
energy produced minus the annual aver-
age (or levelized) cost of the qualified
solar or wind facility over the useful life
of the facility (including debt service,
maintenance, replacement reserve, capital
expenditures, and any other costs associ-
ated with constructing, maintaining, and
operating the facility).
(ii) Third-party ownership. For pur-
poses of this paragraph (e), if the facility
and the Qualified Residential Property
are not commonly owned and the facility
owner enters into a PPA or other contract
for energy services with the Qualified
Residential Property owner and/or build-
ing occupants, net financial value is
defined as the gross financial value of the
annual energy produced minus any pay-
ments made by the building owner and/
or building occupants to the facility owner
for energy services associated with the
facility in a given year.
(iii) Equitable allocation of financial
benefits. There are different rules to ensure
an equitable allocation of financial bene-
fits depending on whether or not financial
value is distributed to building occupants
via utility bill savings or through different
means.
(A) If financial value distributed via
utility bill savings. If financial value is dis-
tributed via utility bill savings, financial
benefits will be considered to be equitably
allocated if at least 50 percent of the finan-
cial value of the energy produced by the
facility is distributed as utility bill savings
in equal shares to each building dwell-
ing unit among the Qualified Residential
Property’s occupants that are designated
as low-income under the covered housing
program or other affordable housing pro-
gram (described in section 48(e)(2)(B)(i))
or alternatively distributed in proportional
shares based on each low-income dwelling
unit’s square footage, or each low-income
dwelling unit’s number of occupants.
For any occupant(s) who choose to not
receive utility bill savings (for example,
exercise their right to not participate in
or to opt out of a community solar sub-
scription in applicable jurisdictions), the
portion of the financial value that would
otherwise be distributed to non-partic-
ipating occupants must be instead dis-
tributed to all participating occupants.
No less than 50 percent of the Qualified
Residential Property’s occupants that are
designated as low-income must partici-
pate and receive utility bill savings for the
facility to utilize this method of benefit
distribution. In the case of a solar facility,
applicants must follow the Department of
Housing and Urban Development (HUD)
guidance on the Treatment of Community
Solar Credits on Tenant Utility Bills
(July 2022), located at https://www.hud.
gov/sites/dfiles/Housing/documents/
MF_Memo_Community_Solar_Credits_
signed.pdf, Community Solar Credits in
PIH Programs (August 2022), located at
https://www.hud.gov/sites/dfiles/docu-
ments/Solar%20Credits_PH_HCV.pdf, or
future HUD guidance, or other guidance
or notices from the Federal agency that
oversees the applicable housing program
identified in section 48(e)(2)(B) to ensure
that tenants’ utility allowances and annual
income for rent calculations are not nega-
tively impacted. Applicants should apply
similar principles in the case of a wind
facility.
(B) If financial value is not distributed
via utility bill savings. If financial value
is not distributed via utility bill savings,
financial benefits will be considered to be
equitably allocated if at least 50 percent of
the financial value of the energy produced
by the facility is distributed to occupants
using one of the methods described in
HUD guidance on the Treatment of Solar
Benefits in Master-metered Building
(May 2023) located at https://www.hud.
gov/sites/dfiles/Housing/documents/MF_
Memo_re_Community_Solar_Credits_
in_MM_Buildings.pdf, or future HUD
guidance, or other guidance or notices
from the Federal agency that oversees the
applicable housing program identified in
section 48(e)(2)(B). In the case of a solar
facility, applicants must comply with HUD
guidance, or future HUD guidance, for
how residents of master-metered HUD-
assisted housing can benefit from owners’
sharing of financial benefits accrued from
an investment in solar energy generation
to ensure that tenants’ utility allowances
and annual income for rent calculations
are not negatively impacted. Applicants
should apply similar principles in the case
of a wind facility.
(6) Benefits Sharing Statement—(i) In
general. The facility owner must prepare
a Benefits Sharing Statement, which must
include:
(A) A calculation of the facility’s gross
financial value using the method described
paragraph (e)(4) of this section,
(B) A calculation of the facility’s net
financial value using the method described
in paragraph (e)(5) of this section,
(C) A calculation of the financial value
required to be distributed to building
occupants using the method described in
paragraph (e)(3) of this section,
(D) A description of the means through
which the required financial value will be
distributed to building occupants, and
(E) If the facility and Qualified
Residential Property are separately
owned, indication of which entity will be
responsible for the distribution of benefits
to the occupants.
(ii) Notification requirement. The
Qualified Residential Property owner
must formally notify the occupants of
units in the Qualified Residential Property
of the development of the facility and
planned distribution of benefits.

Bulletin No. 2023–35 645 August 28, 2023
(f) Financial benefits for a Category
4 Facility—(1) In general. To satisfy the
requirements of a Category 4 Facility as
provided in paragraph (b)(2)(iv) of this
section:
(i) The facility must serve multiple
qualifying low-income households under
section 48(e)(2)(C)(i) or (ii) (Qualifying
Household),
(ii) At least 50 percent of the facility’s
total output in kW must be assigned to
Qualifying Households, and
(iii) Each Qualifying Household must
be provided a bill credit discount rate (as
defined in paragraph (f)(2) of this section)
of at least 20 percent.
(2) Bill credit discount rate—(i) In
general. A bill credit discount rate is the
difference between the financial bene-
fit provided to a Qualifying Household
(including utility bill credits, reductions
in a Qualifying Household’s electricity
rate, or other monetary benefits accrued
by the Qualifying Household on their util-
ity bill) and the cost of participating in the
community program (including subscrip-
tion payments for renewable energy and
any other fees or charges), expressed as a
percentage of the financial benefit distrib-
uted to the Qualifying Household. The bill
credit discount rate can be calculated by
starting with the financial benefit provided
to the Qualifying Household, subtract-
ing all payments made by the Qualifying
Household to the facility owner and any
related third parties as a condition of
receiving that financial benefit, then divid-
ing that difference by the financial benefit
distributed to the Qualifying Household.
(ii) No or nominal cost of participation.
In cases where the Qualifying Household
has no or only a nominal cost of partici-
pation, the bill credit discount rate should
be calculated as the financial benefit pro-
vided to a Qualifying Household (includ-
ing utility bill credits, reductions in a
Qualifying Household’s electricity rate,
or other monetary benefits accrued by a
Qualifying Household on their utility bill)
divided by the total value of the electric-
ity produced by the facility and assigned
to the Qualifying Household (including
any electricity services, products, and
credits provided in conjunction with the
electricity produced by such facility),
as measured by the utility, independent
system operator (ISO), or other off-taker
procuring electricity (and related services,
products, and credits) from the facility.
(iii) Calculation on annual basis. In all
instances, the bill credit discount rate is
calculated on an annual basis.
(iv) Examples. The provisions of this
paragraph (f)(2) may be illustrated by the
following examples:
(A) Example 1. A Qualifying Household signs
a community solar subscription agreement with the
facility owner that 1) requires the facility owner
to cause a portion of the electricity generated (or
its value) to be assigned to the utility bill of the
Qualifying Household on a monthly basis, and 2)
requires the Qualifying Household to pay the facility
owner the equivalent of 80 percent of the monetary
value of the assigned generation (that is, 80 percent
of the value of bill credits provided to the Qualifying
Household’s utility bill) on a monthly basis. In this
example, over the course of the first year the facility
owner or their agent cause $200 in utility bill credits
to be placed on the Qualifying Household’s bill, and
the Qualifying Household pays $160, inclusive of
any upfront fees. The subsequent year, due to varia-
tion in solar generation and/or the compensation paid
by the utility for solar generation, the facility owner,
in accordance with the community solar subscription
agreement, cause $220 in bill credits to be provided
to the Qualifying Household’s bill and the house-
hold pays $176. In each year of facility operation
described within this example, a bill credit discount
rate of 20 percent is maintained.
(B) Example 2. Due to the regulatory structure
of the applicable jurisdiction or program, the terms
of the community solar subscription, the use of a
“net-crediting” mechanism, or other reason, the
Qualifying Household does not make a direct pay-
ment to the facility owner. Assume that the total
value of the electricity produced by the facility
and assigned to the household, as measured by the
utility, ISO, or other off-taker procuring the electric-
ity, is $500 in the first year and $600 in the second
year. Assume further that the Qualifying Household
receives a “net” bill credit of $100 in the first year
and $120 in the second year. In this case, the bill
credit discount rate is 20 percent in each year ($500
x .2 = $100) and ($600 x .2 = $120), respectively.
(3) Low-income verification—(i) In
general. To establish that financial bene-
fits are provided to Qualifying Households
as provided in paragraph (f)(1) of this
section, applicants must, in accordance
with guidance published in the Internal
Revenue Bulletin (see §601.601 of this
chapter), submit documentation upon
placing the qualified solar or wind facility
in service that identifies each Qualifying
Household, the output from the facility
allocated to each Qualifying Household in
kW, and the method of income verification
utilized for each Qualifying Household. A
Qualifying Household’s low-income sta-
tus is determined at the time the household
enrolls in the subscription program and
does not need to be re-verified.
(ii) Methods of verification. Applicants
may use categorical eligibility or other
income verification methods to estab-
lish that a household is a Qualifying
Household.
(A) Categorical eligibility. Categorical
eligibility consists of obtaining proof of
the household’s participation in a needs-
based Federal, State, Tribal, or utility
program with income limits at or below
the qualifying income level required to
be a Qualifying Household. Federal pro-
grams may include, but are not limited
to: Medicaid, Low-Income Home Energy
Assistance Program (LIHEAP) admin-
istered by the Department of Health
and Human Services, Weatherization
Assistance Program (WAP) administered
by the Department of Energy (DOE),
Supplemental Nutrition Assistance
Program (SNAP) administered by the
Department of Agriculture (USDA),
Section 8 Project-Based Rental Assistance,
the Housing Choice Voucher Program
administered by HUD, the Federal
Communication Commission’s Lifeline
Support for Affordable Communications,
the National School Lunch Program admin-
istered by the USDA, the Supplemental
Security Income Program administered
by the Social Security Administration,
and any verified government or non-profit
program serving Asset Limited Income
Constrained Employed (ALICE) persons
or households. With respect to the Federal
programs listed previously an individ-
ual in the household must currently be
approved for assistance from or partici-
pation in the program with an award let-
ter or other written documentation within
the last 12 months for enrollment in that
program to establish categorical eligibil-
ity of the household. State agencies can
also provide verification that a household
is a Qualifying Household if the house-
hold participates in a State’s solar or
other program and income limits for such
program are at or below the qualifying
income level required to be a Qualifying
Household. The qualifying income level
for a Qualifying Household is based on
where such household is located.
(B) Other income verification meth-
ods. Paystubs, Federal or State tax returns,
or income verification through crediting

August 28, 2023 646 Bulletin No. 2023–35
agencies and commercial data sources can
be used to establish that a household is a
Qualifying Household.
(C) Impermissible verification method.
A self-attestation from a household is not
a permissible method to establish a house-
hold is a Qualifying Household. This pro-
hibition on direct self-attestation from a
household does not extend to categorical
eligibility for needs-based Federal, State,
Tribal, or utility programs with income
limits that rely on self-attestation for veri-
fication of income.
(g) Annual Capacity Limitation. Under
section 48(e)(4)(C), the total annual
capacity limitation is 1.8 gigawatts of
DC capacity for the calendar year 2023
and 2024 Program. The annual Capacity
Limitation for each Program year is
divided across the four facility categories
described in section 48(e)(2)(A)(iii) and
paragraph (b)(2) of this section as pro-
vided in guidance published in the Internal
Revenue Bulletin. See §601.601 of this
chapter. The Capacity Limitation for each
Program year is divided across the four
facility categories based on factors such
as the anticipated number of applications
that are expected for each category and the
amount of Capacity Limitation that needs
to be reserved for each category to encour-
age market participation in each category
consistent with statutory intent and the
goals of the Program. After the Capacity
Limitation for each facility category is
established in guidance published in the
Internal Revenue Bulletin, it may later be
re-allocated across facility categories and
sub-reservation in the event one category
or sub-reservation is oversubscribed and
another has excess capacity. A facility cat-
egory or sub-reservation is oversubscribed
if it receives applications in excess of
Capacity Limitation reserved for the facil-
ity category or sub-reservation.
(h) Reservations of Capacity
Limitation allocation for facilities that
meet certain additional selection crite-
ria—(1) In general. At least 50 percent
of the total Capacity Limitation in each
facility category described in paragraph
(b) of this section will be reserved for
qualified facilities meeting the additional
selection criteria described in paragraph
(h)(2) of this section (relating to owner-
ship criteria) and paragraph (h)(3) of this
section (relating to geographic criteria)
as provided in guidance published in the
Internal Revenue Bulletin. See §601.601
of this chapter. Revenue Procedure
2023-27, 2023-35 I.R.B. provides the
specific amounts reserved for 2023 and
future guidance published in the Internal
Revenue Bulletin will provide the
amounts reserved for future years. The
procedure for utilizing these additional
selection criteria is provided in guid-
ance published in the Internal Revenue
Bulletin. After the reservation of Capacity
Limitation for qualified facilities meeting
the additional selection criteria described
in paragraphs (h)(2) and (3) of this sec-
tion is established in guidance published
in the Internal Revenue Bulletin, it may
later be re-allocated across facility cate-
gories and sub-reservations in the event
one category or sub-reservation within a
category is oversubscribed and another
has excess capacity.
(2) Ownership criteria—(i) In general.
The ownership criteria is based on char-
acteristics of the applicant that owns the
qualified solar or wind facility. A qualified
solar or wind facility will meet the own-
ership criteria if it is owned by one of the
following:
(A) A Tribal enterprise (as defined in
paragraph (h)(2)(iii) of this section),
(B) An Alaska native corporation (as
defined in paragraph (h)(2)(iv) of this
section),
(C) A renewable energy cooperative
(as defined in paragraph (h)(2)(v) of this
section),
(D) A qualified renewable energy com-
pany meeting certain characteristics (as
defined in paragraph (h)(2)(vi) of this sec-
tion), or
(E) A qualified tax-exempt entity (as
defined in paragraph (h)(2)(vii) of this
section).
(ii) Indirect ownership—(A) Dis-
regarded entities. If an applicant wholly
owns an entity that is the owner of a
qualified solar or wind facility, and the
entity is disregarded as separate from its
owner for Federal income tax purposes
(disregarded entity), the applicant, and
not the disregarded entity, is treated as
the owner of the qualified solar or wind
facility for purposes of the ownership
criteria.
(B) Partnership. If an applicant is an
entity treated as a partnership for Federal
income tax purposes, and an entity
described in paragraphs (h)(2)(i)(A)-(E)
of this section owns at least a one percent
interest (either directly or indirectly) in
each material item of partnership income,
gain, loss, deduction, and credit and is a
managing member or general partner (or
similar title) under State law of the part-
nership (or directly owns 100 percent
of the equity interests in the managing
member or general partner) at all times
during the existence of the partnership,
the qualified solar or wind facility will be
deemed to meet the ownership criteria. If
the partnership becomes the owner of the
facility after an allocation is made to an
entity described in paragraphs (h)(2)(i)
(A) through (E) of this section, the trans-
fer of the facility to the partnership is not
a disqualification event for purposes of
paragraph (m)(5) of this section, so long
as the requirements of paragraph (m)(5)
of this section are satisfied. The original
applicant and the successor partnership
should refer to guidance published in the
Internal Revenue Bulletin for the proce-
dures to request a transfer of the Capacity
Limitation allocation to the successor
partnership.
(iii) Tribal enterprise. A Tribal enter-
prise for purposes of the ownership crite-
ria is an entity that is:
(A) Owned at least 51 percent directly
by an Indian Tribal government (as
defined in section 30D(g)(9) of the Internal
Revenue Code (Code)), or owned at least
51 percent indirectly through a corpora-
tion that is wholly owned by the Indian
Tribal government and is created under
either the Tribal laws of the Indian Tribal
government or through a corporation
incorporated under the authority of either
section 17 of the Indian Reorganization
Act of 1934, 25 U.S.C. 5124 or section 3
of the Oklahoma Indian Welfare Act, 25
U.S.C. 5203), and
(B) Subject to Tribal government rules,
regulations, and/or codes that regulate the
operations of the entity.
(iv) Alaska native corporation. An
Alaska Native corporation for purposes of
the ownership criteria is defined in section
3 of the Alaska Native Claims Settlement
Act, 43 U.S.C. 1602(m).
(v) Renewable energy cooperative. A
renewable energy cooperative for pur-
poses of the ownership criteria is an entity

