ISRI warns proposed IRS tax policy disincentivizes recycling; exclusion of recycled aluminum, other recycled metals from section 45X credits is at odds with Biden administration's advanced manufacturing, critical minerals, supply chain initiatives

WASHINGTON , February 27, 2024 (press release) –

ISRI Chief Economist and Director of Commodities Joe Pickard testified Feb. 22 that a proposed tax guidance would result in unfair and inconsistent tax policy, which could result in less recycling. 

During the Internal Revenue Service (IRS) Hearing on Advanced Manufacturing Production Credit, Pickard stated the current guidance for section 45X Advanced Manufacturing Production Credit severely restricts the eligibility of recyclers and recycled metal manufacturers from claiming the credits, which creates a disincentive in the market. 

“ISRI strongly supports the legislative initiatives approved by Congress and the Biden-Harris Administration to incentivize the recycling of critical minerals,” said Pickard. “Unfortunately, the recently proposed rulemaking by the IRS and Treasury Department falls well short of those objectives.” 

Current guidance on section 45X disincentivizes recycling by providing a credit for the production (within the U.S.) and sale of certain eligible components including solar and wind energy components, inverters, qualifying battery components and applicable critical minerals. According to a notice of proposed rulemaking published in the Federal Register, the IRS proposed regulations to implement the advanced manufacturing production credit established by the Inflation Reduction Act of 2022 to incentivize the production of eligible components within the U.S. 

The exclusion of recycled aluminum and other recycled metals from the section 45X tax credits is at odds with the administration’s advanced manufacturing, critical minerals and supply chain initiatives. ISRI recommends the IRS/Treasury Department rule making should:

• Be finalized to clarify that “production” by the taxpayer includes secondary production. This is discussed in the preamble to the proposed rules but not the rules themselves; 
•  Reverse its decision on commodity grade aluminum;
• Clarify and expand the eligibility of metals and metal alloys (including alloys made from primary and secondary metal production) under the purity requirements; and 
• Include the cost of production as it relates to electrode active material and expand the list of critical minerals to include recycled raw materials since recycled materials do not pose significant substantiation and administrability issues and meet the conditions for inclusion of direct and indirect material costs under 45X, which themselves should be included.

“ISRI looks forward to working with IRS and Treasury Department officials to remove the unintended disincentives to recycling contained in the proposed rulemaking,” said Pickard. 

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For more information contact: Vicki Morgan, (202) 975-9042,  vmorgan@isri.org

ISRI is the "Voice of the Recycled Materials Industry™," representing more than 1,600 companies in the U.S. and 40 countries around the globe. Based in Washington, D.C., ISRI provides advocacy, education, safety and compliance training, and promotes public awareness of the vital role recycled materials play in the U.S. economy, global trade, the environment and sustainable development.

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