S. 3605: Disaster Zone Energy Affordability and Investment Act

This bill, known as the Disaster Zone Energy Affordability and Investment Act, aims to amend the Internal Revenue Code to allow certain taxpayers who have been affected by federally declared disasters to transfer a portion of their general business credit carryforwards. Here is a breakdown of the key provisions:

Impact on General Business Credit Carryforwards

The bill proposes that a segment of the general business credit carryforwards can be treated as transferrable credits. Specifically:

• Taxpayers who have experienced a federally declared disaster can transfer carryforward credits up to the amount of eligible expenditures made in the taxable year.

Definitions and Eligibility

The bill defines important terms to clarify who qualifies and what constitutes eligible expenditures:

• Applicable General Business Credit Carryforwards: This refers to credit amounts that can be carried forward to taxable years starting after December 31, 2023.
• Eligible Expenditures: These are costs incurred for conduct related to a business in a "qualified disaster area." The expenditures must occur on or before the last day of the second calendar year following the disaster declaration.
• Qualified Disaster Area: Defined as an area where a major disaster has been declared after December 31, 2023, or an area recognized by state governors as affected by a disaster occurring after that date.

Consolidated Groups

The bill stipulates that if a group of affiliated companies files a consolidated return, all members will be treated as a single taxpayer for the purpose of this legislation.

Effective Date

The provisions of this bill would take effect for taxable years that end after the bill is enacted.

Registration Requirements

Regarding the carryforwards, the bill allows flexibility by stating that the Secretary of the Treasury will not require registration for certain portions of carryforwards related to prior taxable years until the relevant registration tool is updated.

Relevant Companies

None found.