Bulletin No. 2023–35 647 August 28, 2023
that develops qualified solar and/or wind
facilities and is either:
(A) A consumer or purchasing coop-
erative controlled by its members with
each member having an equal voting right
and with each member having rights to
profit distributions based on patronage as
defined by proportion of volume of energy
or energy credits purchased (kWh), vol-
ume of financial benefits delivered ($),
or volume of financial payments made
($); and in which at least 50 percent of
the patronage in the qualified facility is
by cooperative members who are low-in-
come households (as defined in section
48(e)(2)(C)), or
(B) A worker cooperative controlled
by its worker-members with each member
having an equal voting right.
(vi) Qualified renewable energy com-
pany. A qualified renewable energy com-
pany for purposes of the ownership criteria
is an entity that serves low-income com-
munities and provides pathways for the
adoption of clean energy by low-income
households. In addition to its general
business purpose, a qualified renewable
energy company must satisfy the own-
ership requirements described in one of
paragraphs (h)(2)(vi)(A) through (F) of
this section and each of the requirements
in paragraphs (h)(2)(vi)(G), (H), and (I) of
this section.
(A) At least 51 percent of the entity’s
equity interests are owned and controlled
by one or more individuals.
(B) At least 51 percent of the enti-
ty’s equity interests are owned and con-
trolled by a Community Development
Corporation (as defined in 13 CFR 124.3).
(C) At least 51 percent of the entity’s
equity interests are owned and controlled
by an agricultural or horticultural coop-
erative (as defined in section 199A(g)(4)
(A)).
(D) At least 51 percent of the enti-
ty’s equity interests are owned and con-
trolled by an Indian Tribal government (as
defined in section 30D(g)(9)).
(E) At least 51 percent of the enti-
ty’s equity interests are owned and con-
trolled by an Alaska Native corporation
(as defined in section 3 of the Alaska
Native Claims Settlement Act, 43 U.S.C.
1602(m)).
(F) At least 51 percent of the entity’s
equity interests are owned and controlled
by a Native Hawaiian organization (as
defined in 13 CFR 124.3).
(G) Has less than 10 full-time equiva-
lent employees (as determined under sec-
tion 4980H(c)(2)(E) and (c)(4)) and less
than $20 million in annual gross receipts
in the previous calendar year; this must
include the employees or receipts of all
affiliates when determining the size of a
business. Affiliation with another business
is based on the power to control, whether
exercised or not. The power to control
exists when an external party has 50 per-
cent or more ownership. It may also exist
with considerably less than 50 percent
ownership by contractual arrangement,
or when one or more parties own a large
share compared to other parties.
(H) First installed and/or operated a
qualified solar or wind facility as defined
in section 48(e)(2)(A) two or more years
prior to the date of application; or
(I) Has provided solar services as a
contractor or subcontractor to qualified
solar or wind facilities as defined in sec-
tion 48(e)(2)(A) with at least 100 kW of
cumulative nameplate capacity located in
one or more low-income communities as
defined in section 48(e)(2)(A)(iii)(I).
(vii) Qualified tax-exempt entity. A
qualified tax-exempt entity for purposes
of the ownership criteria is:
(A) An organization exempt from the
tax imposed by subtitle A by reason of
being described in section 501(c)(3) or
section 501(d);
(B) Any State, the District of Columbia,
or political subdivision thereof, or any
agency or instrumentality of any of the
foregoing;
(C) An Indian Tribal government (as
defined in section 30D(g)(9)), a politi-
cal subdivision thereof, or any agency or
instrumentality of any of the foregoing; or
(D) Any corporation described in sec-
tion 501(c)(12) operating on a cooperative
basis that is engaged in furnishing electric
energy to persons in rural areas.
(3) Geographic criteria—(i) In gen-
eral. Geographic criteria does not apply
to Category 2 Facilities. To meet the
geographic criteria, a facility must be
located in a county or census tract that is
described in paragraph (h)(3)(i)(A) or (B)
of this section. Applicants who meet the
geographic criteria at the time of applica-
tion are considered to continue to meet the
geographic criteria for the duration of the
recapture period, unless the location of the
facility changes.
(A) Persistent Poverty County. A
Persistent Poverty County (PPC for which
information can be found at https://www.
ers.usda.gov/data-products/poverty-ar-
ea-measures/), which is generally defined
as any county where 20 percent or more
of residents have experienced high rates
of poverty over the past 30 years. For the
purposes of the Program, the PPC measure
is that adopted by the USDA to make this
determination. The most recent measure,
which would apply for the 2023 Program
year, incorporates poverty estimates from
the 1980, 1990, and 2000 censuses, and
2007–11 ACS 5-year average. If updated
data is released by USDA, a taxpayer
will have a 1-year period following the
date of the release of the updated data to
be eligible under the previous data. After
the 1-year transition period, the updated
data must be used to determine eligibil-
ity. Applicants who satisfy the definition
of PPC community at the time of applica-
tion are considered to continue to meet the
definition of PPC for the duration of the
recapture period described in paragraph
(n)(1) of this section, unless the location
of the facility changes.
(B) Certain census tracts. A census
tract that is designated in the Climate and
Economic Justice Screening Tool (CEJST),
which can be found at https://screening-
tool.geoplatform.gov/en/#3/33.47/-97.5,
as disadvantaged based on whether the
tract is described in paragraph (h)(3)(ii)
(A) or (B) of this section. The CEJST
website provides further detail on the
terms described in paragraphs (h)(3)(ii)
(C) through (E) of this section, which are
used in identifying census tracts described
in paragraphs (h)(3)(ii)(A) and (B) of this
section. See CEJST, Methodology & data,
https://screeningtool.geoplatform.gov/en/
methodology.
(ii) Applicable terms for certain census
tracts. The following terms are applicable
to this paragraph (h)(3):
(A) Energy burden or cost. The census
tract is greater than or equal to the 90th
percentile for energy burden (or energy
cost) and is greater than or equal to the
65th percentile for low income.
(B) Exposure. The census tract is
greater than or equal to the 90th percentile

August 28, 2023 648 Bulletin No. 2023–35
for PM
2.5
exposure and is greater than
or equal to the 65th percentile for low
income.
(C) Energy cost. Energy cost is defined
as average household annual energy cost
in dollars divided by the average house-
hold income.
(D) PM
2.5
. PM
2.5
is defined as fine
inhalable particles with 2.5 or smaller
micrometer diameters. The percentile is
the weight of the particles per cubic meter.
(E) Low-income. Low income is
defined as the percent of a census tract’s
population in households where house-
hold income is at or below 200 percent of
the Federal poverty level, not including
students enrolled in higher education.
(i) Sub-reservations of allocation
for Category 1 Facilities—(1) In gen-
eral. Capacity Limitation reserved for
Category 1 Facilities will be subdivided
each Program year for facilities seeking
a Category 1 allocation with Capacity
Limitation reserved specifically for eligi-
ble residential behind the meter (BTM)
facilities, including rooftop solar. The
remaining Capacity Limitation is avail-
able for applicants with front of the meter
(FTM) facilities as well as non-residential
BTM facilities. The specific sub-reserva-
tion for eligible residential BTM facili-
ties in Category 1 is provided in guidance
published in the Internal Revenue Bulletin
and is established based on factors such as
promoting efficient allocation of Capacity
Limitation and allowing like-projects
to compete for an allocation. After the
sub-reservation is established in guid-
ance published in the Internal Revenue
Bulletin, it may later be re-allocated in the
event it has excess capacity.
(2) Definitions—(i) Behind the meter
(BTM) facility. For purposes of the
Program, a qualified wind or solar facility
is BTM if:
(A) It is connected with an electrical
connection between the facility and the
panelboard or sub-panelboard of the site
where the facility is located,
(B) It is to be connected on the cus-
tomer side of a utility service meter before
it connects to a distribution or transmis-
sion system (that is, before it connects to
the electricity grid), and
(C) Its primary purpose is to provide
electricity to the utility customer of the
site where the facility is located. This also
includes systems not connected to a grid
and that may not have a utility service
meter, and whose primary purpose is to
serve the electricity demand of the owner
of the site where the system is located.
(ii) Eligible residential BTM facil-
ity. For purposes of paragraph (i)(1) of
this section, an eligible residential BTM
facility is defined as a single-family or
multi-family residential qualified solar
or wind facility that does not meet the
requirements for a Category 3 Facility and
is BTM. A qualified solar or wind facil-
ity is residential if it is uses solar or wind
energy to generate electricity for use in a
dwelling unit that is used as a residence.
(iii) Eligible FTM facility. For purposes
of the Program, a qualified solar or wind
facility is FTM if it is directly connected
to a grid and its primary purpose is to pro-
vide electricity to one or more offsite loca-
tions via such grid or utility meters with
which it does not have an electrical con-
nection; alternatively, FTM is defined as a
facility that is not BTM. For the purposes
of Category 4 Facilities, a qualified solar
or wind facility is also FTM if 50 percent
or more of its electricity generation on an
annual basis is physically exported to the
broader electricity grid.
(j) Process of application evaluation—
(1) In general. Applications for a Capacity
Limitation allocation will be evaluated
according to the procedures specified
in guidance published in the Internal
Revenue Bulletin. See §601.601 of this
chapter. If a facility category is oversub-
scribed, a lottery system may be used to
allocate Capacity Limitation to similarly
situated applicants.
(2) Information required as part of
application. Applicants are required
to submit with each application for a
Capacity Limitation allocation informa-
tion, documentation, and attestations to
demonstrate eligibility for an allocation
and project viability as specified in guid-
ance published in the Internal Revenue
Bulletin. See §601.601 of this chapter.
(3) No administrative appeal of capac-
ity limitation allocation decisions. An
applicant may not administratively appeal
decisions regarding Capacity Limitation
allocations.
(k) Placed in service—(1) Requirement
to report date placed in service. For any
facility that received an allocation of
Capacity Limitation the owner of the
facility must report to DOE the date the
eligible property was placed in service.
This report is done through the same por-
tal by which the original application for
allocation was submitted.
(2) Requirement to submit final eligibil-
ity information at placed in service time.
At the time that the owner reports that eli-
gible property has been placed in service
the owner also must confirm information
about the facility and submit additional
documentation to prove the facility is still
eligible to maintain the allocation and the
increased energy percentage under section
48(e)(1) as specified in guidance pub-
lished in the Internal Revenue Bulletin.
See § 601.601 of this chapter.
(3) DOE confirmation. DOE will
review the placed in service documenta-
tion and attestations to determine if the
facility meets the eligibility criteria for
the owner to claim an increased energy
percentage. DOE then provides a recom-
mendation to the IRS regarding whether
the facility continues to meet the eligibil-
ity requirements for the facility to retain
its allocation or if the facility should be
disqualified (as provided in paragraph (m)
of this section). Based on DOE’s recom-
mendation, the IRS will decide whether
the facility should retain its allocation or if
the facility should be disqualified and will
notify DOE of its decision. Each appli-
cant must receive confirmation from the
IRS that DOE has reviewed the placed in
service submissions, and that eligibility is
confirmed, prior to the owner (or a partner
or shareholder in the case of a partnership
or S corporation) claiming the increased
credit amount on Form 3468, Investment
Credit (or Form 3800, General Business
Credit), or successor form, if eligible,
making a transfer election under section
6418 of the Code, or, if eligible, making
an elective payment election under section
6417 of the Code.
(4) Definition of placed in service. For
purposes of this section, eligible property
is considered placed in service in the ear-
lier of the following taxable years:
(i) The taxable year in which, under
the taxpayer’s depreciation practice, the
period for depreciation with respect to
such eligible property begins; or
(ii) The taxable year in which the eli-
gible property is placed in a condition or

