In 2022 and 2023, MNIPL was busy assisting congregations about understanding the Inflation Reduction Act DIrect Pay incentives they could now take advance to help reduce the cost of solar on their buildings.

Direct Pay allows nonprofits, like faith, spiritual, and religious communities, to file with the IRS for tax credits for the installation of a clean energy project, like a solar array. These credits, applied for after the project is completed and put into service, can amount to 30% – 60% of the installation costs to be recovered by the congregation.

And in 2024, some Minnesota congregations that installed solar projects the previous year tried to file with the IRS for these incentives. In attempting to assist these congregations in the filing process, MNIPL realized that there were serious administrative and financial barriers preventing the congregations from claiming these incentives.

What were these barriers?

For instance, nonprofits were supposed to file with the IRS electronically, but there was no way for them to do by the filing deadline of May15 – the software that enables e-filing was not updated to account for Direct Pay. Churches that filed by paper instead had their filings specifically rejected for filing in that medium, even when there was no other option. Even later, when some software was updated, that software was for tax preparers only – there was no pathway for a nonprofit to file electronically on their own. And while congregations reached out to tax preparers to pay for their e-filing services, they found it very difficult to find companies that could assist them. And if they did find a tax preparer with the time and ability to assist, the cost to receive service from them was often many thousands of dollars.

How MNIPL Helped

MNIPL reported these issues to their national organizational colleagues at Interfaith Power and Light, and together they linked to other national groups working on Direct Pay issues, including Congressional Progressive Caucus Center (CPCC) and Lawyers for Good Government (L4GG). The groups started to directly engage IRS staff on the issues they were finding. MNIPL also directly engaged with Senator Tina Smith’s office, connecting specific MN congregations having the issues with their staff and the national organizational partners working on the issue. 

That organizing worked! The IRS announced new guidelines that clears away almost all these administrative barriers in two ways: First, it grants an automatic filing extension to nonprofit entities who have been struggling to file for Direct Pay. Secondly, it allows these nonprofits entities to file by paper if they wish. These administrative shifts makes sure that those communities that have done the work and are waiting for their Direct Payments, and they’re going to make this process so much easier for other communities to take steps to decarbonize.

This was a group endeavour!

MNIPL so appreciates the Minnesota communities that went first, that did the hard work to make this pathway much smoother for those that come after. We also appreciate the many national partners we worked with, and without whose help we don’t believe the issue would be resolved – especially IPL, CPCC, and L4GG. Finally, we greatly appreciate the ears, assistance and advocacy of Senator Tina Smith’s office and staff, of MN Deputy Commissioner of Commerce Pete Wykoff, as well as that of the IRS itself. Ultimately, the IRS listened, recognized this as a widespread national issue and took the steps necessary to resolve the problems encountered. Getting the full benefits of clean energy out to communities that need them, as a result of organized advocacy to a responsive government, is a nice treat we all can enjoy the benefits of!