26 U.S.C. § 6417 — Elective payment of applicable credits

(a) In general. If an “applicable entity” elects, at the time and in the manner the Secretary^* provides, to use this section for an “applicable credit” determined for that entity, the entity is treated as paying an amount against its subtitle A tax for the relevant taxable year^* equal to the credit.

(b) Applicable credit. “Applicable credit” means:
(1) the part of the section 30C alternative-fuel-vehicle-refueling-property credit that section 30C(d)(1) treats as a section 38(b) credit;
(2) the part of the section 45(a) renewable-electricity-production credit attributable to qualified facilities first placed in service after December 31, 2022;
(3) the part of the section 45Q(a) carbon-oxide-sequestration credit attributable to carbon-capture equipment first placed in service after December 31, 2022;
(4) the section 45U(a) zero-emission nuclear-power-production credit;
(5) the part of the section 45V(a) clean-hydrogen-production credit attributable to qualified clean-hydrogen-production facilities first placed in service after December 31, 2012;
(6) for a tax-exempt entity described in section 168(h)(2)(A)(i), (ii), or (iv), the section 45W qualified-commercial-vehicle credit allowed because of section 45W(d)(3);
(7) the section 45X(a) advanced-manufacturing-production credit;
(8) the section 45Y(a) clean-electricity-production credit;
(9) the section 45Z(a) clean-fuel-production credit;
(10) the section 48 energy credit;
(11) the section 48C qualifying-advanced-energy-project credit; and
(12) the section 48E clean-electricity-investment credit.

(c) Application to partnerships and S corporations.
(1) General rule. If an applicable credit is determined for a facility or property held directly by a partnership^* or S corporation^*, that partnership or S corporation^* must make the subsection (a) election. If it does so, the Secretary pays it the credit amount; subsection (e) applies before partners’ or shareholders’ shares^* are determined; the elected amount is tax-exempt income for sections 705 and 1366; and each partner’s share of that income is based on the partner’s share of the credit that otherwise would apply for each taxable year.
(2) Partner^* or shareholder^* elections. A partner or shareholder may not make a subsection (a) election for a credit determined for a facility or property held directly by the partnership or S corporation.
(3) Treatment of payments. For 31 U.S.C. § 1324, a payment under paragraph (1)(A) is treated like a refund due under a credit provision listed in section 1324(b)(2).