Bulletin No. 2023–35 649 August 28, 2023
state of readiness and availability for a
specifically assigned function, whether in
a trade or business or in the production of
income.
(l) Facilities placed in service prior
to an allocation award—(1) In general.
Qualified solar or wind facilities must be
placed in service after being awarded an
allocation of Capacity Limitation.
(2) Rejection or rescission. An applica-
tion for a qualified solar or wind facility
that is placed in service prior to submis-
sion of the application will be rejected.
If a facility is placed in service after the
application is submitted, but prior to the
allocation of Capacity Limitation, and the
facility is awarded an allocation, the allo-
cation will be rescinded.
(m) Disqualification. A facility will
be disqualified and lose its allocation if
prior to or upon the facility being placed
in service an occurrence described in one
of paragraphs (m)(1) through (5) of this
section takes place.
(1) The location where the facility will
be placed in service changes.
(2) The net output of the facility
increases such that it exceeds the less than
5 MW AC output limitation provided in
section 48(e)(2)(A)(ii) or the nameplate
capacity decreases by the greater of 2 kW
or 25 percent of the Capacity Limitation
awarded in the allocation (AC for a wind
facility; DC for a solar facility).
(3) The facility cannot satisfy the finan-
cial benefits requirements under section
48(e)(2)(B)(ii) and paragraph (e) of this
section as planned, if applicable, or cannot
satisfy the financial benefits requirements
under section 48(e)(2)(C) or paragraph (f)
of this section as planned, if applicable.
(4) The eligible property that is part
of the facility that received the Capacity
Limitation allocation is not placed in ser-
vice within four years after the date the
applicant was notified of the allocation of
Capacity Limitation to the facility.
(5) The facility received a Capacity
Limitation allocation based, in part, on
meeting the ownership criteria and own-
ership of the facility changes prior to the
facility being placed in service, unless the
original applicant transfers the facility
to an entity treated as a partnership for
Federal income tax purposes and retains at
least a one percent interest (either directly
or indirectly) in each material item of
partnership income, gain, loss, deduction,
and credit of such partnership and is a
managing member or general partner (or
similar title) under State law of the part-
nership (or directly owns 100 percent of
the equity interests in the managing mem-
ber or general partner) at all times during
the existence of the partnership.
(n) Recapture of section 48(e) Increase
to the section 48(a) credit—(1) In general.
Section 48(e)(5) provides for recapturing
the benefit of any increase in the credit
allowed under section 48(a) by reason of
section 48(e) with respect to any prop-
erty that ceases to be property eligible for
such increase (but that does not cease to
be investment credit property within the
meaning of section 50(a)). Section 48(e)
provides that the period and percentage of
such recapture must be determined under
rules similar to the rules of section 50(a).
Therefore, if, at any time during the five
year recapture period beginning on the
date that a qualified solar or wind facility
property under section 48(e) is placed in
service, there is a recapture event under
paragraph (n)(3) of this section with
respect to such property, then the Federal
income tax imposed on the taxpayer by
chapter 1 of the Code for the taxable year
in which the recapture event occurs is
increased by the recapture percentage of
the benefit of the increase in the section 48
credit. The recapture percentage is deter-
mined according to the table provided in
section 50(a)(1)(B).
(2) Exception to application of recap-
ture. Such recapture may not apply
with respect to any property if, within
12 months after the date the applicant
becomes aware (or reasonably should
have become aware) of such property
ceasing to be property eligible for such
increase in the credit allowed under sec-
tion 48(a), the eligibility of such property
for such increase pursuant to section 48(e)
is restored. Such restoration of an increase
pursuant to section 48(e) is not available
more than once with respect to any facility.
(3) Recapture events. Any of the fol-
lowing circumstances result in a recapture
event if the property ceases to be eligi-
ble for the increased credit under section
48(e):
(i) Property described in section 48(e)
(2)(A)(iii)(II) fails to provide financial
benefits.
(ii) Property described under section
48(e)(2)(B) ceases to allocate the financial
benefits equitably among the occupants of
the dwelling units, such as not allocating
to residents the required net energy sav-
ings of the electricity, as required by para-
graph (e) of this section.
(iii) Property described under section
48(e)(2)(C) ceases to provide at least 50
percent of the financial benefits of the
electricity produced to qualifying house-
holds as described under section 48(e)
(2)(C)(i) or (ii), or fails to provide those
households the required minimum 20 per-
cent bill credit discount rate, as required
by paragraph (f) of this section.
(iv) For property described under sec-
tion 48(e)(2)(B), the residential rental
building the facility is a part of ceases to
participate in a covered housing program
or any other affordable housing program
described in section 48(e)(2)(B)(i), as
applicable.
(v) A facility increases its output such
that the facility’s output is 5 MW AC or
greater, unless the applicant can prove
that the output increase is not attribut-
able to the original facility but rather
is output associated with a new facility
under the 80/20 Rule (the cost of the
new property plus the value of the used
property).
(4) Section 50(a) Recapture. Any
event that results in recapture under sec-
tion 50(a) will also result in recapture of
the benefit of the increase in the section
48 credit by reason of section 48(e). The
exception to the application of recapture
provided in paragraph (n)(2) of this sec-
tion does not apply in the case of a recap-
ture event under section 50(a).
(o) Applicability date. The rules of this
section will apply to taxable years ending
on or after October 16, 2023.
Douglas W. O’Donnell,
Deputy Commissioner for Services and
Enforcement.
Approved: August 2, 2023.
Lily L. Batchelder,
Assistant Secretary (Tax Policy).
(Filed by the Office of the Federal Register August
10, 2023, 8:45 a.m., and published in the issue of the
Federal Register for August 15, 2023, 88 FR 55506)

August 28, 2023 650 Bulletin No. 2023–35
Part III
Section 5000D Excise Tax
on Sales of Designated
Drugs; Reporting and
Payment of the Tax
Notice 2023-52
SECTION 1. PURPOSE
This notice announces that the
Department of the Treasury (Treasury
Department) and the Internal Revenue
Service (IRS) intend to propose regu-
lations (forthcoming proposed regula-
tions) addressing § 5000D of the Internal
Revenue Code (Code), including how tax-
payers would report and pay the excise tax
imposed by § 5000D (§ 5000D tax).
1
SECTION 2. BACKGROUND
.01 Sections 1191 through 1198 of
the Social Security Act (SSA), added by
§§ 11001 and 11002 of Public Law 117-
169, 136 Stat. 1818 (August 16, 2022),
commonly referred to as the Inflation
Reduction Act of 2022 (IRA), require the
Secretary of Health and Human Services
to establish a Medicare prescription drug
price negotiation program (Program) to
negotiate maximum fair prices (MFPs) for
certain high expenditure, single-source
drugs covered under Medicare. Under
the Program, the Secretary of Health
and Human Services must, among other
things: (1) publish a list of selected drugs
in accordance with § 1192 of the SSA;
(2) enter into agreements with willing
manufacturers of selected drugs in accor-
dance with § 1193 of the SSA; and (3)
negotiate MFPs for such selected drugs
in accordance with § 1194 of the SSA.
Under § 1193(a)(3) of the SSA, manu-
facturers of selected drugs that choose to
enter into agreements with the Secretary
of Health and Human Services and that
agree to an MFP commit to provide access
to selected drugs at the negotiated prices
to MFP-eligible individuals

(as defined
in § 1191(c)(2) of the SSA), as well as
to pharmacies and other dispensers, hos-
pitals, physicians, other providers of ser-
vices, and suppliers with respect to such
individuals.
.02 Section 5000D, added to the
Code by § 11003 of the IRA, imposes
the § 5000D tax on the sale by the man-
ufacturer, producer, or importer (manu-
facturer or taxpayer) of any designated
drug
2
during a day that falls within a
period described in § 5000D(b) (statu-
tory period). The amount of § 5000D tax
imposed on such a manufacturer equals
the amount that causes the ratio of (1) the
§ 5000D tax, divided by (2) the sum of
the § 5000D tax and the price for which
the designated drug was sold, when such
ratio is expressed as a percentage, to equal
the “applicable percentage.” Section
5000D(a).
.03 Section 5000D(d) defines the term
“applicable percentage” as follows: (1)
in the case of sales of a designated drug
during the first 90 days in a statutory
period with respect to such drug, 65 per-
cent; (2) in the case of sales of such drug
during the 91st day through the 180th day
in a statutory period with respect to such
drug, 75 percent; (3) in the case of sales
of such drug during the 181st day through
the 270th day in a statutory period with
respect to such drug, 85 percent; and (4)
in the case of sales of such drug during
any subsequent day in a statutory period,
95 percent.
SECTION 3. GUIDANCE TO BE
ISSUED
.01 Scope of taxable sales. The Treasury
Department and the IRS intend that, under
the forthcoming proposed regulations,
the § 5000D tax would be imposed on
taxpayer sales of designated drugs dis-
pensed, furnished, or administered to indi-
viduals under the terms of Medicare. The
Treasury Department and the IRS intend
that the forthcoming proposed regulations
will also propose a method for taxpayers
to calculate their § 5000D liability.
.02 Separately charged tax not part
of price; presumption where no separate
charge for tax is made. The Treasury
Department and the IRS intend that the
forthcoming proposed regulations will
propose a rule providing that when the
§ 5000D tax is separately charged on the
invoice or records pertaining to the sale of
a designated drug by the manufacturer, the
tax is not part of the price of the designated
drug. Thus, if a manufacturer computes
the § 5000D tax and charges it as a sep-
arate item on the invoice or records per-
taining to the sale in addition to the stated
sale price, the amount of § 5000D tax so
charged does not become part of the price
and no § 5000D tax is due on the amount
of § 5000D tax so charged. When no sep-
arate charge is made as to the § 5000D tax
on the invoice or records pertaining to the
sale of a designated drug, it will be pre-
sumed that the amount charged for the des-
ignated drug includes the proper amount
of § 5000D tax and the price of the desig-
nated drug; therefore, the amount charged
will be allocated between the amount of
the § 5000D tax and the price. For exam-
ple, if a manufacturer charges a purchaser
$100 for a designated drug during the first
90 days in a statutory period and does not
make a separate charge for the § 5000D
tax, $65 is allocated to the § 5000D tax
and $35 is allocated to the price of the
designated drug. This example only illus-
trates the presumption in section 3.02 of
this notice; it does not illustrate other con-
cepts described in this notice.
.03 Procedural rules. The Treasury
Department and the IRS intend that the
forthcoming proposed regulations will pro-
pose applying the Excise Tax Procedural
Regulations in 26 CFR part 40 (Excise
Tax Procedural Regulations) generally
to chapter 50A of the Code (and thus to
§ 5000D), with some limited exceptions.
1
Unless otherwise specified, all “section” or “§” references are to sections of the Code or the Excise Tax Procedural Regulations (26 CFR part 40).
2
The term “designated drug” means any negotiation-eligible drug (as defined in § 1192(d) of the SSA) included on the list published under § 1192(a) of the SSA that is manufactured or
produced in the United States or entered into the United States for consumption, use, or warehousing. See § 5000D(e)(1).

Bulletin No. 2023–35 651 August 28, 2023
In particular, the Treasury Department and
the IRS intend to propose that the Excise
Tax Procedural Regulations will apply to
chapter 50A of the Code as follows:
(1) Returns: § 40.6011(a)-1(a)(1). The
Treasury Department and the IRS intend to
propose that taxpayers would be required
to report any § 5000D tax liability on
IRS Form 720, Quarterly Federal Excise
Tax Return, according to the instructions
applicable to the form. The IRS also
intends to issue a new form that taxpayers
would be required to attach to Form 720
to compute any § 5000D tax liability and
report the § 5000D tax.
(2) Time for filing returns:
§ 40.6071(a)-1(a). The Treasury
Department and the IRS intend to propose
that the deadline for filing quarterly returns
on Form 720 to report any § 5000D tax
liability would be the last day of the first
calendar month following the quarter of a
calendar year (calendar quarter) for which
the return is made. Therefore, taxpay-
ers would be required to file a Form 720
reporting any § 5000D tax liability arising
in a calendar quarter as follows:
Calendar Quarter
Covered by Form 720
Due Date for Form 720
Would Be
3
1st calendar quarter (Jan., Feb., Mar.)April 30 of same calendar year
2nd calendar quarter (Apr., May, June)July 31 of same calendar year
3rd calendar quarter (July, Aug., Sept.)October 31 of same calendar year
4th calendar quarter (Oct., Nov., Dec.)January 31 of following calendar year
(3) No semimonthly deposits. The
Treasury Department and the IRS intend
that the forthcoming proposed regulations
would not apply § 40.6302(c)-1(a)(1) or
any of the other semimonthly deposit rules
in the Excise Tax Procedural Regulations
to chapter 50A of the Code. Therefore,
taxpayers liable for the § 5000D tax would
not be required to make semimonthly
deposits of § 5000D tax.
(4) Payment of tax: § 40.6151(a)-1. The
Treasury Department and the IRS intend
to propose that the deadline for payment of
the § 5000D tax would be the same as the
filing deadline for Form 720. Taxpayers
liable for the § 5000D tax would, there-
fore, be required to pay the § 5000D tax
when they file the Form 720 for the cal-
endar quarter during which the § 5000D
liability arose. See § 40.6071(a)-1(a).
SECTION 4. RELIANCE
Until the Treasury Department and the
IRS issue further guidance, taxpayers may
rely on section 3 of this notice.
SECTION 5. DRAFTING
INFORMATION
This notice was authored by the
Office of the Associate Chief Counsel
(Passthroughs & Special Industries). For
further information regarding this notice,
contact Passthroughs & Special Industries
at (202) 317-6855 (not a toll-free number).
Update for Weighted
Average Interest Rates,
Yield Curves, and Segment
Rates
Notice 2023-61
This notice provides guidance on the
corporate bond monthly yield curve, the
corresponding spot segment rates used
under § 417(e)(3), and the 24-month aver-
age segment rates under § 430(h)(2) of the
Internal Revenue Code. In addition, this
notice provides guidance as to the inter-
est rate on 30-year Treasury securities
under § 417(e)(3)(A)(ii)(II) as in effect for
plan years beginning before 2008 and the
30-year Treasury weighted average rate
under § 431(c)(6)(E)(ii)(I).
YIELD CURVE AND SEGMENT
RATES
Section 430 specifies the minimum
funding requirements that apply to
single-employer plans (except for CSEC
plans under § 414(y)) pursuant to § 412.
Section 430(h)(2) specifies the interest
rates that must be used to determine a
plan’s target normal cost and funding tar-
get. Under this provision, present value is
generally determined using three 24-month
average interest rates (“segment rates”),
each of which applies to cash flows during
specified periods. To the extent provided
under § 430(h)(2)(C)(iv), these segment
rates are adjusted by the applicable per-
centage of the 25-year average segment
rates for the period ending September 30
of the year preceding the calendar year in
which the plan year begins.
1
However, an
election may be made under § 430(h)(2)
(D)(ii) to use the monthly yield curve in
place of the segment rates.
Notice 2007-81, 2007-44 I.R.B. 899,
provides guidelines for determining the
monthly corporate bond yield curve, and
the 24-month average corporate bond seg-
ment rates used to compute the target nor-
mal cost and the funding target. Consistent
with the methodology specified in Notice
2007-81, the monthly corporate bond
yield curve derived from July 2023 data is
in Table 2023-7 at the end of this notice.
The spot first, second, and third segment
rates for the month of July 2023 are,
respectively, 5.35, 5.28, and 5.10.
3
If any due date for filing Form 720 falls on a Saturday, Sunday, or legal holiday, the Form 720 would be due on the next business day. See § 301.7503-1 of the Procedure and Administration
Regulations (26 CFR part 301).
1
Pursuant to § 433(h)(3)(A), the third segment rate determined under § 430(h)(2)(C) is used to determine the current liability of a CSEC plan (which is used to calculate the minimum amount
of the full funding limitation under § 433(c)(7)(C)).

August 28, 2023 652 Bulletin No. 2023–35
The 24-month average segment rates
determined under § 430(h)(2)(C)(i)
through (iii) must be adjusted pursuant to §
430(h)(2)(C)(iv) to be within the applica-
ble minimum and maximum percentages
of the corresponding 25-year average seg-
ment rates. For this purpose, any 25-year
average segment rate that is less than 5%
is deemed to be 5%. The 25-year average
segment rates for plan years beginning in
2022 and 2023 were published in Notice
2021-54, 2021-41 I.R.B. 457, and Notice
2022-40, 2022-40 I.R.B. 266, respec-
tively. The applicable minimum and max-
imum percentages are 95% and 105% for
a plan year beginning in 2022 or 2023.
24-MONTH AVERAGE CORPORATE
BOND SEGMENT RATES
The three 24-month average corpo-
rate bond segment rates applicable for
August 2023 without adjustment for the
25-year average segment rate limits are
as follows:
24-Month Average Segment Rates Without 25-Year Average Adjustment
Applicable Month First Segment Second Segment Third Segment
August 2023 3.42 4.33 4.43
The adjusted 24-month average seg-
ment rates set forth in the chart below reflect
§ 430(h)(2)(C)(iv) of the Code. The
24-month averages applicable for August
2023, adjusted to be within the applicable
minimum and maximum percentages of
the corresponding 25-year average seg-
ment rates in accordance with § 430(h)(2)
(C)(iv) of the Code, are as follows:
Adjusted 24-Month Average Segment Rates
For Plan Years
Beginning InApplicable MonthFirst SegmentSecond SegmentThird Segment
2022August 20234.755.185.92
2023August 20234.755.005.74
30-YEAR TREASURY SECURITIES
INTEREST RATES
Section 431 specifies the minimum
funding requirements that apply to multi-
employer plans pursuant to § 412. Section
431(c)(6)(B) specifies a minimum amount
for the full-funding limitation described in
§ 431(c)(6)(A), based on the plan’s cur-
rent liability. Section 431(c)(6)(E)(ii)(I)
provides that the interest rate used to calcu-
late current liability for this purpose must
be no more than 5 percent above and no
more than 10 percent below the weighted
average of the rates of interest on 30-year
Treasury securities during the four-year
period ending on the last day before the
beginning of the plan year. Notice 88-73,
1988-2 C.B. 383, provides guidelines for
determining the weighted average interest
rate. The rate of interest on 30-year Treasury
securities for July 2023 is 3.96 percent. The
Service determined this rate as the average
of the daily determinations of yield on the
30-year Treasury bond maturing in May
2053. For plan years beginning in August
2023, the weighted average of the rates of
interest on 30-year Treasury securities and
the permissible range of rates used to cal-
culate current liability are as follows:
Treasury Weighted Average Rates
For Plan Years Beginning In30-Year Treasury Weighted AveragePermissible Range 90% to 105%
August 20232.782.50 to 2.91
MINIMUM PRESENT VALUE
SEGMENT RATES
In general, the applicable interest rates
under § 417(e)(3)(D) are segment rates
computed without regard to a 24-month
average. Notice 2007-81 provides guide-
lines for determining the minimum
present value segment rates. Pursuant to
that notice, the minimum present value
segment rates determined for July 2023
are as follows:
Minimum Present Value Segment Rates
Month First Segment Second Segment Third Segment
July 2023 5.35 5.28 5.10

Bulletin No. 2023–35 653 August 28, 2023
DRAFTING INFORMATION
The principal author of this notice is
Tom Morgan of the Office of Associate
Chief Counsel (Employee Benefits,
Exempt Organizations, and Employment
Taxes). However, other personnel from
the IRS participated in the development
of this guidance. For further information
regarding this notice, contact Mr. Morgan
at 202-317-6700 or Tony Montanaro at
626-927-1475 (not toll-free numbers ).

