Residential Clean Energy Credit 2022 battery and solar

[taxmanhelp]

Hello,

In 2022 I installed solar panels and Tesla batteries on my primary home. I claimed the 

Residential Clean Energy Credit for this. Recently the IRS sent a letter that I did not provide enough documentation and needed to pay back the full credit + interest. I provided them additional documentation showing I did indeed install Solar and Batteries in 2022.

The IRS then came back and said batteries were not a qualified Residential Clean Energy Credit and I needed to pay the credit + interest back for the batteries but not the solar. I do see that in 2023 they specifically stated batteries were allowed as a tax credit whether you installed with solar or not. However from my understanding 2022 and prior so long as you installed the batteries with solar, you could claim the Residential Clean Energy Credit for batteries and solar.

Does anyone have guidance on this? 

Thank you

[Opus 17]

This is tricky because the legal sites I use have the updated version of the law, not the version in place in 2022.  Here is the instructions for form 5695 from 2022. 

https://www.irs.gov/pub/irs-prior/i5695--2022.pdf

In a private letter ruling in 2018, the IRS ruled that a battery system was an allowable cost if it was connected in such a way that it was only charged by the solar system, and could not be charged from the utility.  In other words, a battery used for "time-shifting" (when you have demand pricing) is not allowed prior to the Inflation Reduction Act in 2023, but a battery that is part of the solar system and can only be charged by the solar system, did qualify.

https://www.irs.gov/pub/irs-wd/201809003.pdf

Private letter rulings are not binding precedent on the IRS, but I would expect the IRS to follow the letter, since if you appealed to the Tax Court, the court is likely to use the same legal analysis.