IRS issues guidance on requirements for home energy audits

The IRS said Friday it intends to propose regulations on the requirements for home energy audits for purposes of the Sec. 25C energy efficient home improvement credit and provided the requirements that will be included in the forthcoming regulations, which taxpayers may rely on until the proposed regulations are issued (Notice 2023-59).

Sec. 25C(a), as amended by the Inflation Reduction Act, P.L. 117-169, allows a credit equal to 30% of the sum of amounts that taxpayers pay or incur during a tax year for qualified energy efficiency improvements, residential energy property expenditures, and home energy audits. The amount of the credit for a home energy audit is capped at $150 per year, and a taxpayer must substantiate the home energy audit.

The notice specifies the requirements that the forthcoming proposed regulations would set forth for qualifying as a home energy auditor for purposes of the Sec. 25C credit. The notice also has the requirements for what information must be included in the written report for a home energy audit required to be furnished by a qualified home energy auditor.

The notice also specifies how a taxpayer complies with the substantiation requirement and provides a transition rule, under which a home energy auditor is not required to be a qualified home energy auditor for audits conducted during tax years ending after Dec. 31, 2022, and conducted on or before Dec. 31, 2023.

The IRS intends that the forthcoming proposed regulations would apply to tax years ending after Dec. 31, 2022.

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.