On February 19, 2020, the Internal Revenue Service and the Department of Treasury released the first two pieces of guidance regarding the I.R.C. section 45Q carbon capture and sequestration credit in order to implement changes made to that tax credit by the Bipartisan Budget Act of 2018.

Notice 2020-12 provides beginning of construction guidance that is generally styled after the beginning of construction guidance provided for the wind, solar and other renewable energy industries in a series of notices: Notices 2018-59, Notice 2017-4, Notice 2016-31, Notice 2015-25, Notice 2014-46, Notice 2013-60, and Notice 2013-29. A link to Notice 2020-12 is provided here.

Revenue Procedure 2020-12 provides a safe harbor for partnership allocations that is generally styled after guidance provided for the wind industry (and often used for other renewable energy projects) in Revenue Procedure 2007-65. A link to Revenue Procedure 2020-12 is provided here.

A more complete analysis of this guidance will be forthcoming. For additional coverage of I.R.C. section 45Q, see Eversheds Sutherland Legal Alert: IRS requests comments on section 45Q carbon sequestration credit in Notice 2019-32 and Legal Alert: IRS releases 2019 inflation adjustment for section 45Q carbon oxide sequestration credit.

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