The Internal Revenue Service (IRS) has issued a notice to provide initial guidance on the carbon oxide sequestration credit, which was significantly revised by the Inflation Reduction Act of 2022 (IRA).
The notice details the requirements for the lifecycle analysis (LCA) report, outlining the necessary information and procedures for taxpayers to submit their reports, along with supporting documentation, to the IRS and the Department of Energy for review.
Before any credit can be granted, the IRS must approve the LCA report’s assessment of greenhouse gas emissions related to carbon capture property installed on or after February 18, 2018. Consequently, taxpayers must secure IRS approval of their LCA before claiming the carbon oxide sequestration credit.