August 28, 2023 654 Bulletin No. 2023–35
Table 2023-7
Monthly Yield Curve for July 2023
Derived from July 2023 Data
MaturityYieldMaturityYieldMaturityYieldMaturityYieldMaturityYield
0.55.8020.55.2740.55.0860.55.0280.54.99
1.05.6821.05.2641.05.0861.05.0281.04.99
1.55.5721.55.2541.55.0861.55.0281.54.99
2.05.4622.05.2442.05.0762.05.0282.04.99
2.55.3522.55.2342.55.0762.55.0282.54.99
3.05.2623.05.2243.05.0763.05.0283.04.99
3.55.1823.55.2243.55.0763.55.0283.54.99
4.05.1124.05.2144.05.0764.05.0284.04.99
4.55.0724.55.2044.55.0664.55.0284.54.99
5.05.0525.05.1945.05.0665.05.0185.04.99
5.55.0425.55.1945.55.0665.55.0185.54.99
6.05.0526.05.1846.05.0666.05.0186.04.99
6.5
5.0726.55.1746.55.0666.55.0186.54.99
7.05.1027.05.1747.05.0667.05.0187.04.99
7.55.1327.55.1647.55.0567.55.0187.54.99
8.05.1628.05.1648.05.0568.05.0188.04.99
8.55.1928.55.1548.55.0568.55.0188.54.99
9.05.2329.05.1549.05.0569.05.0189.04.99
9.55.2629.55.1549.55.0569.55.0189.54.99
10.05.2830.05.1450.05.0570.05.0190.04.98
10.55.3130.55.1450.55.0570.55.0190.54.98
11.05.3331.05.1351.05.0471.05.0191.04.98
11.55.3531.55.1351.55.0471.55.0191.54.98
12.05.3632.05.1352.05.0472.05.0092.04.98
12.55.3732.55.1252.55.0472.55.0092.54.98
13.05.3833.05.1253.0
5.0473.05.0093.04.98
13.55.3833.55.1253.55.0473.55.0093.54.98
14.05.3834.05.1154.05.0474.05.0094.04.98
14.55.3834.55.1154.55.0474.55.0094.54.98
15.05.3835.05.1155.05.0375.05.0095.04.98
15.55.3735.55.1055.55.0375.55.0095.54.98
16.05.3636.05.1056.05.0376.05.0096.04.98
16.55.3536.55.1056.55.0376.55.0096.54.98
17.05.3537.05.1057.05.0377.05.0097.04.98
17.55.3437.55.0957.55.0377.55.0097.54.98
18.05.3338.05.0958.05.0378.05.0098.04.98
18.55.3138.55.0958.55.0378.55.0098.54.98
19.05.3039.05.0959.05.0379.05.0099.04.98
19.55.2939.55.0859.55.0279.55.0099.5
4.98
20.05.2840.05.0860.05.0280.04.99100.04.98

Bulletin No. 2023–35 655 August 28, 2023
26 CFR 601.201: Rulings and determination letters.
Rev. Proc. 2023-27
SECTION 1. PURPOSE
This revenue procedure provides the
process under § 48(e) of the Internal
Revenue Code (Code)
1
to apply for an
allocation of environmental justice solar
and wind capacity limitation (Capacity
Limitation). Receipt of an allocation
increases the amount of an energy invest-
ment credit determined under § 48(a) (§
48 credit) for the taxable year in which
certain solar and wind-powered electricity
generation facilitates are placed in service.
SECTION 2. BACKGROUND
.01 Section 13103 of Public Law 117–
169, 136 Stat. 1818, 1921 (August 16,
2022), commonly known as the Inflation
Reduction Act of 2022 (IRA), added
new § 48(e) to the Code. Section 48(e)
increases the amount of the § 48 credit
with respect to eligible property that is
part of a qualified solar or wind facility
that is awarded an allocation of Capacity
Limitation as part of the low-income
communities bonus credit program for
the energy investment credit (Program).
The § 48 credit for a taxable year is gen-
erally calculated by multiplying the basis
of each energy property placed in service
during that taxable year by the energy per-
centage (as defined in § 48(a)(2)). Section
48(e) increases the § 48 credit by increas-
ing the energy percentage used to calcu-
late the amount of the § 48 credit (§ 48(e)
Increase) in the case of qualified solar and
wind facilities that receive an allocation of
Capacity Limitation.
.02 Section 48(e)(4) directs the
Secretary to establish a program, within
180 days of enactment of the IRA, to allo-
cate amounts of Capacity Limitation to
qualified solar and wind facilities. Notice
2023–17, 2023–10 I.R.B. 505, established
the Low-Income Communities Bonus
Credit Program and provided definitions
and other guidance related to the program.
On June 1, 2023, the Department of the
Treasury (Treasury Department) and the
Internal Revenue Service (IRS) published
in the Federal Register (88 FR 35791) a
notice of proposed rulemaking (REG-
110412-23, 2023-26 I.R.B. 1098) under
§ 48(e) (Proposed Regulations) relating
to the Low-Income Communities Bonus
Credit Program. A Treasury Decision
adopting the Proposed Regulations
with modifications appears in the Final
Regulations section of 88 FR 55506 (Final
Regulations).
.03 This revenue procedure pro-
vides the process for the Low-Income
Communities Bonus Credit Program.
These procedural rules provide guidance
necessary to implement the Low-Income
Communities Bonus Credit Program,
including, in relevant part, information
an applicant must submit, the application
review process, and the manner of obtain-
ing an allocation from the IRS.
SECTION 3. CAPACITY LIMITATION
RESERVATIONS AVAILABLE FOR
ALLOCATION
The amount of Capacity Limitation
available for allocation through the
application process provided in this
Revenue Procedure is limited to the
annual Capacity Limitation of 1.8 giga-
watts of direct current capacity for each
of calendar years 2023 and 2024. As
provided in § 1.48(e)-1(g), the annual
Capacity Limitation available for allo-
cation is divided across the four facility
categories described in § 1.48(e)-1(b)(2).
For 2023, the Treasury Department and
the IRS plan to reserve the total annual
Capacity Limitation of 1.8 gigawatts of
direct current capacity as shown in Table
1 below. As described in § 1.48(e)-1(g),
the Treasury Department and the IRS
may later re-allocate these reservations
across facility categories in the event any
category is oversubscribed or has excess
capacity. In addition, as described in the
preamble to the Final Regulations, the
Treasury Department and the IRS may
adjust this initial reservation of capacity in
future guidance as needed to achieve the
goals of the Program and ensure an effi-
cient allocation process.
Table 1
Category 1: Located in a Low-Income Community 700 megawatts
Category 2: Located on Indian Land 200 megawatts
Category 3: Qualified Low-Income Residential Building Project 200 megawatts
Category 4: Qualified Low-Income Economic Benefit Project 700 megawatts
SECTION 4. CATEGORY 1 SUB-
RESERVATIONS
The 700 megawatts of Capacity
Limitation reserved for Category 1
Facilities will be subdivided for facili-
ties seeking a Category 1 allocation with
490 megawatts of Capacity Limitation
reserved specifically for eligible residen-
tial behind the meter (BTM) facilities
described in § 1.48(e)-1(i)(2)(ii), including
rooftop solar. The remaining 210 mega-
watts of Capacity Limitation reserved
for Category 1 is available for applicants
with front of the meter (FTM) facilities
described in § 1.48(e)-1(i)(2)(iii) as well
as non-residential BTM facilities that
meet the requirements of § 1.48(e)-1(i)(2)
(i). As described in § 1.48(e)-1(i)(1), the
Treasury Department and the IRS may
adjust this initial reservation of capacity in
1
Unless otherwise specified, all “section” or “§” references are to sections of the Code or the Income Tax Regulations (26 CFR part 1).

August 28, 2023 656 Bulletin No. 2023–35
future guidance based on factors such as
promoting efficient allocation of Capacity
Limitation and allowing like-projects to
compete for an allocation.
SECTION 5. APPLICATION
An applicant (defined in section 6 of
this revenue procedure) must submit an
application to apply for an allocation of
Capacity Limitation. The application must
contain all information, documentation,
and attestations specified in section 7 of
this revenue procedure and any additional
information required by the Department
of Energy’s (DOE) publicly available
written procedures. Applicants must sub-
mit applications for a particular category
of facility described in § 1.48(e)-1(b)(2)
(that is, Category 1 Facility, Category 2
Facility, Category 3 Facility, or Category 4
Facility). Applicants may only submit one
application per facility per the allocation
year. DOE will publicly announce open-
ing and closing dates for the application.
SECTION 6. APPLICANT
.01 In general. The owner of the solar
or wind facility is the applicant who
must apply for an allocation of Capacity
Limitation. The owner of the facility is
the recipient of the allocation of Capacity
Limitation.
.02 Disregarded entities. If a quali-
fied solar or wind facility is owned by an
entity that is disregarded as separate from
its owner for federal income tax purposes,
the owner of the disregarded entity is the
owner of the facility and is the applicant.
.03 Partnerships and S corporations. If
a qualified solar or wind facility is owned
by a partnership or S corporation, then the
partnership or S corporation is the owner
of the facility and is the applicant, not the
partners or shareholders.
SECTION 7. APPLICATION PROCESS
.01 Registration.
(1) In general. Applications are col-
lected through the portal hosted by the
Department of Energy (portal). Applicants
must follow DOE’s publicly available
procedures to register in the portal and to
submit applications.
(2) Application Submission. The appli-
cant’s application and any required attes-
tations must be submitted under penalties
of perjury and dated by the applicant. The
person submitting the application must
have personal knowledge of the facts.
Further, the application and any required
attestations must be submitted by a per-
son authorized under state law to bind the
applicant. For example, an application
may be authorized by an officer on behalf
of a corporation, a general partner of a
state law partnership, a member-manager
on behalf of a limited liability company, a
trustee on behalf of a trust, or the propri-
etor in the case of a sole proprietorship. If
the applicant is a member of an affiliated
group filing consolidated returns, the sub-
mission also must be authorized by a duly
authorized officer of the common parent
of the group.
.02 Applicant Information. The appli-
cation must include the following identi-
fying information:
(1) The name of the applicant;
(2) The unique federal taxpayer iden-
tification number for the applicant (if
available);
(3) The applicant’s address;
(4) If the applicant is a subsidiary cor-
poration of a consolidated group, the legal
name and federal taxpayer identification
number of the parent corporation of the
consolidated group;
(5) The name and telephone number of
the person submitting the application on
behalf of the applicant; and
(6) Any other information required
by DOE’s publicly available written
procedures.
.03 Facility Information.
(1) In general. The application must
include the information described in sec-
tions 70.02(2) and 7.03(3) of this revenue
procedure.
(2) Facility maximum net output and
nameplate capacity.
(a) Wind facility. Applicants seeking an
allocation for a wind facility must report
the expected maximum net output of the
facility defined as the nameplate capac-
ity of the facility in alternating current.
Wind facilities selected for an allocation
will be awarded an amount of Capacity
Limitation in direct current that is equal to
the facility’s reported nameplate capacity
in alternating current.
(b) Solar facility. Applicants seek-
ing an allocation for a solar facility must
report the expected maximum net output
of the facility as measured in alternating
current and the nameplate capacity of the
facility in direct current. Solar facilities
selected for an allocation will be awarded
an amount of Capacity Limitation in
direct current that is equal to the facili-
ty’s reported nameplate capacity in direct
current.
(3) Facility location. Applicants are
required to report the location of the facil-
ity, including street address (if applicable)
and coordinates (latitude and longitude).
.04 Documentation.
(1) In general. Applicants must submit
the documentation specified in sections
7.04(2) and 7.04(3) of this revenue proce-
dure with an application for an allocation
of Capacity Limitation. An application is
not complete and may be rejected if any
required documentation is not included.
(2) Facility documentation. The follow-
ing documents are required for each facility
for which an application is submitted:

Bulletin No. 2023–35 657 August 28, 2023
Table 2
Document RequirementFTM
2
BTM
3
<= 1 MW ACBTM > 1 MW AC
An executed contract to purchase the facility, an executed
contract to lease the facility, or an executed power purchase
agreement for the facility, in their entirety inclusive of any
amendments, appendices, consumer disclosures, and schedules
thereto.
NoYesYes
A copy of the final executed interconnection agreement, if
applicable (see below).
If the facility is located in a market where the interconnection
agreement cannot be signed prior to construction or
interconnection of the facility, a signed conditional approval
letter from the jurisdictional utility and/or an affidavit stating
that an interconnection agreement cannot be executed until after
construction of the facility signed by an individual with authority
to bind the applicant.
If an interconnection agreement is not applicable to the facility
(for example, due to utility ownership), this requirement
is satisfied by a final written decision from a Public Utility
Commission, cooperative board, or other governing body with
sufficient authority that financially authorizes the facility.
YesNoYes
(3) Facility category specific docu-
ment. The application must include the
following documents for the applicable
facility category:
Table 3
Document RequirementCategory 1Category 2Category 3Category 4
Documentation demonstrating property will be installed on
an eligible residential building.
NoNoYesNo
Plans to ensure tenants receive required financial benefits,
including a draft Benefits Sharing Statement.
NoNoYesNo
If applying under Additional Selection Criteria:
Documentation demonstrating applicant meets Ownership
Criteria Documentation including, but not limited to: IRS
determination letter of tax-exempt status; informational
tax filings (Form 990); tax returns and employment tax
returns
4
; articles of incorporation or certificate of formation
and by-laws; financial statements prepared by a third-party
and/or certified by an officer of the entity; partnership
agreement; and employee records.
YesYesYesYes
2
As defined in § 1.48(e)-1(i)(2)(iii), for the purposes of the Program, a qualified solar or wind facility is front of the meter (FTM) if it is directly connected to a grid and its primary purpose
is to provide electricity to one or more offsite locations via such grid or utility meters with which it does not have an electrical connection; alternatively, FTM is defined as a facility that is
not BTM. For the purposes of Category 4, a qualified solar or wind facility is also FTM if 50 percent or more of its electricity generation on an annual basis is physically exported to the
broader electricity grid.
3
As defined in § 1.48(e)-1(i)(2)(i), a qualified wind or solar facility is behind the meter (BTM) if (1) it is connected with an electrical connection between the facility and the panelboard or
sub-panelboard of the site where the facility is located, (2) it is to be connected on the customer side of a utility service meter before it connects to a distribution or transmission system (that is,
before it connects to the electricity grid), and its primary purpose is to provide electricity to the utility customer of the site where the facility is located. This also includes systems not connected
to a grid and that may not have a utility service meter, and whose primary purpose is to serve the electricity demand of the owner of the site where the system is located.
4
Redact Taxpayer Identification Numbers (TINs) before submitting tax returns and employment tax returns.

