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Q&A

What a Tax Expert Thinks of Trump’s IRA Order

A conversation with Bob Moczulewski, tax director for Baker Tilly’s federal credits and incentives practice

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What a Tax Expert Thinks of Trump’s IRA Order
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Given the Trump administration’s new pause on grants under the Inflation Reduction Act, this week’s conversation is with Bob Moczulewski, tax director for Baker Tilly’s federal credits and incentives practice. We asked him to explain this 90-day pause via executive order, because if anyone’s going to cut the nonsense and tell you what actually matters here, it’ll be a tax expert.

The following chat was lightly edited for clarity.

Does Trump’s executive order actually impact the IRA’s tax credits?

The IRA had several components to it, most of which – the biggest things – are tax credits. Those are written into tax law. They are a legally binding ability for developers and users, creators of renewable energy that are allowed within the law – wind, solar, geothermal, battery storage, biogas – those are laws.

[The order] has a stop on those items that were more discretionary that had the control of the administration to delegate out: its grants, loans, and contracts. That has no impact on the tax credits, where the bulk of the IRA sits right now. A lot of that stuff was in anticipation of being heavily pushed through and sent out before January 20. There’s actual impact there. But tax credits are not appropriated funds.

This is not holding back the tax credits that are there.

You’ve said it is unclear if this covers all prospective funding, like direct pay?

If you’re a municipality and you put up a solar project that is eligible for tax credits and direct pay, that is the part with this potential slow play that could be done here. We really don’t know what the executive branch can do to hold back the payment of those direct payments. If you’re a business, you put up a solar, it’s a $10,000 tax credit, you can use it to reduce your taxable income. None of these orders impact that.

Now if you’re a municipality and you’re requesting a direct payment for those tax credits that are legally binding in tax law, I could see the possibility that an executive branch could have pressure on the Treasury Department, which has pressure on the IRS, to slow play those payments. But that’s only speculation. The law is stated, this is supposed to be paid out. This is in a realm of, y’know, almost a conspiracy theory-type of thing that could be done.

With respect to how a pause like this can impact the bankability of IRA, are you seeing it affect executives’ views on the durability of the law?

I would say there’s just a lot of caution as to [the] next steps around it. These are laws. Until the laws are repealed, if they are repealed, that would be the only way you’d know for certain.

As I’ve explained many times over, the history of tax credit laws is once they’re repealed or altered, those changes are prospective as to the time the law is changed. If I have a half a billion dollar solar project underway, I’ve met or begun a construction criteria. There has been no prior passing of tax laws that would revoke the ability to claim credits on that.

What are you watching for next for clarity?

There’s two things I’m looking for in the future. Where pundits around this really feel this is truly going. And the other part is to see if there’s any actual traction to repeal the tax credits that exist right now.

There’s a whole new realm of credits that begin in 2025 and continue through 2032. Will there be incentive to repeal those credits?

I have clients that are engaging in multi billions of dollars of projects that are in the heart of the southern tier of the United States of America, that would impact thousands of jobs. Those groups have strong ties to a lot of senators and congresspeople along the way. Just enough of a push and turn on this and all it takes is a few senators to not go along with it.

Editor’s note: A previous version of this article misidentified Moczulewski’s profession. He is a CPA, not an attorney. The article has been corrected. We regret the error.

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Q&A

GoodPower Is Sussing Out What People Actually Want from Data Centers

Talking with Leah Qusba, the CEO of GoodPower.

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Leah Qusba.
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This week’s conversation is with Leah Qusba, CEO of GoodPower, which recently released a survey experiment you need to read. Conducted with Data for Progress, the project, published Monday, takes a unique approach to asking people why they opposed data centers for artificial intelligence and whether constructing renewable energy instead of gas power moves the needle at all in their support for AI infrastructure near them. Instead of just asking polling questions, they posed various hypothetical project designs to people — and the results were eye-popping. Turning to solar instead of gas? Might not be a panacea for gaining approval at the local level. Protecting electricity rates from going sky-high? Now that’s a way to get buy-in.

The following conversation was lightly edited for clarity.

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A First-Of-Its-Kind State of Emergency — Over a Permitting Pause

And more of the week’s top fights around development.

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The United States.
Heatmap Illustration/Getty Images

1. Umatilla County, Oregon – A small town in Oregon this week declared a state of emergency over fears that a statewide pause on data center permits will harm its economy.

  • Five of the six people on the Umatilla city council voted to adopt a resolution formally calling for a state of emergency “due to the threat of widespread financial loss.” Umatilla City Manager Dave Stockdale told the council before the vote that the data center pause enacted by Governor Tina Kotek puts millions in tax revenue at risk. Other city staffers told the council that current budget reserves are healthy, but this could complicate a bond for a new police station and delay executing their city’s master plan.
  • Umatilla is home to more than 20 data center projects currently operating or under development, equal to roughly one-fifth of the state’s data center sector. Oregon law expressly grants cities and towns permission to declare a state of emergency over “financial loss.” And the Umatilla resolution is a clear legal threat; its text calls for “immediate reconsideration” of Governor Kotek’s directive pausing data center permits and “authorizes the city manager to coordinate with affected governments and legal counsel to pursue appropriate administrative and judicial remedies.”
  • To the best of our knowledge, this is the first time a municipal government has threatened legal action or declared a state of emergency over a state-wide permitting pause against data center development. It goes to show that what comes around goes around.

2. Saratoga County, New York – Is Trump’s country music superstar-turned-power-project combatant John Rich preparing to debut a new song about solar farms, or something more?

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The Most Important Data Center Election You’ve Never Heard Of

The race for the top job in McCracken County, Kentucky, might hinge on the importance of a community benefit agreement.

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Paducah, Kentucky figures.
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An election-season battle is brewing over what could be the nation’s first massive data center operating on federal land. And you almost certainly have never heard of it.

Come with me to McCracken County, Kentucky, just outside its largest city, Paducah, where the Energy Department is allowing new development at a large brownfield property. First constructed in the 1950s, the Paducah Gaseous Diffusion Plant was once the country’s only uranium enrichment facility, but it closed in 2010. Since then, and after years of cleanup, Paducah city officials and the McCracken County government have sought to revitalize and reindustrialize the site.

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