How Tax Advisors Can Harness Transferable Tax Credits To Save Money For Clients

Are you a tax advisor looking to optimize your clients' financial strategy? The Inflation Reduction Act (IRA) has opened up new ways for tax advisors to drive value for their clients through the purchase of clean energy tax credits. By capitalizing on these credits, tax advisors can effectively reduce their clients' tax liabilities and generate economic returns, all while supporting sustainability objectives. Now is the opportune time for tax advisors to explore incorporating tax credits in the financial strategy for their clients.

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Atheva provides tax advisors with a seamless platform to facilitate the buying and selling of tax credits for their clients. First, you will work with our team of experts to understand your financial goals, both long-term and short-term. From there, our teams put together a curated list of matches based on your specific client needs. Once matched, Atheva provides clear steps and outlines specific needs from the buyer to help fast track the transaction. From standardized contracts to a deal room, Atheva also provides the tools you need to seamlessly transact on behalf of your clients. 

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Tax credits are crucial for tax advisors for two key reasons. First, utilizing tax credits to reduce tax liabilities creates financial flexibility and more efficient resource allocation for their clients. With this flexibility, advisors can explore various credits applicable to their requirements and invest in initiatives aligned with their business objectives. Secondly, tax advisors can utilize credits to support their clients sustainability goals, contributing to mitigating climate change and promoting sustainable practices.

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4 Things Tax Advisors Should Know About Tax Credits 

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• Tax Reduction: Tax credits serve as valuable assets that enable holders to decrease their tax liabilities. A credit is purchased at a discount, but the buyer is able to reduce their taxes based on the full value. On average, tax credits are purchased at a 5%-16% discount, allowing your clients to potentially save millions while supporting clean energy initiatives. For instance, a $50M credit may be sold for $45M, but the buyer can reduce their tax liability by $50M

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• Transaction Process: From finding the right buyer/seller to due diligence to the legal contract components, the transaction process can be a lot to efficiently manage. Working with a partner like Atheva helps streamline the process, ensuring the best match and outcome.  

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• Regulation Compliance: The federal government regulations continue to evolve so it is important to work with a partner that can keep up to date on changes to remain compliant. A transferability partner, such as Atheva, can help tax advisors navigate the specific rules outlined in Section 6418 of the Internal Revenue Code.

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• Marketplace Pricing: A marketplace typically charges a 1-3% transaction fee that is paid by the seller. Although the fee structure may not be a top consideration, it can play a big part in the total net outcome for your clients. Atheva stands by having the lowest fee on the market — a flat 1% transaction fee. This allows Project Developers to maximize their net outcome and provides flexibility on credit pricing to attract the right buyers. 

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Conclusion 

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If it isn’t already, tax credit transferability should be part of your financial strategy for clients. With Atheva's expertise and streamlined process, tax advisors can confidently navigate the complexities of tax credit transactions, ensuring optimal pricing and minimal risk. 

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‍Contact us today to start reducing your clients’ tax liability and be part of accelerating access to clean energy financing.