August 28, 2023 658 Bulletin No. 2023–35
.05 Attestations.
(1) In general. An application must
include attestations specified in sec-
tions 7.05(2) and 7.05(3) of this revenue
procedure. An application is not complete
and may be rejected if any required attes-
tation is not included.
(2) For all facilities. The following
attestations are required for each facility
for which an application is submitted:
Table 4
Attestation RequirementFTMBTM <= 1 MW ACBTM > 1 MW AC
The applicant has site control through ownership, an executed
lease contract, site access agreement or similar agreement
between the property owner and the applicant.
For a facility on Indian Lands under 25 U.S. Code § 3501(2)
(A)-(C), applicant has obtained the applicable approval of
the relevant tribal government or Alaska Native Corporation
landowner.
YesNoNo
The facility has obtained all applicable federal, state, tribal, and
local non-ministerial permits, or that the facility is not required
to obtain such permits.
5
YesYesYes
The applicant is in compliance with all federal, state, and local
laws, including consumer protection provisions, and safety
obligations, and that the applicant did not and will not engage in
any unfair or deceptive acts or practices.
YesYesYes
The applicant has appropriately sized the facility, or that
customer/offtaker subscriptions will be sized to meet the
customer’s energy needs, considering historical customer load
and/or reasonable future load projections, in accordance with
applicable state and local requirements.
YesYesYes
The proposed location of the facility has been determined
suitable for installation.
YesYesYes
(3) Facility and category specific attes-
tations. The application must include the
following attestations for the applicable
facility category:
Table 5
Attestation Requirement Category 1Category 2Category 3Category 4
Facility location is eligible.
6
YesYesNoNo
Consumer disclosures informing customers of their legal rights and
protections have been provided to customers prior to executing a
contract to subscribe or purchase power from the facility, or lease a
facility.
YesYes
Yes
(provided to
tenants as
applicable)
Yes
The applicant will ensure at least 50% of the financial benefits will be
provided to qualified households at 20% bill credit discount rate.
NoNoNoYes
If applying under Additional Selection Criteria: Facility location is
eligible based on PPC/CEJST.
7
YesNoYesYes
5
Non-ministerial permits are permits in which one or more officials or agencies consider various factors and exercise some discretion in deciding whether to issue or deny permits. This
does not include ministerial permits based upon a determination that the request complies with established standards such as electrical or building permits. Non-ministerial permits typically
come with conditions and usually require public notice or hearings. Examples of non-ministerial permits include local planning board authorization, conditional use permits, variances, and
special orders.
6
For Category 1, the facility will be located in a low-income community as defined in the final rules for the Program, specifically § 1.48(e)-1. A map that captures applicable census tracts
will be available in DOE’s publicly available written procedures to assist applicants. For Category 2, the facility will be located on Indian Land as defined in § 2601(2) of the Energy Policy
Act of 1992 (25 U.S.C. 3501(2)).
7
Maps that capture applicable census tracts will be available in DOE’s publicly available written procedures to assist applicants.

Bulletin No. 2023–35 659 August 28, 2023
SECTION 8. REVIEW AND
SELECTION PROCESS
.01 In general. DOE will review appli-
cations and provide a recommendation
to the IRS regarding whether to award
an applicant an amount of Capacity
Limitation with respect to a facility. Based
on DOE’s recommendation, the IRS will
award the applicant a Capacity Limitation
allocation or reject the application.
.02 Order of application review.
(1) First 30 days. At the start of each
program year, there will be a 30-day
period during which time applications will
initially be accepted for each category. All
applications submitted within the 30-day
period will be treated as submitted on the
same date and at the same time.
(2) Rolling application review.
Following the 30-day period, DOE will
generally accept applications on a rolling
basis and will review applications and
provide recommendations to the IRS in
the order applications are received until
the IRS allocates all Capacity Limitation
in a program year. The IRS will award the
applicants in the order that it receives rec-
ommendations from DOE.
(3) Lottery. If at the conclusion of the
30-day period described in section 8.02(1)
of this revenue procedure any category or
Category 1 sub-reservation of Capacity
Limitation is oversubscribed (as provided
in §1.48(e)-1(g)), applications in those
oversubscribed categories or sub-reserva-
tion will be entered into a lottery to deter-
mine the order of DOE’s review. DOE
will first separate applications to group
all applications which purport to meet
additional selection criteria described in
§1.48(e)-1(h)(2) (Ownership Criteria) and
§1.48(e)-1(h)(3) (Geographic Criteria).
These applications will be prioritized and
processed as described in section 8.03 of
this revenue procedure.
(4) Applications submitted after the
30-day period. Applications may still be
submitted in oversubscribed categories
or for the Category 1 sub-reservation
of Capacity Limitation after the 30-day
period and until the close of a program
year. Those applications may be reviewed
in the order received only after DOE’s
review and the IRS’s award determina-
tions regarding all applications submitted
within the first 30 days. Applications sub-
mitted will only be reviewed if there is
remaining Capacity Limitation.
(5) Close of program year. After the
IRS awards all the Capacity Limitation
within each category, or the program year
is closed, DOE will cease review of any
remaining applications. After the end of
the program year, no further action will
be taken on applications submitted but not
awarded an allocation. Applicants may
reapply in the next program year if they
remain eligible.
.03 Processing Additional Selection
Criteria applications.
(1) In general. Fifty percent of the
Capacity Limitation in each facility cat-
egory will be reserved for qualified solar
or wind facilities meeting the Ownership
Criteria described in §1.48(e)-1(h)(2)
and the Geographic Criteria described in
§1.48(e)-1(h)(3) (Additional Selection
Criteria). As described in § 1.48(e)-1(h)
(1), the Treasury Department and the
IRS may adjust this initial reservation of
capacity in future guidance.
(2) Review of Additional Selection
Criteria applications. Applications pur-
porting to meet an Additional Selection
Criteria are generally evaluated on the
same schedule as other applications unless
a facility category is oversubscribed at
the close of the initial 30-day applica-
tion period described in section 8.02(2)
of this revenue procedure in which case
such applications are considered first and
other applications are entered into a lot-
tery to determine the order of review (see
section 8.02(3) of this revenue procedure).
If the eligible applications for Capacity
Limitation for facilities that meet at
least one of the two Additional Selection
Criteria exceed the Capacity Limitation
for a category, facilities purporting to meet
both of the Additional Selection Criteria
are reviewed before other applications
within each facility category described in
§ 48(e)(2)(A)(iii) and §1.48(e)-1(b)(2).
Allocations for facilities meeting one or
more of the Additional Selection Criteria
will be made from the 50-percent reserve
for such facilities before additional
amounts reserved for a facility category
are allocated. A lottery will be used to
determine the order of review of appli-
cations purporting to meet Additional
Selection Criteria if such applications
exceed the Capacity Limitation reserved
for the facility category.
.04 Cure period for application defects.
(1) In general. If the assigned DOE
reviewer identifies a defect with a sub-
mitted application, such as missing or
incorrect information or documentation,
the DOE will contact the applicant via the
portal. The reviewer will request that the
applicant submit additional information or
documentation to correct or complete the
application via the portal.
(2) Timing for applicant response.
An applicant that is contacted by a DOE
reviewer to submit additional information
or documentation or provide corrected
information will have 21 business days to
respond and provide such requested infor-
mation or documentation.
(3) Consequences for failure to respond
or provide information. If an appli-
cant fails to respond and/or provide the
requested information or documentation
within the 21-day cure period, DOE will
cease review and mark the application as
withdrawn. If withdrawn, the applicant
may create and submit a new application
for review at a later date if the facility
remains eligible.
SECTION 9. NOTIFICATION OF
ALLOCATION DECISION FROM IRS
.01 In general. The IRS will send
final decision letters through the portal to
inform applicants of the outcome of the
application process. For any applicant that
receives an award of Capacity Limitation,
the letter will state the amount of the allo-
cated Capacity Limitation.
.02 Allocation amount. The Capacity
Limitation allocated to a facility will be
determined based on the nameplate capac-
ity of the facility as stated in the applica-
tion. The Capacity Limitation allocation
will be provided in direct current. For
wind facilities, alternating current will
be treated as equivalent to direct current
for purposes of determining the amount
of a Capacity Limitation allocation. The
facility that receives the final allocation of
Capacity Limitation in each facility cate-
gory or Category 1 sub-reservation may
receive an allocation less than its name-
plate capacity.

August 28, 2023 660 Bulletin No. 2023–35
SECTION 10. PLACED IN SERVICE
.01 In general. To satisfy the require-
ments of §1.48-1(k), for any facility
that received an allocation of Capacity
Limitation, the owner of the facility must
report to the DOE the date the facility was
placed in service.
.02 Documentation and attestation
requirements. To satisfy the requirements
of §1.48-1(k), the owner must provide the
following:
(1) An attestation confirming that there
has been no material ownership and/or
facility changes from the application;
(2) Permission to Operate (PTO) let-
ter (or commissioning report verifying
for off-grid facilities) confirming that the
facility has been placed in service and the
location of the facility being placed in
service;
(3) Final, Professional Engineer (PE)
stamped (if required by applicable state or
local law) as-built design plan, PTO letter
with nameplate capacity listed, or other
documentation from an unrelated party
verifying as-built nameplate capacity;
(4) For Category 3 Facilities, a
Benefits Sharing Statement as defined in
§1.48(e)-1(e)(4);
(5) For Category 4 Facilities, a final
list of low-income households served with
name, address, subscription share, and the
income verification method used; and
(6) For Category 4 Facilities, a spread-
sheet demonstrating the expected finan-
cial benefit to low-income subscribers to
demonstrate the 20 percent bill credit dis-
count rate.
SECTION 11. EFFECT OF
ALLOCATION OR OTHER
NOTIFICATION
A Capacity Limitation allocation or a
notification that a facility has met the eligi-
bility requirements under the Low-Income
Communities Bonus Credit Program at
the time the facility is placed in service
is not a final determination that property
is eligible for an increased credit under §
48(e). The IRS may, upon examination,
determine that property does not qualify
for the increased credit.
SECTION 12. CLAIMING THE
ENERGY PERCENTAGE INCREASE
.01 In general. After the facility is
placed in service, and the applicant sub-
mits the additional documentation and
attestations described in §1.48-1(k), the
applicant is notified that it (or the appli-
cable partners or shareholders in the case
of a partnership or an S corporation) may
claim the energy percentage increase on
Form 3468, Investment Credit (or succes-
sor form) or Form 3800, General Business
Credit (or successor form), if eligible,
make a transfer election under § 6418, or,
if eligible, make an elective payment elec-
tion under § 6417.
.02 Reduction in Increased Energy
Percentage. In cases where the facility
size is larger than the allocated capacity
when placed in service (but still below 5
MW AC), the 10 percentage or 20 per-
centage point increase will be reduced by
a reduction factor which is calculated by
the amount of Capacity Limitation allo-
cated (kW) divided by the total name-
plate capacity installed (kW) at the time
the owner of the facility claims the energy
percentage increase under § 48(e). See §
48(e)(2)(B).
SECTION 13. SUCCESSOR IN
INTEREST
.01 In general. Except as otherwise
provided in this section 13, a Capacity
Limitation allocation award applies only
to the taxpayer who applied for and
received an allocation award for the facil-
ity the taxpayer owns. If a taxpayer wants
to request a transfer of an allocation, it
should refer to DOE’s publicly available
written procedures to initiate a transfer
request with the IRS.
.02 Additional Selection Criteria.
Applicants who received an allocation
based on the Additional Selection Criteria
should refer to §1.48(e)-1(m)(v) regard-
ing potential disqualification if the origi-
nal applicant does not retain an ownership
interest in an entity that owns the facil-
ity or the successor does not provide the
required attestation.
SECTION 14. APPLICABILITY DATE
This revenue procedure applies to
taxable years ending on or after the date
of publication of the Treasury Decision
under § 48(e) 88 FR 55506.
SECTION 15. PAPERWORK
REDUCTION ACT
This revenue procedure is not creat-
ing a new collection of information as
described by the Paperwork Reduction
Act (44 U.S.C. 3507(d)). The collections
of information contained within this rev-
enue procedure, and their associated bur-
dens, have been submitted to the Office
of Management and Budget as part of TD
9979 and will be approved under OMB
Control Number 1545-2308.
SECTION 16. DRAFTING
INFORMATION
The principal author of this reve-
nue procedure is the Office of Associate
Chief Counsel (Passthroughs & Special
Industries). However, other personnel
from the Treasury Department and the
IRS participated in its development. For
further information regarding this revenue
procedure, call the energy security guid-
ance contact number at (202) 317-5254
(not a toll-free number).

