Bloomberg Tax: IRS Carbon Capture Rules Likely to Include Definitions, Uses

Eversheds Sutherland Partner Amish Shah is quoted in this article by Bloomberg Tax highlighting the expected upcoming IRS guidance on the tax credits for carbon capture projects.

The proposed rules are expected to clarify the activities that qualify for the credit, as well as measurement and reporting requirements. The package was recently transferred to the White House’s regulatory review office, bringing the guidance one step closer to public release.

While the previous IRS guidance for the carbon capture credits generally mirrored existing guidance for other renewable tax credits for wind and solar energy, some issues specific to carbon capture still need some clarification, such as the definition of "secure geological storage," Amish said. 

He added that the transfer of the rule package to the White House is a sign that the IRS and Treasury Department are still working hard amid the coronavirus outbreak, but depending on how severe the outbreak’s damage is to the economy, the industry could see some relief from Congress or Treasury.

The 2009 green energy grant program allowed developers to recoup their costs right away, rather than getting funding from financial firms and transferring credits to those investors. Amish said, "Here we could end up in a similar situation where there’s not enough tax equity. Relief could also manifest itself in more business-friendly IRS rules."