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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
Heatmap Illustration

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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Spotlight

A Giant Data Center Offers a Permitting Reform Test Case

What would happen to Project Jupiter if the Bipartisan American Affordability and Jobs Act is passed?

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Project Jupiter.
Heatmap Illustration/Project Jupiter, Library of Congress

One of the nation’s largest data centers is struggling under permitting woes. So let’s play a game: would the bipartisan permitting bill in Congress make the path easier, or might the federal legislation be irrelevant to large hyperscalers under development today?

Meet Project Jupiter, a mega project in southern New Mexico in Dona Ana County under development by Oracle and OpenAI, with financial backing from SoftBank and political support from the Trump administration for being a part of Stargate, a major Trump administration public-private initiative boosting AI development. Project Jupiter would be one of the largest data centers in the country if completed and currently is expected to run on a microgrid powered by fuel cells converting gas to electricity, which the developers claim will burn much cleaner than a typical off-grid gas turbine power plant.

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Hotspots

The Trump Administration Is Still Messing with Offshore Wind Farms

And more of the week’s top news around project fights.

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The United States.
Heatmap Illustration/Getty Images

1. New England (and Maryland) – The Trump administration is still messing with offshore wind farms, even while trying to pass a permitting reform deal. Examining the court filings reveals why they may feel empowered to do it — and I’m not sure how this ends.

  • Last Friday, in a legal case brought by anti-wind activists, the Justice Department submitted a motion in federal court to send the construction and operations plan for Orsted’s Revolution Wind project in New England back to the Interior Department for more analysis. On Wednesday, the DOJ entered a similar motion in another case challenging the construction and operations plan for U.S. Wind’s MarWin project off the coast of Maryland in a lawsuit brought by the state’s coastal community of Ocean City.
  • Trump’s actions led some to question whether the president was sabotaging the deal, and others to claim the media coverage itself was an attempt to kill it. Going further, supporters of the bipartisan bill claimed the DOJ's motions were precisely why the bill should become law, implying it would guard offshore wind farms against this sort of maneuver.
  • However, for the bill’s backers, it’s worth considering why the Trump administration believes it has the legal authority to do this. It’s also time to ask whether the bill would actually protect these wind farms against this tactic.
  • To answer those questions, you have to rewind. On May 1, 2025, the Interior Department withdrew a Biden solicitor’s opinion instructing the agency to “strike a rational balance” between wind power and fishing interests. This revocation document is technically not in effect at the moment; one year later, a federal court ruled the opinion was potentially illegal as a part of a preliminary injunction on five anti-renewables actions requested by solar and wind trade groups. The Trump administration is contesting that ruling, and the administration has filed a notice of appeal.
  • In August, despite that opinion being in doubt, a federal judge granted Trump permission under the Outer Continental Shelf Lands Act to remand the construction and operations plan for the now-defunct Atlantic Shores offshore wind farm in the waters of New Jersey. U.S. District Judge Jia Cobb specifically wrote that Atlantic Shores failed to demonstrate the federal government had limitations under OSCLA on revisiting these plans and that the injunction from the litigation on appeal “did not prohibit all reevaluation of agency action.”
  • In the recent Revolution and MarWin filings, Trump’s Justice Department argues the construction and operations plans should be remanded under OSCLA without being vacated. The DOJ motions include claims that previous decision documents did not adequately explain impacts to commercial fishing and other industries that use OSCLA waters. It’s not clear if the administration will win these motions.
  • The bipartisan permitting bill would bar the Interior Department and other federal agencies from taking “any new action that would revoke, rescind, withdraw, terminate, suspend, amend, or alter a federal authorization or permit in effect on or after September 16, 2026,” or “any other action to interfere with or prevent the construction or operation at full capacity of a project that has secured all necessary federal authorizations and permits.” The restriction exempts cases where “the agency is required to take such action by order of a court.” As I wrote in our lengthy piece explaining the bill, this provision has a damages component that allows companies impacted by violations to pursue financial compensation.
  • Here’s the billion-dollar question I expect we won’t have answered unless the bill language is enacted and then litigated: Would the court order exception apply to rulings that grant these motions? Or would the developers be able to sue for damages?

2. Columbia County, N.Y. – New York’s renewable energy permitting office has rejected an upstate solar farm on farmland as a House Democrat representing the area joined hands with the Trump administration in publicly railing against the project.

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Q&A

The Developer that Builds Local Support with ‘Right-sized’ Data Centers

A conversation with Harmol Samra of Host Digital

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The Q&A subject.
Heatmap Illustration

This week’s conversation is with Harmol Samra, CEO of data center developer Host Digital. I asked Samra for a conversation because his team expressed a willingness to offer candid views on the industry’s problems with social license to operate — namely, why is the industry botching this so badly? From his point of view, many could learn a lot from industrial revolutions of the past, and they should be careful not to let mega-project expansions get in the way of broader acceptance of the data center sector.

The following conversation was lightly edited for clarity.

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