Bulletin No. 2023–35 661 August 28, 2023
Part IV
Deletions From Cumulative
List of Organizations,
Contributions to Which are
Deductible Under Section
170 of the Code
Announcement 2023-24
The Internal Revenue Service has
revoked its determination that the organi-
zations listed below qualify as organiza-
tions described in sections 501(c)(3) and
170(c)(2) of the Internal Revenue Code of
1986.
Generally, the IRS will not disallow
deductions for contributions made to a
listed organization on or before the date
of announcement in the Internal Revenue
Bulletin that an organization no longer
qualifies. However, the IRS is not pre-
cluded from disallowing a deduction for
any contributions made after an organiza-
tion ceases to qualify under section 170(c)
(2) if the organization has not timely filed
a suit for declaratory judgment under sec-
tion 7428 and if the contributor (1) had
knowledge of the revocation of the ruling
or determination letter, (2) was aware that
such revocation was imminent, or (3) was
in part responsible for or was aware of the
activities or omissions of the organization
that brought about this revocation.
If on the other hand a suit for declar-
atory judgment has been timely filed,
contributions from individuals and orga-
nizations described in section 170(c)(2)
that are otherwise allowable will con-
tinue to be deductible. Protection under
section 7428(c) would begin on August
28, , 2023 and would end on the date the
court first determines the organization is
not described in section 170(c)(2) as more
particularly set for in section 7428(c)(1).
For individual contributors, the maximum
deduction protected is $1,000, with a hus-
band and wife treated as one contributor.
This benefit is not extended to any indi-
vidual, in whole or in part, for the acts or
omissions of the organization that were
the basis for revocation.
NAME OF ORGANIZATION
Effective Date of
Revocation
LOCATION
Margaret B. Gilfillan Charitable Trust01/01/2020Pittsburgh, PA
Alpine Country Club6/01/2019Alpine Texas
United Way Detroit01/01/2021New York, NY
American Cancer Foundation of Ohio01/01/2021Staten Island, NY
American Cancer Society for Adults01/01/2021Staten Island, NY
American Cancer Foundation of Arlington
01/01/2021Staten Island, NY
American Cancer Foundation of Corpus Christi01/01/2021Staten Island, NY
American Cancer Foundation for Children Inc.01/01/2021Staten Island, NY
American Cancer Foundation of Philadelphia01/01/2021Staten Island, NY
American Cancer Foundation of Pittsburgh01/01/2021Staten Island, NY

August 28, 2023 662 Bulletin No. 2023–35
Notice of Proposed
Rulemaking
Identification of Monetized
Installment Sale
Transactions as Listed
Transactions
REG-109348-22
AGENCY: Internal Revenue Service
(IRS), Treasury
ACTION: Notice of proposed rulemaking
and notice of public hearing.
SUMMARY: This document contains
proposed regulations that would identify
monetized installment sale transactions
and substantially similar transactions as
listed transactions, a type of reportable
transaction. Material advisors and partic-
ipants in these listed transactions would
be required to file disclosures with the
IRS and would be subject to penalties for
failure to disclose. The proposed regula-
tions would affect participants in those
transactions as well as material advisors.
This document also provides a notice
of a public hearing on the proposed
regulations.
DATES: Comments: Electronic or written
comments must be received by October 3,
2023.
Public Hearing: The public hear-
ing is scheduled to be held on October
12, 2023, at 10:00 a.m. ET. Pursuant to
Announcement 2023-16, 2023-20 I.R.B.
854 (May 15, 2023), the public hearing is
scheduled to be conducted in person, but
the IRS will provide a telephonic option for
individuals who wish to attend or testify
at the hearing by telephone. Requests to
speak and outlines of topics to be discussed
at the public hearing must be received by
October 3, 2023. If no outlines are received
by October 3, 2023, the public hearing will
be cancelled. Requests to attend the public
hearing must be received by 5:00 p.m. ET
on October 10, 2023. The hearing will be
made accessible to people with disabilities.
Requests for special assistance during the
hearing must be received by 5:00 p.m. ET
on October 6, 2023.
ADDRESSES: Commenters are strongly
encouraged to submit public comments
electronically. Submit electronic sub-
missions via the Federal eRulemaking
Portal at https://www.regulations.gov
(indicate IRS and REG-109348-22) by
following the online instructions for sub-
mitting comments. Requests for a public
hearing must be submitted as prescribed
in the “Comments and Requests for a
Public Hearing” section. Once submitted
to the Federal eRulemaking Portal, com-
ments cannot be edited or withdrawn. The
Department of the Treasury (Treasury
Department) and the IRS will publish for
public availability any comments to the
IRS’s public docket. Send paper submis-
sions to: CC:PA:LPD:PR (REG-109348-
22), room 5203, Internal Revenue Service,
P.O. Box 7604, Ben Franklin Station,
Washington, D.C. 20044.
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed
regulations, Jonathan A. Dunlap of
the Office of Associate Chief Counsel
(Income Tax and Accounting), (202) 317-
4718 (not a toll-free number); concerning
submissions of comments and requests for
hearing, Vivian Hayes at (202) 317-5306
(not a toll-free number) or publichear-
ings@irs.gov (preferred).
SUPPLEMENTARY INFORMATION:
Background
This document contains proposed
additions to 26 CFR part 1 (Income Tax
Regulations) under section 6011 of the
Internal Revenue Code (Code). The
additions identify certain transactions as
“listed transactions” for purposes of sec-
tion 6011.
I. Disclosure of Reportable Transactions
by Participants and Penalties for Failure
to Disclose
Section 6011(a) generally provides that,
when required by regulations prescribed
by the Secretary of the Treasury or her
delegate (Secretary), “any person made
liable for any tax imposed by this title, or
with respect to the collection thereof, shall
make a return or statement according to
the forms and regulations prescribed by
the Secretary. Every person required to
make a return or statement shall include
therein the information required by such
forms or regulations.”
Section 1.6011-4(a) provides that
every taxpayer that has participated in a
reportable transaction within the mean-
ing of §1.6011-4(b) and who is required
to file a tax return must file a disclosure
statement within the time prescribed in
§1.6011-4(e).
Reportable transactions are identified
in §1.6011-4 and include listed transac-
tions, confidential transactions, transac-
tions with contractual protection, loss
transactions, and transactions of interest.
See §1.6011-4(b)(2) through (6). Section
1.6011-4(b)(2) defines a listed transac-
tion as a transaction that is the same as or
substantially similar to one of the types of
transactions that the IRS has determined to
be a tax avoidance transaction and identi-
fied by notice, regulation, or other form of
published guidance as a listed transaction.
Section 1.6011-4(c)(4) provides that a
transaction is “substantially similar” if it
is expected to obtain the same or similar
types of tax consequences and is either
factually similar or based on the same or
similar tax strategy. Receipt of an opin-
ion regarding the tax consequences of the
transaction is not relevant to the determi-
nation of whether the transaction is the
same as or substantially similar to another
transaction. Further, the term substantially
similar must be broadly construed in favor
of disclosure. For example, a transaction
may be substantially similar to a listed
transaction even though it may involve
different entities or use different Code
provisions.
Section 1.6011-4(c)(3)(i)(A) provides
that a taxpayer has participated in a listed
transaction if the taxpayer’s tax return
reflects tax consequences or a tax strat-
egy described in the published guidance
that lists the transaction under §1.6011-
4(b)(2). Published guidance may identify
other types or classes of persons that will
be treated as participants in a listed trans-
action. Published guidance may also iden-
tify types or classes of persons that will

Bulletin No. 2023–35 663 August 28, 2023
not be treated as participants in a listed
transaction.
Section 1.6011-4(d) and (e) pro-
vide that the disclosure statement Form
8886, Reportable Transaction Disclosure
Statement (or successor form) must be
attached to the taxpayer’s tax return for
each taxable year for which a taxpayer
participates in a reportable transaction.
A copy of the disclosure statement must
be sent to the IRS’s Office of Tax Shelter
Analysis (OTSA) at the same time that
any disclosure statement is first filed by
the taxpayer pertaining to a particular
reportable transaction.
Section 1.6011-4(e)(2)(i) provides that
if a transaction becomes a listed trans-
action after the filing of a taxpayer’s tax
return reflecting the taxpayer’s participa-
tion in the listed transaction and before the
end of the period of limitations for assess-
ment for any taxable year in which the tax-
payer participated in the listed transaction,
then a disclosure statement must be filed
with OTSA within 90 calendar days after
the date on which the transaction becomes
a listed transaction. This requirement
extends to an amended return and exists
regardless of whether the taxpayer par-
ticipated in the transaction in the year the
transaction became a listed transaction.
The Commissioner of Internal Revenue
(Commissioner) may also determine the
time for disclosure of listed transactions
in the published guidance identifying the
transaction.
Participants required to disclose these
transactions under §1.6011-4 who fail to
do so are subject to penalties under sec-
tion 6707A. Section 6707A(b) provides
that the amount of the penalty is 75 per-
cent of the decrease in tax shown on the
return as a result of the reportable transac-
tion (or which would have resulted from
such transaction if such transaction were
respected for Federal tax purposes), sub-
ject to minimum and maximum penalty
amounts. The minimum penalty amount
is $5,000 in the case of a natural person
and $10,000 in any other case. For a listed
transaction, the maximum penalty amount
is $100,000 in the case of a natural person
and $200,000 in any other case.
Additional penalties may also apply.
In general, section 6662A imposes a 20
percent accuracy-related penalty on any
understatement (as defined in section
6662A(b)(1)) attributable to an adequate-
ly disclosed reportable transaction. If the
taxpayer had a requirement to disclose
participation in the reportable transaction
but did not adequately disclose the trans-
action in accordance with the regulations
under section 6011, the taxpayer is sub-
ject to an increased penalty rate equal
to 30 percent of the understatement. See
section 6662A(c). Section 6662A(b)
(2) provides that section 6662A applies
to any item which is attributable to any
listed transaction and any reportable
transaction (other than a listed trans-
action) if a significant purpose of such
transaction is the avoidance or evasion of
Federal income tax.
Participants required to disclose listed
transactions who fail to do so are also sub-
ject to an extended period of limitations
under section 6501(c)(10). That section
provides that the time for assessment of
any tax with respect to the transaction
shall not expire before the date that is one
year after the earlier of the date the partic-
ipant discloses the transaction or the date a
material advisor discloses the participation
pursuant to a written request under section
6112(b)(1)(A).
II. Disclosure of Reportable Transactions
by Material Advisors and Penalties for
Failure to Disclose
Section 6111(a) provides that each
material advisor with respect to any
reportable transaction shall make a return
setting forth: (1) information identifying
and describing the transaction, (2) infor-
mation describing any potential tax bene-
fits expected to result from the transaction,
and (3) such other information as the
Secretary may prescribe. Such return shall
be filed not later than the date specified by
the Secretary.
Section 301.6111-3(a) of the Procedure
and Administration Regulations provides
that each material advisor with respect
to any reportable transaction, as defined
in §1.6011-4(b), must file a return as
described in §301.6111-3(d) by the date
described in §301.6111-3(e).
Section 301.6111-3(b)(1) provides that
a person is a material advisor with respect
to a transaction if the person provides any
material aid, assistance, or advice with
respect to organizing, managing, promot-
ing, selling, implementing, insuring, or
carrying out any reportable transaction,
and directly or indirectly derives gross
income in excess of the threshold amount
as defined in §301.6111-3(b)(3) for the
material aid, assistance, or advice. Under
§301.6111-3(b)(2)(i) and (ii), a person
provides material aid, assistance, or advice
if the person provides a tax statement,
which is any statement (including another
person’s statement), oral or written, that
relates to a tax aspect of a transaction that
causes the transaction to be a reportable
transaction as defined in §1.6011-4(b)(2)
through (7).
Material advisors must disclose trans-
actions on Form 8918, Material Advisor
Disclosure Statement (or successor form),
as provided in §301.6111-3(d) and (e).
Section 301.6111-3(e) provides that the
material advisor’s disclosure statement for
a reportable transaction must be filed with
the OTSA by the last day of the month
that follows the end of the calendar quar-
ter in which the advisor becomes a mate-
rial advisor with respect to a reportable
transaction or in which the circumstances
necessitating an amended disclosure state-
ment occur. The disclosure statement must
be sent to the OTSA at the address pro-
vided in the instructions for Form 8918 (or
successor form).
Section 301.6111-3(d)(2) provides
that the IRS will issue to a material advi-
sor a reportable transaction number with
respect to the disclosed reportable trans-
action. Receipt of a reportable transaction
number does not indicate that the dis-
closure statement is complete, nor does
it indicate that the transaction has been
reviewed, examined, or approved by the
IRS. Material advisors must provide the
reportable transaction number to all tax-
payers and material advisors for whom the
material advisor acts as a material advisor
as defined in §301.6111-3(b). The report-
able transaction number must be provided
at the time the transaction is entered into,
or, if the transaction is entered into prior to
the material advisor receiving the report-
able transaction number, within 60 cal-
endar days from the date the reportable
transaction number is mailed to the mate-
rial advisor.

August 28, 2023 664 Bulletin No. 2023–35
Section 6707(a) provides that a mate-
rial advisor who fails to file a timely dis-
closure, or files an incomplete or false
disclosure statement, is subject to a pen-
alty. Pursuant to section 6707(b)(2),
for listed transactions, the penalty is the
greater of (1) $200,000, or (2) 50 per-
cent of the gross income derived by such
person with respect to aid, assistance, or
advice which is provided with respect to
the listed transaction before the date the
return is filed under section 6111.
Additionally, section 6112(a) provides
that each material advisor with respect to
any reportable transaction shall (whether
or not required to file a return under sec-
tion 6111 with respect to such transaction)
maintain a list (1) identifying each person
with respect to whom such advisor acted
as a material advisor with respect to such
transaction and (2) containing such other
information as the Secretary may by reg-
ulations require. Material advisors must
furnish such lists to the IRS in accordance
with §301.6112-1(e).
A material advisor may be subject to
a penalty under section 6708 for failing
to maintain a list under section 6112(a)
and failing to make the list available
upon written request to the Secretary in
accordance with section 6112(b) within
20 business days after the date of such
request. Section 6708(a) provides that the
penalty is $10,000 per day for each day
of the failure after the 20th day. However,
no penalty will be imposed with respect to
the failure on any day if such failure is due
to reasonable cause.
III. Installment Sales
Section 61(a)(3) provides that a tax-
payer’s gross income includes gains
from dealings in property. Under sec-
tion 1001(a), a taxpayer’s gain on a sale
of property is equal to the excess of the
amount realized on the sale over the tax-
payer’s adjusted basis in the property and,
generally, a taxpayer must recognize the
gain in the taxable year of the sale. The
taxpayer’s amount realized generally
includes cash actually or constructively
received, plus the fair market value of
any property received or, in the case of
a debt instrument issued in exchange
for property, the issue price of the debt
instrument. See §1.1001-1 of the Income
Tax Regulations.
Section 453 provides an exception to
the general rule that gain from the sale
of property must be recognized in the
year of sale. Section 453(a) provides, in
general, that income from an installment
sale is accounted for under the installment
method. Under section 453(b), an install-
ment sale is one in which a taxpayer dis-
poses of property and at least one payment
is to be received after the close of the tax-
able year of the disposition. The install-
ment method, as described in section
453(c), requires a taxpayer to recognize
income from a disposition as payments
are actually or constructively received,
in an amount equal to the proportion of
the payment received that the gross profit
(realized or to be realized when payment
is completed) bears to the total contract
price.
Under section 453(f)(3) and 26 CFR
§15a.453-1(b)(3) (Temporary Income
Tax Regulations Under the Installment
Sales Revision Act), a taxpayer gener-
ally does not receive a “payment,” as
such term is used in section 453(b), to
the extent the taxpayer receives evidence
of indebtedness “of the person acquiring
the property” (installment obligation). As
a result, notwithstanding that a taxpayer
has received an installment obligation
from the buyer evidencing the buyer’s
obligation to pay an amount equal to the
purchase price, the taxpayer is not treated
as having received full payment in the
year in which the taxpayer received the
installment obligation. Instead, the tax-
payer is treated as receiving payments
when the taxpayer receives (or con-
structively receives) payments under the
installment obligation.
However, to the extent that the tax-
payer receives a note or other evidence
of indebtedness in the year of sale from
a person other than “the person acquiring
the property,” section 453(f)(3) is inappli-
cable. A note or other evidence of indebt-
edness received in the year of sale issued
by a person other than the person acquir-
ing the property is, under §15a.453-1(b)
(3), the receipt of a payment for purposes
of section 453. Likewise, under §15a.453-
1(b)(3), the taxpayer’s receipt of a note
or other evidence of indebtedness that is
secured directly or indirectly by cash or a
cash equivalent is treated as the receipt of
payment for purposes of section 453.
Section 453A(d) provides rules relating
to certain installment obligations arising
from a disposition of property, the sales
price of which is more than $150,000.
Under section 453A(d), if any indebted-
ness is secured by an installment obliga-
tion to which section 453A applies, the
net proceeds of the secured indebtedness
are treated as a payment received on the
installment obligation as of the later of the
time the indebtedness becomes secured
by the installment obligation or the time
the taxpayer receives the proceeds of the
indebtedness (the pledging rule). To the
extent installment payments are received
after the date payment is treated as
received under section 453A(d), the tax on
such payments is treated as having already
been paid.
IV. Tax Avoidance Using Monetized
Installment Sales
The Treasury Department and the IRS
are aware that promoters are marketing
transactions that purport to convert a
cash sale of appreciated property by a
taxpayer (seller) to an identified buyer
(buyer) into an installment sale to an
intermediary (who may be the promoter)
followed by a sale from the intermedi-
ary to the buyer. In a typical transaction,
the intermediary issues a note or other
evidence of indebtedness to the seller
requiring annual interest payments and a
balloon payment of principal at the matu-
rity of the note, and then immediately or
shortly thereafter, the intermediary trans-
fers the seller’s property to the buyer in
a purported sale of the property for cash,
completing the prearranged sale of the
property by seller to buyer. In connection
with the transaction, the promoter refers
the seller to a third party that enters into a
purported loan agreement with the seller.
The intermediary generally transfers the
amount it has received from the buyer,
less certain fees, to an account held by
or for the benefit of this third party (the
account). The third party provides a pur-
ported non-recourse loan to the seller in
an amount equal to the amount the seller
would have received from the buyer for

