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Sec. 45Q provides a credit for taxpayers sourcing requirements that make the gen- C-suite members, are revisiting their
that capture and permanently sequester eral electrical vehicle credits unusable. tax strategies and incorporating ESG
carbon oxide. The credit rate depends Sec. 179D allows commercial building principles into their tax planning. The
on how the captured carbon is used or owners who make their footprint more ESG-related tax opportunities available
stored. The credit provides a substantial energy efficient to deduct the costs relat- to taxpayers are numerous and complex.
economic incentive to install carbon- ing to the installation of energy-efficient As such, entities need to assess their
capture equipment in manufacturing commercial building property (EECBP), current ESG tax policy, their ability to
processes and industries that generate rather than capitalizing and depreciating effectively identify and implement the
substantial carbon emissions. There is such property. EECBP must generally available opportunities, and any required
also an increased rate for direct air cap- be part of (1) interior lighting systems; or optional disclosures.
ture, an emerging technology designed (2) heating, cooling, ventilation, and hot As ESG initiatives become more
to capture carbon dioxide currently in water systems; or (3) the building enve- widespread, it is crucial for companies
the atmosphere. lope. The maximum deduction amount is to involve tax professionals to help build
The previously expired Sec. 30C credit $5 per square foot. The Sec. 179D deduc- and implement an efficient, sustainable,
for alternative fuel vehicle refueling prop- tion has a rolling three-year cap. and responsible tax program that is
erty is reinstated by the Inflation Reduc- unique to the company. This can take
tion Act, with certain modifications. The Regulatory disclosures time and requires careful consideration
credit provides for a maximum benefit In addition to the recent legislation, the of the tax department’s integration,
of 30% of the cost of an item of property SEC proposed “Rules to Enhance and goals, and anticipated contribution to
deemed to be a qualified alternative Standardize Climate-Related Disclo- business initiatives. Developing a strat-
vehicle refueling station, with a limit of sures for Investors” in March 2022. The egy that incorporates tax in a company’s
$100,000 per item of property. Alterna- new rules, in whatever final form they overall ESG strategy begins with defin-
tive fuels generally include ethanol, take, will require disclosures of a pub- ing and articulating the entity’s social
natural gas, liquefied petroleum gas, and licly traded company’s climate change and environmental purpose and values.
hydrogen. Further, mixtures containing strategy, including risks and material Next, the company must ensure that the
biodiesel, diesel, and kerosene may also impact of its operations on the climate, tax strategy is aligned with the organiza-
qualify. Lastly, the alternative refueling greenhouse gas emissions, additional tion’s business strategy through a robust
property must be located in an eligible qualitative and quantitative climate risk governance, control, and risk manage-
census tract, which generally includes disclosures, and governance of climate- ment framework. Finally, the company
low-income communities and tracts that related risks and risk-management should address ESG reporting require-
are not located in urban areas. Thus, there processes. While the exact timing of the ments, which may include a description
is a higher cap in 2023, but its availability rules and their application remain un- of its tax policies and resulting contribu-
is much more limited geographically. certain at the time of drafting this item, tions to its sustainability efforts.
Newly created Sec. 45W provides a the SEC has proposed a phasing in of From Pinky Shodhan, CPA, J.D.,
credit for qualified commercial clean ve- requirements, starting with large, accel- LL.M., MBA, Washington, D.C., and
hicles. A qualified commercial clean vehi- erated filers and later adding in limited Don Reiris, CPA, J.D., LL.M.
cle is propelled to a significant extent by and reasonable assurance over some of
an electric motor or power derived from the information.
one or more cells. The credit is the lesser Employee Benefits
of (1) 30% of the basis of a vehicle not Now what? & Pensions
powered by a gasoline or diesel internal Considering the recently enacted tax
combustion engine, or (2) the incremen- legislation and the forthcoming SEC Early access to wages may
tal cost of such a vehicle (which is defined disclosure requirements, taxpayers need require new employment tax
as an amount equal to the excess of the additional implementation guidance. analyses
purchase price for such a vehicle over the The Inflation Reduction Act granted Employees desiring access to their wages
price of a comparable vehicle). The credit Treasury broad authority to prescribe before their payday via early payment
is capped at a maximum credit of $7,500 regulations or other guidance that may programs and arrangements have left
for vehicles with a gross vehicle weight significantly affect how the incen- employers wondering whether they need
rating of less than 14,000 pounds or tives are implemented. As companies to change their employment tax prac-
$40,000 for vehicles over 14,000 pounds. await this guidance, leaders of an tices. Employers may not be required to
Finally, there are no battery and mineral organization’s tax function, along with change anything today, but Treasury has

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