The Internal Revenue Service (IRS) will release Revenue Procedure 2024-31 on November 12, 2024, introducing significant changes to tax credits related to energy-efficient home improvements. These changes will impact both manufacturers and taxpayers (consumers). This guide provides essential information for each group to help you understand and prepare for the upcoming requirements.
For Manufacturers
New Requirements and Procedures
Effective January 1, 2025, manufacturers producing specified energy-efficient products must comply with the following to be considered a Qualified Manufacturer (QM):
Register as a Qualified Manufacturer:
Register with the IRS and enter into an agreement to become a QM.
Assign Product Identification Numbers (PINs):
Assign a unique PIN to each item of specified property.
Product Labeling:
Clearly label each product with its assigned PIN for consumer verification.
Regular Reporting to the IRS:
Submit periodic written reports to the IRS detailing the assigned PINs and related product information.
Why Becoming a QM Is Crucial
Market Competitiveness:
Products not produced by a QM will be ineligible for the tax credit, potentially reducing consumer demand.
Regulatory Compliance:
Failing to comply may result in penalties and loss of eligibility for your products.
Steps to Prepare
Begin Registration Early:
Start the QM registration process with the IRS as soon as possible.
Update Systems and Processes:
Implement systems to assign and manage PINs.
Update labeling processes to include PINs on all eligible products.
Employee Training:
Educate staff about new requirements to ensure compliance.
Communicate with Partners:
Inform distributors and retailers about your QM status and the importance of PINs for consumers.
Seek Professional Advice:
Consult legal and tax professionals to fully understand and meet all requirements.
The upcoming changes to tax credit regulations will significantly impact both taxpayers and manufacturers starting in 2025.
Taxpayers must ensure they purchase eligible products from QMs and include the product's PIN on their tax returns to claim the credit.
Manufacturers need to become QMs and comply with the new PIN requirements to keep their products competitive and eligible for consumer tax credits.
Our accounting firm is here to assist both taxpayers and manufacturers in navigating these changes. If you have questions or need guidance, please contact us for professional support.
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