Bulletin No. 2023–35 665 August 28, 2023
the sale of the property, less certain fees.
The “loan” is either funded or collater-
alized by the amount deposited into the
account. The seller’s obligation to make
payments on the purported loan is typi-
cally limited to the amount to be received
by the seller from the intermediary pur-
suant to the purported installment obli-
gation. Upon maturity of the purported
installment obligation, the purported
loan, and the funding note, the offsetting
instruments each terminate, giving rise
to a deemed payment on the purported
installment obligation and triggering
taxable gain to the seller purportedly
deferred until that time.
The promotional materials for these
transactions assert that engaging in the
transaction will allow the seller to defer
the gain on the sale of the property under
section 453 until the taxpayer receives
the balloon principal payment in the year
the note matures, even though the seller
receives cash from the purported lender in
an amount that approximates the amount
paid by the buyer to the intermediary. The
IRS intends to use multiple arguments to
challenge the reported treatment of these
transactions as installment sales to which
section 453 purportedly applies, including
the arguments described below.
First, the intermediary is not a bona
fide purchaser of the gain property that
is the subject of the purported installment
sale. In these transactions, the interme-
diary is interposed between the seller
and the buyer for no purpose other than
Federal income tax avoidance, and the
intermediary neither enjoys the benefits
nor bears the burdens of ownership of
the gain property. The interposition of
the intermediary typically takes place
after the seller has decided to sell the
gain property to a specific buyer at a spe-
cific negotiated purchase price, and the
purported resale by the intermediary to
such buyer generally takes place almost
simultaneously with the purported sale
to the intermediary for approximately
the same negotiated purchase price, less
certain fees. The seller’s only purpose for
entering into an agreement with the inter-
mediary is to defer recognition of the
gain on the sale of the gain property to
the buyer. Other than the Federal income
tax deferral benefits provided by the
installment method provisions of section
453, the sole economic effect of entering
the monetized installment sale transac-
tion from the perspective of the seller is
to pay direct and indirect fees to the inter-
mediary and the purported lender in an
amount that is substantially less than the
Federal tax savings purportedly achieved
from using section 453 to defer the real-
ized gain on the sale.
When an intermediate transaction
with a third party is interposed and lacks
independent substantive (non-tax) pur-
pose, such transaction is not respected
for Federal income tax purposes and
the transaction is appropriately treated
as a sale of the property by the seller
directly to the buyer in the taxable year
in which the gain property is trans-
ferred by the seller. See Commissioner
v. Court Holding Co., 324 U.S. 331, 334
(1945) (“A sale by one person cannot
be transformed for tax purposes into a
sale by another by using the latter as a
conduit through which to pass title. To
permit the true nature of a transaction
to be disguised by mere formalisms,
which exist solely to alter tax liabili-
ties, would seriously impair the effec-
tive administration of the tax policies of
Congress” (footnote omitted)); Wrenn
v. Commissioner, 67 T.C. 576 (1976),
(holding that a taxpayer did not engage
in a bona fide installment sale when the
taxpayer transferred stock to his spouse
under a purported installment sale con-
tract, followed by the spouse immedi-
ately selling the stock to a third party for
a negligible gain); Blueberry Land Co.
v. Commissioner, 361 F.2d 93, 100 (5th
Cir. 1966), (holding that a corporation’s
transaction with an unrelated intermedi-
ary entered into solely to avoid Federal
income taxes on the sale should be disre-
garded for Federal income tax purposes
and the corporation should be taxed as if
it sold the property directly to the ulti-
mate buyer); Enbridge Energy Co. Inc.
v. United States, 354 F. App’x 15 (5th
Cir. 2009) (holding that an intermedi-
ate sale was a sham, the intermediary
lacked a “bona fide role in the transac-
tion,” as its only purpose for being a
party in the transaction, and indeed for
existing, was to mitigate the Federal tax
bill arising from the transaction, and that
the transaction should be treated, for
Federal tax purposes, as a sale directly
from the seller to the taxpayer).
In addition, it is inappropriate to treat
the intermediary in the monetized install-
ment sale transaction described in this
NPRM as the acquirer of the gain property
that is the subject of the purported install-
ment sale because the intermediary neither
enjoys the benefits nor bears the burdens
of ownership of the gain property that a
person must possess to be considered the
owner of property for Federal income tax
purposes. See Grodt & McKay Realty Inc.
v. Commissioner, 77 T.C. 1221 (1981).
See also Derr v. Commissioner, 77 T.C.
708 (1981) and Baird v. Commissioner, 68
T.C. 115 (1977).
Second, in these transactions the
seller is appropriately treated as having
already received the full payment at the
time of the sale to the buyer because
(1) the purported installment obliga-
tion received by the seller is treated as
the receipt of a payment by the seller
under §15a.453-1(b)(3) since it is indi-
rectly secured by the sales proceeds, (2)
the proceeds of the purported loan are
appropriately treated as a payment to the
seller because the purported loan is not
a bona fide loan for Federal income tax
purposes, or (3) the pledging rule of sec-
tion 453A(d) deems the seller to receive
full payment on the purported install-
ment obligation in the year the seller
receives the loan proceeds.
Third, the transaction may be disre-
garded or recharacterized under the eco-
nomic substance rules codified under
section 7701(o) or the substance over
form doctrine. The step transaction doc-
trine and conduit theory may also apply to
recharacterize monetized installment sale
transactions described in this NPRM.
V. Purpose of Proposed Regulations
On March 3, 2022, the Sixth Circuit
issued an order in Mann Construction v.
United States, 27 F.4th 1138, 1147 (6th
Cir. 2022), holding that Notice 2007-83,
2007-2 C.B. 960, which identified certain
trust arrangements claiming to be welfare
benefit funds and involving cash value life
insurance policies as listed transactions,
violated the Administrative Procedure

August 28, 2023 666 Bulletin No. 2023–35
Act (APA), 5 U.S.C. 551-559, because
the notice was issued without follow-
ing the notice-and-comment procedures
required by section 553 of the APA. The
Sixth Circuit reversed the decision of the
district court, which held that Congress
had authorized the IRS to identify listed
transactions without notice and comment.
See Mann Construction, Inc. v. United
States, 539 F.Supp.3d 745, 763 (E.D.
Mich. 2021).
Relying on the Sixth Circuit’s analy-
sis in Mann Construction, three district
courts and the Tax Court have concluded
that IRS notices identifying listed trans-
actions were improperly issued because
they were issued without following the
APA’s notice and comment procedures.
See Green Rock, LLC v. IRS, 2023 WL
1478444 (N.D. AL., February 2, 2023)
(Notice 2017-10); GBX Associates, LLC,
v. United States, 1:22cv401 (N.D. Ohio,
Nov. 14, 2022) (same); Green Valley
Investors, LLC, et al. v. Commissioner,
159 T.C. No. 5 (Nov. 9, 2022) (same);
see also CIC Services, LLC v. IRS, 2022
WL 985619 (E.D. Tenn. March 21,
2022), as modified by 2022 WL 2078036
(E.D. Tenn. June 2, 2022) (Notice
2016-66, identifying a transaction of
interest).
The Treasury Department and the
IRS disagree with the Sixth Circuit’s
decision in Mann Construction and the
subsequent decisions that have applied
that reasoning to find other IRS notices
invalid and are continuing to defend the
validity of notices identifying transac-
tions as listed transactions in circuits
other than the Sixth Circuit. At the same
time, however, to avoid any confusion
and ensure consistent enforcement of
the tax laws throughout the nation, the
Treasury Department and the IRS are
issuing these proposed regulations to
identify monetized installment sale trans-
actions as listed transactions for purposes
of all relevant provisions of the Code and
Treasury Regulations.
Explanation of Provisions
These proposed regulations would
require taxpayers that participate in mon-
etized installment sale transactions and
substantially similar transactions, and
persons who act as material advisors with
respect to these transactions, to disclose
the transactions in accordance with the
regulations issued under sections 6011
and 6111. Material advisors would also be
required to maintain lists as required by
section 6112.
I. Definition of Monetized Installment
Sale Transaction
Proposed §1.6011-13(a) would pro-
vide that a transaction that is the same as,
or substantially similar to, a monetized
installment sale transaction described in
proposed §1.6011-13(b) is a listed trans-
action for purposes of §1.6011-4(b)(2) and
sections 6111 and 6112. “Substantially
similar” is defined in §1.6011-4(c)(4) to
include any transaction that is expected
to obtain the same or similar types of tax
consequences and that is either factually
similar or based on the same or a similar
tax strategy.
The transaction described in proposed
§1.6011-13(b) includes the following
elements:
(1) A taxpayer (seller), or a person
acting on the seller’s behalf, identifies a
potential buyer for appreciated property
(gain property), who is willing to purchase
the gain property for cash or other prop-
erty (buyer cash).
(2) The seller enters into an agreement
to sell the gain property to a person other
than the buyer (intermediary) in exchange
for an installment obligation.
(3) The seller purportedly transfers the
gain property to the intermediary, although
the intermediary either never takes title to
the gain property or takes title only briefly
before transferring it to the buyer.
(4) The intermediary purportedly trans-
fers the gain property to the buyer in a sale
of the gain property in exchange for the
buyer cash.
(5) The seller obtains a loan, the
terms of which are such that the amount
of the intermediary’s purported interest
payments on the installment obligation
correspond to the amount of the seller’s
purported interest payments on the loan
during the period. On each of the install-
ment obligation and loan, only interest is
due over identical periods, with balloon
payments of all or a substantial portion
of principal due at or near the end of the
instruments’ terms.
(6) The sales proceeds from the buyer
received by the intermediary, reduced
by certain fees (including an amount set
aside to fund purported interest payments
on the purported installment obligation),
are provided to the purported lender to
fund the purported loan to the seller or
transferred to an escrow or investment
account of which the purported lender is
a beneficiary. The lender agrees to repay
these amounts to the intermediary over
the course of the term of the installment
obligation.
(7) On the seller’s Federal income tax
return for the taxable year of the purported
installment sale, the seller treats the pur-
ported installment sale as an installment
sale under section 453.
A transaction may be “substantially
similar” to the transaction described above
even if such transaction does not include
all of the elements described above. For
example, a transaction would be substan-
tially similar to a monetized installment
sale if a seller transfers property to an
intermediary for an installment obliga-
tion, the intermediary simultaneously or
after a brief period transfers the property
to a previously identified buyer for cash or
other property, and in connection with the
transaction, the seller receives a loan for
which the cash or property from the buyer
serves indirectly as collateral.
II. Participation
Whether a taxpayer has participated
in the listed transaction described in pro-
posed §1.6011-13(b) would be determined
under §1.6011-4(c)(3)(i)(A). Participants
would include the seller, the intermedi-
ary, the purported lender, and any other
person whose Federal income tax return
reflects tax consequences or the tax strat-
egy described in proposed §1.6011-13(b),
or a substantially similar transaction.
Under the proposed regulations, the
buyer of the gain property that provides
the buyer cash or other consideration
would not be treated as a participant in
the listed transaction described in pro-
posed §1.6011-13(b) under §1.6011-4(c)
(3)(i)(A). The Treasury Department and
the IRS request comments on whether

Bulletin No. 2023–35 667 August 28, 2023
the buyer of the gain property should be
treated as a participant given the buyer’s
key role in the transaction. If the final reg-
ulations include the buyer as a participant,
that change would apply only with respect
to transactions entered into after the date
on which the final regulations are pub-
lished in the Federal Register.
III. Material Advisors
Material advisors who make a tax
statement with respect to monetized
installment sale transactions described
in proposed §1.6011-13(b) would have
disclosure and list maintenance obliga-
tions under sections 6111 and 6112. See
§§301.6111-3 and 301.6112-1.
IV. Effect of Transaction Becoming a
Listed Transaction
Participants required to disclose listed
transactions under §1.6011-4 who fail to
do so are subject to penalties under sec-
tion 6707A. Participants required to dis-
close listed transactions under §1.6011-4
who fail to do so are also subject to an
extended period of limitations under
section 6501(c)(10). Material advisors
required to disclose listed transactions
under section 6111 who fail to do so are
subject to penalties under section 6707.
Material advisors required to maintain
lists of investors under section 6112 who
fail to do so (or who fail to provide such
lists when requested by the IRS) are
subject to penalties under section 6708.
In addition, the IRS may impose other
penalties on persons involved in listed
transactions, including accuracy-related
penalties under section 6662 or section
6662A, the section 6694 penalty for
understatements of a taxpayer’s liabil-
ity by a tax return preparer, the section
6700 penalty for promoting abusive tax
shelters, and the section 6701 penalty for
aiding and abetting understatement of tax
liability.
The Treasury Department and IRS
recognize that some taxpayers may have
filed Federal income tax returns taking
the position that they were entitled to
the purported tax benefits of the type of
transactions described in these proposed
regulations. Because the IRS will take the
position in litigation that taxpayers are not
entitled to the purported tax benefits of
transactions described in these proposed
regulations, taxpayers who have partic-
ipated in those transactions should con-
sider the best way to make corrections,
whether by filing an amended return, an
administrative adjustment request under
section 6227, or a Form 3115, Application
for Change in Accounting Method (which-
ever is applicable), or if the taxpayer has
been contacted by the IRS for examina-
tion for a taxable year in which the tax-
payer participated in the transaction, by
working with an IRS employee to reverse
the purported tax benefits.
In addition, the proposed regulations
would subject material advisors to disclo-
sure requirements with regard to transac-
tions occurring in prior years. However,
notwithstanding §301.6111-3(b)(4)(i)
and (iii), material advisors would be
required to disclose only if they have
made a tax statement on or after [the date
that is 6 years before the date that Final
Regulations are published in the Federal
Register].
V. Applicability Date
Proposed §1.6011-13(a) would identify
monetized installment sale transactions,
and transactions that are the same as, or
substantially similar to, the monetized
installment sale transactions described in
proposed §1.6011-13(b) as listed transac-
tions effective as of the date of publication
in the Federal Register of a Treasury deci-
sion adopting these regulations as final
regulations.
Special Analyses
I. Paperwork Reduction Act
The collection of information con-
tained in these proposed regulations is
reflected in the collection of information
for Forms 8886 and 8918 that have been
reviewed and approved by the Office of
Management and Budget (OMB) in accor-
dance with the Paperwork Reduction Act
(44 U.S.C. 3507(c)) under control num-
bers 1545-1800 and 1545-0865.
To the extent there is a change in bur-
den as a result of these regulations, the
change in burden will be reflected in the
updated burden estimates for the Forms
8886 and 8918. The requirement to main-
tain records to substantiate information
on Forms 8886 and 8918 is already con-
tained in the burden associated with the
control number for the forms and remains
unchanged.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
OMB control number.
II. Regulatory Flexibility Act
The Secretary of the Treasury hereby
certifies that the proposed regulations will
not have a significant economic impact
on a substantial number of small entities
pursuant to the Regulatory Flexibility Act
(5 U.S.C. chapter 6). This certification is
based on the fact that these proposed regu-
lations implement sections 6111 and 6112
and §1.6011-4 by specifying the manner
in which and time at which an identified
Monetized Installment Sale Transaction
must be reported.
Further, the Treasury Department and
the IRS expect that the reporting burden
is low; the information sought is neces-
sary for regular annual return preparation
and ordinary recordkeeping. The esti-
mated burden for any taxpayer required
to file Form 8886 is approximately 10
hours, 16 minutes for recordkeeping,
4 hours, 50 minutes for learning about
the law or the form, and 6 hours, 25
minutes for preparing, copying, assem-
bling, and sending the form to the IRS.
According to the American Institute of
CPAs 2016 National MAP Survey, the
median billing cost for a CPA is approx-
imately $100 per hour. See 2016 AICPA
PCPS/CPA.com National MAP Survey
8-9 (2016), https://www.riscpa.org/
writable/news-items/documents/2016_
pcps_national_map_survey_commen-
tary.pdf (last accessed July 3, 2023). For
2018, the median billing cost for a CPA
is approximately $210.50 per hour. See
National MAP Survey 2018 Executive
Summary, 13 (2018), https://us.aicpa.
org/content/dam/aicpa/interestareas/pri-
vatecompaniespracticesection/financial-
adminoperations/nationalmapsurvey/

