SECTION 2. BACKGROUND

.01 Section 6417, which applies to taxable years beginning on or after January 1, 2023, allows applicable entities defined in section 6417(d)(1) to make an elective payment election under section 6417 with respect to any applicable credit

determined with respect to the applicable entity for the taxable year. If an applicable entity makes an elective payment election, the applicable entity is treated as making a payment against Federal income taxes imposed by subtitle A of the Code for the taxable year with respect to which such credit was determined that is equal to the amount of such credit (elective payment amount). An election under section 6417 must be made at such time and in such manner as provided by the Secretary of the Treasury or her delegate (Secretary).

.02 Section 1.6417-2(b)(1)(i) provides an elective payment election is made on the annual tax return, as defined in §1.6417-1(b), in the manner prescribed by the IRS in guidance, along with any required completed source credit form(s) with respect to the applicable credit property, a completed Form 3800 (or its successor), and any additional information, including supporting calculations, required in instructions. Section 1.64171(b)(1) defines annual tax return for any taxpayer normally required to file a tax return with the IRS on an annual basis as the required return (including the Form 990-T for organizations subject to tax imposed by section 511 of the Code or a proxy tax under section 6033(e) or that are required to file a Form 990 pursuant to section 6033(a)).

.03 Section 6417(d)(3)(A)(i) provides rules regarding the due date for making an elective payment election. Under §1.6417-2(b)(3)(i), in the case of any taxpayer for which no Federal income tax return is required under sections 6011 or no Federal return is required under 6033(a) of the Code (such as a State; the District of Columbia; an Indian Tribal government; any U.S. territory; a political subdivision of a State, the District of Columbia, or a U.S. territory, or a subdivision of an Indian Tribal government; certain agencies or instrumentalities of a State, the District of Columbia, an Indian Tribal government, or a U.S. territory; or a taxpayer excluded from filing pursuant to section 6033(a)(3)), an elective payment election is due by the 15th day of the fifth month after the end of such applicable entity’s taxable year. However, subject to

1 Unless otherwise specified, all “section” or “§” references are to sections of the Code or the Income Tax Regulations (26 CFR Part 1).

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the issuance of guidance that specifies the manner in which such entities can request an extension of time to file and make the elective payment election, an automatic six-month extension from the 15th day of the fifth month after the end of the taxable year is deemed to be allowed. In the case of an applicable entity for which a return is required under section 6011 or 6033(a), an elective payment election under section 6417(a) cannot be made later than the due date (including extensions of time) for the tax return for the taxable year for which the election is made, and there is no deemed automatic extension of time from the original due date.

.04 For example, a State government with a taxable year ending December 31, 2023, would have an original due date to file Form 990-T to make an elective payment election of May 15, 2024, with an automatic six-month extension of time to November 15, 2024. A tax-exempt entity with a taxable year ending December 31, 2023, would have an original due date to file Form 990-T to make an elective payment election of May 15, 2024, but, without the relief granted in section 3.02 of this revenue procedure, would receive a six-month extension of time to file only if the tax-exempt entity properly filed Form 8868 on or before May 15, 2024.

.05 Section 6417(h) authorizes the Secretary to issue such regulations or other guidance as may be necessary to carry out the purposes of section 6417, including guidance to ensure that the amount of the payment or deemed payment made under section 6417 is commensurate with the amount of the credit that would be otherwise allowable (determined without regard to section 38(c)).

.06 Section 6081(a) permits the Secretary to grant a reasonable extension of time, generally no more than six months, for filing any return, statement, or other required document.

.07 Section 7803(a)(2)(A) provides that the Commissioner of Internal Revenue “shall have such duties and powers as the Secretary may prescribe, including the power to administer, manage, con

duct, direct, and supervise the execution and application of the internal revenue laws or related statutes and tax conventions to which the United States is a party.”

.08 As previously described in section 1 of this revenue procedure, the Treasury Department and the IRS are aware that many applicable entities that had otherwise intended to timely and properly make an elective payment election on an electronically-filed Form 990-T were nevertheless unable to do so. For example, some applicable entities that did not previously have an obligation to file Form 990-T timely filed the required Form 990, Return of Organization Exempt from Income Tax, but failed to file a Form 990T, which is required to make an elective payment election. Other applicable entities have been unable to engage thirdparty return preparers to electronically file the Form 990-T with any other relevant schedules and forms due to service limitations.