On January 19, 2024, the Department of Treasury and the IRS jointly issued Notice 2024-20. This notice contains guidance on determining whether qualified alternative fuel vehicle refueling property (charging station) is located within an eligible census tract. The guidance also indicates the intent to issue proposed regulations in connection with the credit, but until such time, taxpayers may rely on Sections 4 and 5 of the Notice including the definitions and census tract information contained within.
Section 30C allows for a credit on qualified charging station property. The Inflation Reduction Act (IRA) amended the credit for property placed in service after December 31, 2022 and before January 1, 2033. Beginning January 1, 2023, to be eligible for the credit, the charging station must be located within an eligible census tract. An eligible census tract is defined to be either a population census tract that is a low-income community or that is not in an urban area.
A low-income community will generally be defined as any population census tract with a poverty rate of at least 20% based upon the applicable American Community Survey (ACS) 5-year estimate. A tract that isn’t part of a metropolitan area will also be considered a low-income community if the median family income within the tract is not more than 80% of the statewide median family income. Further, if a tract is within a metropolitan area, it will qualify as a low-income community if the median family income within the tract is not more than 80% of the greater statewide family income or the median family income of the metropolitan area.
To determine whether an area is considered an urban or a non-urban area, the Census Bureau looks at the density and land use of an area. The Census Bureau’s determination is updated after each decennial census based on specific criteria and other data.
For purposes of determining whether the census tract the charging station is located within qualifies as either a low-income community or non-urban area, taxpayers will need to first determine the appropriate 11-digit census tract GEOID, which is based upon the charging station’s address or latitude and longitude. The GEOID comprises a 2-digit state GEOID, 3-digit county GEOID, and 6-digit census tract GEOID. The applicable boundaries of each census tract may vary depending on the placed-in-service date. Taxpayers will need to make sure to verify the correct GEOID based upon which list of census tracts or boundaries is applicable to their situation. The Notice includes guidance related to the following:
- Low-Income Community Census Tract
- Non-Urban Census Tract
- 2020 Non-Urban Census Tract
- 2011-2015 NMTC Tracts
- 2016-2020 NMTC Tracts
- 2015 Census Tract Boundaries
- 2020 Census Tract Boundaries
For purposes of making the determination for a non-urban area, which must be based upon the most recent decennial census as designated by the Secretary of Commerce, the Census Bureau determined urban areas based upon census blocks and not population census tracts for the 2020 Census. To account for this, the proposed regulations will define a non-urban area as any population census tract with at least 10% of its census blocks designated as not an urban area. To accomplish this, Treasury and the IRS will rely on the boundaries in the 2020 Census as well as the determinations of urban areas contained within.
The Notice contains two appendixes to help taxpayers determine whether a charging station is located within an eligible census tract. Appendix A contains a list of eligible low-income community census tracts using the 2011–2015 NMTC tracts based upon the 2015 census tract boundaries. Appendix B contains a list of eligible low-income community census tracts using the 2016–2020 NMTC tracts and a list of eligible non-urban census tracts, both using the 2020 census tract boundaries.
For charging stations placed in service after December 31, 2022 and before January 1, 2025, taxpayers can reference either Appendix A or Appendix B as the appropriate GEOID needs to only be listed in one to be eligible for the credit. For charging stations placed in service after December 31, 2024 and before January 1, 2030, taxpayers must reference Appendix B only to determine if the charging station is eligible for the credit. On or after January 1, 2030, taxpayers may need to reference guidance to be issued later.
Taxpayers can determine the 11-digit census tract GEOID for a location using the 2015 census tract boundaries CDFI Fund CIMS Mapping Tool using the following instructions:
“On that page, choose 'CDFI,' which should take the user to a page titled 'CDFI Public Viewer.' In the left-hand side column, choose 'Layers.' Under 'CIMS Layers,' put a checkmark in the box next to '2015 CDFI Tract' and remove all checkboxes from other CIMS Layers. Specifically, uncheck the '2020 CDFI Tract' box. Type in your address or latitude and longitude in the 'Search Addresses' bar at the top. This will take you to the tract of the location you entered. If you left click your mouse, the 11-digit population census tract identifier (that is, the GEOID) will appear.”1
To determine the 11-digit census tract GEOID using the 2020 census tract boundaries, taxpayers can use the property’s address with the Census Geocoder or by using a latitude and longitude point here. Taxpayers using the latitude and longitude option will need to use the following instructions:
“In the 'Benchmark' drop-down menu, choose 'Public_AR_Census2020.' In the 'Vintage' drop-down menu, choose 'Census2020_Current.' The 11-digit population census tract identifier is in the GEOID under 'Census Tracts.' Further instructions to use the Census Geocoder are available via”1 the Geocoder page.
To determine which guidance is applicable, taxpayers will first need to determine when a charging station is considered placed in service. The placed-in-service rules a taxpayer need to reference will be determined based upon whether the property is depreciable or not. For depreciable property, a charging station is considered placed in service in the earliest tax year that one of following occurs:
- Based upon the taxpayer’s depreciation practice, depreciation begins for the charging station, or
- The charging station is in a state of readiness and available to be used for its designated purpose.
For non-depreciable property, the charging station is considered placed in service once installed and operational at a principal residence.
The IRS released frequently asked questions (FAQs) along with the Notice that taxpayers may reference. Simultaneous to the release of the Notice and FAQs, the Department of Energy released a tool that taxpayers can use to see if a charging station is potentially located within an eligible census tract. However, taxpayers need to note the disclaimer included prior to using the tool:
“Disclaimer: This mapping tool is intended to reflect all eligible locations for the 30C credit but is not formal IRS guidance. Thus, this mapping tool may not be relied upon by taxpayers to substantiate a tax return position and will not be used by the IRS for examination purposes. The mapping tool does not reflect the application of the law to a specific taxpayer’s situation, and the applicable Internal Revenue Code provisions ultimately control.”2
While the tool may be helpful, taxpayers must rely on the official IRS guidance, including appendixes A and B, as applicable, to make the final determination.
For additional information on this credit, including the applicable credit percentage and whether or not the prevailing wage and apprenticeship requirements apply, reference our previous FORsights™.
How Forvis Mazars Can Help
Taxpayers who have placed in service or are considering placing in service a qualified charging station may have questions concerning determining whether it is located within an eligible census tract. If you have questions or need assistance, please reach out to a professional at Forvis Mazars.