Article by Alex T. Hengel and Laura J. Kenney Churches, religious schools below the college level, and certain other religious organizations now have a great opportu...
Article by Alex T. Hengel and Laura J. Kenney
Churches, religious schools below the college level, and certain other religious organizations now have a great opportunity for cash tax refunds if they invest in green energy property – even if they normally do not pay any income tax!
Like many tax-exempt organizations, religious organizations are eager to claim refundable green energy tax credits from the Inflation Reduction Act (IRA). These credits can only be claimed on a timely filed original Form 990-T (including extensions). You cannot file an amended or late return to obtain the credits.
This is very important for religious organizations to take notice of, since most do not file Form 990 or Form 990-T, and are not aware of the tax filing forms and dates.
Exempt organizations – including churches and other religious organizations – need to either file timely a Form 990-T or timely file an extension using Form 8868 – Application for Automatic Extension of Time to File an Exempt Organization Return. The original filing due date is generally the 15th day of the 5th month after the tax year end:
| Year End Date | Initial Return Due Date | Extended Due Date (Corporations) |
| December 31 | May 15 | November 15 |
| November 30 | April 15 | October 15 |
| October 31 | March 15 | September 15 |
| September 30 | February 15 | August 15 |
| August 31 | January 15 | July 15 |
| July 31 | December 15 | June 15 |
| June 30 | November 15 | May 15 |
| May 31 | October 15 | April 15 |
| April 30 | September 15 | March 15 |
| March 31 | August 15 | February 15 |
| February 28/29 | July 15 | January 15 |
| January 31 | June 15 | December 15 |
According to the IRS’s Elective Pay Frequently Asked Questions (FAQs) 21:
No election is permitted to be made on an amended return or by filing an administrative adjustment request under section 6227 of the Code. There is no relief available under sections 301.9100-1 through 301.9100-3 of the Procedure and Administration Regulations (26 CFR part 301) for an elective payment election that is not timely filed.
Green energy tax credits are available now starting for tax year 2023. According to the IRS’s FAQ 27:
- Q27. Can I apply elective pay to taxable years beginning before December 31, 2022? (added June 14, 2023)
- A27. No. Elective pay is only effective for taxable years beginning after December 31, 2022. As a result, if your taxable year begins in the middle of the calendar year, even though one of your taxable years ends during 2023, section 6417 only applies to the taxable year that begins in 2023.
Although there is good news for government entities that do not have to file extensions on Form 8868 in this first year of implementation to request an extension of time to file for the green energy tax credit, there is no exception for religious organizations that do not have a Form 990 filing requirement.
Similar to other types of exempt organizations, be sure your church, religious school, or other religious organization files a timely Form 990-T or files a timely extension if there is any potential to qualify for green energy tax credits.
CLA’s Federal Tax Strategies and National Exempt Tax (NExT) teams can help your organization navigate the available credits and filing requirements. Watch for more insights from CLA’s nonprofit and federal tax strategies teams about this important development and how the IRA can benefit your organization. Unsure if your project might be eligible? Contact Us for an initial consultation.
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