Funding from the Inflation Reduction Act improves taxpayer service with modern online tools

IR-2024-230, Sept. 4, 2024

WASHINGTON - With the funding from the Inflation Reduction Act (IRA), the Internal Revenue Service continues to modernize online tools for taxpayers to take advantage of clean energy credits.

The IRA, with its associated funding, gave the IRS the opportunity to transform taxpayer services - creating new, fully electronic processes and systems, updating legacy systems, improving compliance and fraud mitigation.

Building and launching these online tools has been a major milestone for the IRA and is helping to save taxpayers time and money.

IRS Energy Credits Online

IRS Energy Credits Online or IRS ECO, is a free electronic service that is secure, accurate and requires no special software, making it accessible to large and small businesses alike.

Taxpayers can use the IRS ECO platform to register and provide information to the IRS for filing purposes. In addition, IRS ECO incorporates validation checks and other risk-mitigation measures and allows for monitoring in real time of key metrics to include identification of customer-service enhancements and fraudulent activity.

In November 2023, the IRS announced that qualified manufacturers can submit eligible clean vehicle VINs and sellers and dealers can register their business and complete time of sale reports completely online using IRS Energy Credits Online tool.

If a taxpayer transfers their clean vehicle credit, IRS Energy Credits Online allows dealers and sellers to receive advance payments within 72 hours of the expiration of a cancellation period. IRS ECO generates a time of sale report that the vehicle buyer will use when filing their federal tax return to claim or report the transfer of the credit.

In December 2023, the IRS announced that qualifying businesses, tax-exempt organizations or entities such as state, local and Indian tribal governments can register using the new IRS Energy Credits Online tool so they can take advantage of the elective payment or transfer of credits.

The Inflation Reduction Act and the Creating Helpful Incentives to Produce Semiconductors Act, known as CHIPS, allows taxpayers to take advantage of certain manufacturing investment, clean energy investment and production tax credits through elective pay or transfer.

Elective payment and the transfer election create alternative ways for applicable entities and eligible taxpayers who have earned one of the IRA clean energy or the CHIPS credits to get the benefit of the credit even if the taxpayer cannot use the credit to offset their tax liability.

IRS ECO was built with flexibility and as it evolves taxpayers will soon be able to leverage the technology for home energy credits. The IRS will continue to interact with taxpayers, qualified manufacturers, sellers and dealers to maximize the effectiveness of this tool and is committed to delivering a seamless experience that works for taxpayers.

Simplified processes

When introduced in 2009, applying for the Qualifying Advanced Energy Project Credit program could be a cumbersome and complex process. Taxpayers had to navigate intricate paper-based procedures to report necessary information to both the IRS and the DOE. However, expanded funding from the IRA enabled a transition towards a fully electronic process.

In a landmark milestone, the IRS, in partnership with the Department of the Treasury and the Department of Energy (DOE), created a streamlined digital application process for the Qualifying Advanced Energy Project Credit and the Wind and Solar Low-Income Communities Bonus Credit programs.

The pioneering collaboration led to the creation of an online application portal for the two programs and marked a significant step forward in the IRS's commitment to leveraging modern technology for improved taxpayer service and lowering barriers of entry for taxpayer to access clean energy tax incentives.

This partnership led to the creation of a DOE online application portal for the Wind and Solar Low-Income Communities Bonus Credit public release in June 2023.

The DOE portal is designed to streamline the digital implementation of the Qualifying Advanced Energy Project Credit and the Wind and Solar Low-Income Communities Bonus Credit.

This new portal provides a user-friendly interface for taxpayers and simplifies the submission and review processes, enabling easy communication between taxpayers, DOE and IRS.

By creating a user-friendly platform, the agencies lowered the barrier to entry, making it easier for taxpayers to participate in these clean energy tax incentives.

The portal was thoroughly tested before its public release in June 2023, ensuring a robust and efficient system.

To further simply the application process, a new Advanced Energy Project Credit DOE portal was launched because of extensive collaboration with the IRS Large Business and International Division.

Enhanced customer service and communication

These new online tools allowed this IRS to create new ways for the IRS to provide customer service directly to the taxpayer without long wait times on the phone. Recognizing the preference for email communication, the IRS established customer service email inboxes and help desk support structures, ensuring prompt and effective taxpayer assistance.

Since August of 2022 the IRS has published several program resources reflecting the ongoing commitment to taxpayer service, education and continuous improvement.

Looking ahead

The IRS remains dedicated to enhancing online tools and focusing on future updates to further streamline processes and improve user experiences. The landmark funding will continue the IRS's ability to integrate modern technology to deliver unprecedented service quality and efficiency to taxpayers, all while supporting the clean energy tax incentives.

Use IRS.gov to find helpful resources

The IRS reminds taxpayers of the several resources for the credits and deductions under the Inflation Reduction Act can be found on IRS.gov.

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