August 28, 2023 668 Bulletin No. 2023–35
downloadabledocuments/2018-nation-
al-map-survey-executive-summary.pdf
(last accessed July 3, 2023). Thus, for
the initial reporting period, it is estimated
that taxpayers may incur costs ranging
from $2,150 to $4,700 per respondent,
although this amount is anticipated to
be significantly less for all subsequent
reporting periods.
For the reasons stated, a regulatory
flexibility analysis under the Regulatory
Flexibility Act is not required. The
Treasury Department and the IRS invite
comments on the impact of the proposed
regulations on small entities. Pursuant to
section 7805(f) of the Code, this notice
of proposed rulemaking has been submit-
ted to the Chief Counsel for the Office
of Advocacy of the Small Business
Administration for comment on its impact
on small business.
III. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates
Reform Act of 1995 (UMRA) requires
that agencies assess anticipated costs and
benefits and take certain other actions
before issuing a final rule that includes
any Federal mandate that may result in
expenditures in any one year by a State,
local, or Tribal government, in the aggre-
gate, or by the private sector, of $100
million (updated annually for inflation).
This proposed rule does not include any
Federal mandate that may result in expen-
ditures by State, local, or Tribal govern-
ments, or by the private sector in excess of
that threshold.
IV. Executive Order 13132: Federalism
Executive Order 13132 (Federalism)
prohibits an agency from publishing
any rule that has federalism implica-
tions if the rule either imposes substan-
tial, direct compliance costs on State and
local governments, and is not required
by statute, or preempts State law, unless
the agency meets the consultation and
funding requirements of section 6 of the
Executive order. This proposed rule does
not have federalism implications and does
not impose substantial direct compliance
costs on State and local governments or
preempt State law within the meaning of
the Executive order.
V. Regulatory Planning and Review
Pursuant to the Memorandum of Ag-
reement, Review of Treasury Regulations
under Executive Order 12866 (June 9,
2023), tax regulatory actions issued by the
IRS are not subject to the requirements of
section 6(b) of Executive Order 12866, as
amended. Therefore, a regulatory impact
assessment is not required.
Comments and Public Hearing
Before these proposed amendments to
the regulations are adopted as final reg-
ulations, consideration will be given to
any comments that are submitted timely
to the IRS as prescribed in the preamble
under the ADDRESSES section. The
Treasury Department and the IRS request
comments on all aspects of the proposed
regulations. Any comments submitted
will be made available at https://www.
regulations.gov or upon request. Once
submitted to the Federal eRulemaking
Portal, comments cannot be edited or
withdrawn.
A public hearing is being held on
October 12, 2023, beginning at 10:00
a.m. ET, in the Auditorium at the Internal
Revenue Building, 1111 Constitution
Avenue, NW., Washington, DC. Due to
building security procedures, visitors must
enter at the Constitution Avenue entrance.
In addition, all visitors must present
photo identification to enter the building.
Because of access restrictions, visitors
will not be admitted beyond the imme-
diate entrance area more than 30 minutes
before the hearing starts. Participants may
alternatively attend the public hearing by
telephone.
The rules of 26 CFR 601.601(a)(3)
apply to the hearing. Persons who wish to
present oral comments at the hearing must
submit an outline of the topics to be dis-
cussed as well as the time to be devoted
to each topic by October 3, 2023. A period
of ten minutes will be allocated to each
person for making comments. After the
deadline for receiving outlines has passed,
the IRS will prepare an agenda contain-
ing the schedule of speakers. Copies of
the agenda will be made available free of
charge at the hearing. If no outlines of the
topics to be discussed at the hearing are
received by October 3, 2023, the public
hearing will be cancelled. If the public
hearing is cancelled, a notice of cancel-
lation of the public hearing will be pub-
lished in the Federal Register.
Individuals who want to testify in per-
son at the public hearing must send an
email to publichearings@irs.gov to have
your name added to the building access
list The subject line of the email must con-
tain the regulation number REG-109348-
22 and the language TESTIFY In Person..
For example, the subject line may say:
Request to TESTIFY In Person at Hearing
for REG-109348-22.
Individuals who want to testify by
telephone at the public hearing must send
an email to publichearings@irs.gov to
receive the telephone number and access
code for the hearing. The subject line
of the email must contain the regulation
number REG-109348-22 and the language
TESTIFY Telephonically. For exam-
ple, the subject line may say: Request to
TESTIFY Telephonically at Hearing for
REG-109348-22.
Individuals who want to attend the
public hearing in person without testify-
ing must also send an email to publichear-
ings@irs.gov to have your name added to
the building access list. The subject line
of the email must contain the regulation
number (REG-109348-22) and the lan-
guage ATTEND In Person. For exam-
ple, the subject line may say: Request to
ATTEND Hearing In Person for REG-
109348-22. Requests to attend the public
hearing must be received by 5:00 p.m. ET
on October 10, 2023.
Individuals who want to attend the
public hearing telephonically without
testifying must also send an email to pub-
lichearings@irs.gov to receive the tele-
phone number and access code for the
hearing. The subject line of the email must
contain the regulation number (REG-
109348-22) and the language ATTEND
Hearing Telephonically. For example, the

Bulletin No. 2023–35 669 August 28, 2023
subject line may say: Request to ATTEND
Hearing Telephonically for REG-109348-
22. Requests to attend the public hearing
must be received by 5:00 p.m. ET on
October 10, 2023.
Hearings will be made accessible to
people with disabilities. To request spe-
cial assistance during the hearing, contact
the Publications and Regulations Branch
of the Office of Associate Chief Counsel
(Procedure and Administration) by send-
ing an email to publichearings@irs.gov
(preferred) or by telephone at (202) 317-
6901 (not a toll-free number) by at least
October 6, 2023.
Statement of Availability of IRS
Documents
Guidance cited in this preamble is pub-
lished in the Internal Revenue Bulletin and
is available from the Superintendent of
Documents, U.S. Government Publishing
Office, Washington, DC 20402, or by vis-
iting the IRS website at https://www.irs.
gov.
Drafting Information
The principal author of these proposed
regulations is Jonathan A. Dunlap, Office
of Associate Chief Counsel (Income Tax
& Accounting). However, other person-
nel from the Treasury Department and the
IRS participated in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and record-
keeping requirements.
Proposed Amendments to the
Regulations
Accordingly, the Treasury Department
and the IRS propose to amend 26 CFR
part 1 as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 is amended by adding an entry
for §1.6011-13 in numerical order to read
in part as follows:
Authority: 26 U.S.C. 7805 * * *
* * * * *
Section 1.6011-13 also issued under 26
U.S.C. 6001 and 26 U.S.C. 6011.
* * * * *
Par. 2. Section 1.6011-13 is added to
read as follows:
§1.6011-13 Monetized installment sale
listed transaction.
(a) Identification as a listed transac-
tion. Transactions that are the same as,
or substantially similar to, a transaction
described in paragraph (b) of this section
are identified as listed transactions for
purposes of §1.6011-4(b)(2).
(b) Monetized installment sale transac-
tion. A transaction is a monetized install-
ment sale transaction if, in connection
with the transaction, and regardless of the
order of the steps, or the presence of addi-
tional steps or parties--
(1) A taxpayer (seller), or a person
acting on the seller’s behalf, identifies a
potential buyer for appreciated property
(gain property), who is willing to purchase
the gain property for cash or other prop-
erty (buyer cash);
(2) The seller enters into an agreement
to sell the gain property to a person other
than the buyer (intermediary), in exchange
for an installment obligation;
(3) The seller purportedly transfers the
gain property to the intermediary, although
the intermediary either never takes title to
the gain property or takes title only briefly
before transferring it to the buyer;
(4) The intermediary purportedly trans-
fers the gain property to the buyer in a sale
of the gain property in exchange for the
buyer cash;
(5) The seller obtains a loan, the
terms of which are such that the amount
of the intermediary’s purported interest
payments on the installment obligation
correspond to the amount of the seller’s
purported interest payments on the loan
during the period. On each of the install-
ment obligation and loan, only interest is
due over identical periods, with balloon
payments of all or a substantial portion
of principal due at or near the end of the
instruments’ terms;
(6) The sales proceeds from the buyer
received by the intermediary, reduced
by certain fees (including an amount set
aside to fund purported interest payments
on the purported installment obligation),
are provided to the purported lender to
fund the purported loan to the seller or
transferred to an escrow or investment
account of which the purported lender is
a beneficiary. The lender agrees to repay
these amounts to the intermediary over the
course of the term of the installment obli-
gation; and
(7) On the seller’s Federal income tax
return for the taxable year of the purported
installment sale, the seller treats the pur-
ported installment sale as an installment
sale under section 453.
(c) Substantially similar transac-
tions. A transaction may be substantial-
ly similar to a transaction described in
paragraph (b) of this section if the trans-
action does not include all of the ele-
ments described in that paragraph. For
example, a transaction would be sub-
stantially similar to a monetized install-
ment sale described in paragraph (b) of
this section if a seller transfers proper-
ty to an intermediary for an installment
obligation, the intermediary simultane-
ously or after a brief period transfers the
property to a previously identified buyer
for cash or other property, and in con-
nection with the transaction, the seller
receives a loan for which the cash or
property from the buyer serves indirect-
ly as collateral.
(d) Participation in a monetized
installment sale transaction. Participants
in a monetized installment sale transac-
tion described in paragraph (b) of this
section include sellers, intermediaries
and purported lenders described in para-
graph (b) of this section and any other
taxpayer whose Federal income tax return
reflects tax consequences or the tax strat-
egy described in paragraph (b) of this sec-
tion or a substantially similar transaction.
Buyers of gain property described in para-
graph (b) of this section are not treated as
participants.
(e) Applicability date. This section’s
identification of transactions that are
the same as, or substantially similar to,

August 28, 2023 670 Bulletin No. 2023–35
the transaction described in paragraph
(b) of this section as listed transactions
for purposes of §1.6011-4(b)(2) and
sections 6111 and 6112 of the Code is
effective on the date that these regula-
tions are published as final regulations in
the Federal Register. Notwithstanding
section 301.6111-3(b)(4)(i) and (iii) of
this chapter, material advisors are re-
quired to disclose only if they have made
a tax statement on or after the date that is
6 years before the date that these regula-
tions are published as final regulations in
the Federal Register.
Douglas W. O’Donnell,
Deputy Commissioner for Services and
Enforcement
(Filed by the Office of the Federal Register August
3, 2023, 8:45 a.m., and published in the issue of the
Federal Register for August 4, 2023, 88 FR 51756)

Bulletin No. 2023–35 i August 28, 2023
Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the
effect:
Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).
Clarified is used in those instances
where the language in a prior ruling is be-
ing made clear because the language has
caused, or may cause, some confusion. It
is not used where a position in a prior rul-
ing is being changed.
Distinguished describes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modified is used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
with amplified and clarified, above).
Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transactions.
This term is most commonly used in a ruling
that lists previously published rulings that
are obsoleted because of changes in laws or
regulations. A ruling may also be obsoleted
because the substance has been included in
regulations subsequently adopted.
Revoked describes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a
period of time in separate rulings. If the
new ruling does more than restate the sub-
stance of a prior ruling, a combination of
terms is used. For example, modified and
superseded describes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previous-
ly published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.
Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names
in subsequent rulings. After the original
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul-
ings in the series.
Suspended is used in rare situations
to show that the previous published rul-
ings will not be applied pending some
future action such as the issuance of new
or amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The following abbreviations in current
use and formerly used will appear in
material published in the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.

August 28, 2023 ii Bulletin No. 2023–35
Numerical Finding List
1
Bulletin 2023–35
Announcements:
2023-18, 2023-30 I.R.B. 366
2023-19, 2023-30 I.R.B. 367
2023-20, 2023-30 I.R.B. 368
2023-17, 2023-31 I.R.B. 412
2023-21, 2023-31 I.R.B. 413
2023-22, 2023-32 I.R.B. 429
2023-23, 2023-34 I.R.B. 569
2023-24, 2023-35 I.R.B. 661
Notices:
2023-29, 2023-29 I.R.B. 1
2023-45, 2023-29 I.R.B. 317
2023-47, 2023-29 I.R.B. 318
2023-37, 2023-30 I.R.B. 359
2023-50, 2023-30 I.R.B. 361
2023-51, 2023-30 I.R.B. 362
2023-54, 2023-31 I.R.B. 382
2023-53, 2023-32 I.R.B. 424
2023-55, 2023-32 I.R.B. 427
2023-57, 2023-34 I.R.B. 560
2023-58, 2023-34 I.R.B. 563
2023-59, 2023-34 I.R.B. 564
2023-52, 2023-35 I.R.B. 650
2023-61, 2023-35 I.R.B. 651
Proposed Regulations:
REG-124123-22, 2023-30 I.R.B. 369
REG-124930-21, 2023-31 I.R.B. 431
REG-120730-21, 2023-33 I.R.B. 491
REG-134420-10, 2023-34 I.R.B. 571
REG-109348-22, 2023-35 I.R.B. 662
Revenue Procedures:
2023-31, 2023-25 I.R.B. 386
2023-26, 2023-33 I.R.B. 486
2023-27, 2023-35 I.R.B. 655
Revenue Rulings:
2023-13, 2023-32 I.R.B. 413
2023-14, 2023-33 I.R.B. 484
2023-15, 2023-34 I.R.B. 559
Treasury Decisions:
9976, 2023-30 I.R.B. 354
9977, 2023-31 I.R.B. 375
9978, 2023-32 I.R.B. 415
9979, 2023-35 I.R.B. 602
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2023–27 through 2023–52 is in Internal Revenue Bulletin
2023–52, dated December 27, 2023.

Bulletin No. 2023–35 iii August 28, 2023
Finding List of Current Actions on
Previously Published Items
1
Bulletin 2023–35
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2023–27 through 2023–52 is in Internal Revenue Bulletin
2023–52, dated December 27, 2023.

Internal Revenue Service
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