(d) Special rules.
(1) Applicable entity.
(A) In general. “Applicable entity” means an organization exempt from subtitle A tax; a State or its political subdivision; the Tennessee Valley Authority; an Indian tribal government^* (as defined in section 30D(g)(9)); an Alaska Native Corporation (as defined in section 3 of the Alaska Native Claims Settlement Act, 43 U.S.C. § 1602(m)); or a cooperative corporation that furnishes electric energy to people in rural areas.
(B) Clean hydrogen. A taxpayer^* that is not one of those entities may elect under this subparagraph for a taxable year in which it placed a qualified clean-hydrogen-production facility in service. For that year, it is treated as an applicable entity only for the credit in subsection (b)(5). A “qualified clean hydrogen production facility” is defined in section 45V(c)(3); this section does not define it.
(C) Carbon sequestration. A taxpayer that is not one of those entities may elect under this subparagraph for a taxable year in which, after December 31, 2022, it placed carbon-capture equipment in service at a qualified facility. For that year, it is treated as an applicable entity only for the credit in subsection (b)(3). “Qualified facility” is defined in section 45Q(d); this section does not define it.
(D) Advanced manufacturing.
(i) A taxpayer that is not one of those entities may elect for a taxable year in which, after December 31, 2022, it produced eligible components. For that year, it is treated as an applicable entity only for the credit in subsection (b)(7). “Eligible components” is defined in section 45X(c)(1); this section does not define it.
(ii)(I) Except as provided next, such an election also applies to each of the four succeeding taxable years ending before January 1, 2033.
(ii)(II) The taxpayer may elect to revoke it for a specified year and every later year in that four-year period. That revocation cannot later be revoked.
(iii) For a year covered by clause (ii)(I), the taxpayer may not elect under section 6418(a) to transfer the credit for those eligible components.
(E) Other rules. The elections under subparagraphs (B), (C), and (D) must be made when and how the Secretary provides. None may be made for a taxable year beginning after December 31, 2032.
(2) Application. For an applicable entity making the subsection (a) election, the credit is determined without section 50(b)(3) and section 50(b)(4)(A)(i), and the property generating it is treated as used in the entity’s trade or business^*.
(3) Elections.
(A) General rules. (i) A government or political subdivision that need not file under section 6011 or 6033(a) must elect by the date the Secretary considers appropriate. Any other entity must elect by the due date, including extensions, for its tax return for the year, but not before 180 days after enactment of this section. (ii) Once made, the election is irrevocable and applies to the credit for that taxable year unless this paragraph provides otherwise.
(B) Renewable electricity. The election applies separately to each qualified facility, must be made for the year it is first placed in service, and applies for that year and later years within section 45(a)(2)(A)(ii)’s period for the facility.
(C) Carbon sequestration. (i) The election applies separately to carbon-capture equipment first placed in service by the entity in a taxable year. For a taxpayer electing under paragraph (1)(C), it applies in the service year and the next four years ending before January 1, 2033. Otherwise, it applies in that year and later years within section 45Q(a)(3)(A)’s period. (ii) During the first period, the taxpayer may not transfer that equipment’s credit under section 6418(a). (iii) A taxpayer electing under paragraph (1)(C) may revoke the election for later years in that period. The revocation applies from the specified year through the rest of the period and cannot later be revoked.
(D) Clean hydrogen. (i) The election applies separately to each qualified facility, is made for its service year (or within the one-year period after enactment for a facility placed in service before December 31, 2022), and, for a paragraph (1)(B) taxpayer, applies for that year and the next four years ending before January 1, 2033. Otherwise it applies for that year and every later year for the facility. “Qualified clean hydrogen production facility” is defined in section 45V(c)(3); this section does not define it. (ii) During the four-year period, the taxpayer may not transfer that facility’s credit under section 6418(a). (iii) A paragraph (1)(B) taxpayer may revoke the election for later years in that period; the revocation applies from the specified year through the rest of the period and cannot later be revoked.
(E) Clean electricity. The election applies separately to each qualified facility, is made for the facility’s service year, and applies for that year and later years within section 45Y(b)(1)(B)’s period.
(4) Timing. The payment is treated as made, for a government or political subdivision needing no return, on the later of the date its section 6033(a) return would be due or the date it submits a credit or refund claim in the Secretary’s required manner. In every other case, it is treated as made on the later of the return’s due date without extensions or the date the return is filed.
(5) Additional information. Before treating an amount as a payment, the Secretary may require information or registration needed to prevent duplication, fraud, improper payments, or excessive payments.
(6) Excessive payment. (A) If the Secretary decides that a deemed payment or a partnership/S-corporation payment is excessive, the entity’s chapter 1 tax for the year of the decision is increased by the excess plus 20 percent of the excess, even if it otherwise would not owe that tax. (B) The 20-percent addition does not apply if the entity satisfies the Secretary that reasonable cause caused the excess. (C) The excess is the payment for the facility or property minus the credit that would otherwise be allowed under this title, determined under paragraph (2) and without section 38(c). (D) The same increase applies to an excessive payment caused by a section 6662(m)(2) disallowance of an applicable energy credit.

(e) Denial of double benefit. For an applicable entity using this section, the credit is reduced to zero and is treated as allowed to the entity for that taxable year for all other purposes of this title.

(f) Mirror-code possessions. For a U.S. possession with a mirror-code tax system (defined in section 24(k)), this section is not part of U.S. income-tax law for deciding that possession’s law unless the possession elects to treat it as part of that law.

(g) Basis reduction and recapture. Except as subsection (c)(2)(A) provides otherwise, rules similar to section 50 apply.

(h) Regulations. The Secretary must issue regulations or other guidance needed to carry out this section, including guidance ensuring that a payment or deemed payment matches the credit otherwise allowable without section 38(c).