SECTION 11. DRAFTING

INFORMATION

The principal author of this notice is Jennifer Bernardini of the Office of Associate Chief Counsel (Passthroughs & Special Industries). For further information regarding this notice, contact Douglas H. Kim at (202) 622–3110 (not a toll-free call).

Budget in accordance with the Paperwork Reduction Act (44 U.S.C. 3507) under control number 1545–2002.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number.

The collections of information in this notice are in sections 4, 5, 6, 7, and Appendix B of this notice. This information is required to obtain an allocation of qualifying gasification project credits. This information will be used by the Service to verify that the taxpayer is eligible for the qualifying gasification project credits. The

collection of information is required to obtain a benefit. The likely respondents are business or other for-profit institutions.

The estimated total annual reporting burden is 1,700 hours.

The estimated annual burden per respondent varies from 50 to 125 hours, depending on individual circumstances, with an estimated average of 85 hours. The estimated number of respondents is 20.

The estimated annual frequency of responses is on occasion.

Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue

March 13, 2006 613 2006–11 I.R.B.

APPENDIX A

CLOSING AGREEMENT

Under § 7121 of the Internal Revenue Code, [insert taxpayer’s name, address, and identifying number] (“Taxpayer”) and the Commissioner of Internal Revenue (“Commissioner”) make the following closing agreement:

WHEREAS:

1. On or before October [insert date and year], Taxpayer submitted to the Internal Revenue Service (“IRS”), an application for certification under the qualifying gasification project program described in Notice 2006–25 (“Application for § 48B Certification”);

2. Taxpayer’s Application for § 48B Certification is for the qualifying gasification project (the “Project”) described below—

(1) The Project will be located at [insert address or other identifying designation];

(2) The Project will supply [insert number] mcf of synthesis gas that is composed primarily of carbon monoxide and hydrogen for direct use or subsequent chemical or physical conversion;

(3) The fuels identified in § 48B(c)(2) will at all times cumulatively comprise at least 90 percent of the total fuels (fuels identified in § 48B(c)(2) and any other fuel input) required by the Project for the production of chemical feedstocks, liquid transportation fuels, or co-production of electricity;

[If the Project is a priority project, insert:

(4) The Project is entitled to priority under Notice 2006–25 [insert either: “for carbon capture capability (as defined in § 48B(c)(5)) or use of renewable fuels”; “because the project team has experience that demonstrates successful and reliable operations of the gasification technology on domestic fuels identified in § 48B(c)(2)”; or “both for carbon capture capability (as defined in § 48B(c)(5)) or use of renewable fuels and because the project team has experience that demonstrates successful and reliable operations of the gasification technology on domestic fuels identified in § 48B(c)(2)”]; ] and

3. On or before November 30, [insert year], the IRS accepted Taxpayer’s Application for § 48B Certification for the Project and allocated a qualifying gasification project credit under § 48B in the amount of $[insert number] to the Project.

NOW IT IS HEREBY DETERMINED AND AGREED FOR FEDERAL INCOME TAX PURPOSES THAT:

1. The total amount of the qualifying gasification project credit to be claimed for the Project under § 48B(a) must not exceed $[insert the number in WHEREAS clause #3].

2. If the Project is not placed in service by Taxpayer within 7 years of [insert date of acceptance letter issued under section 4.02(9) of Notice 2006–25], the qualifying gasification project credit in the amount of $[insert the number in WHEREAS clause

#3] allocated to the Project is fully forfeited.

3. If the Project does not supply synthesis gas in the amount of [insert the number in WHEREAS clause #2(2)] on the date the Project is placed in service, the qualifying gasification project credit in the amount of $[insert the number in WHEREAS clause #3] allocated to the Project is reduced proportionately.

[If the Project is not a priority project for carbon capture capability, for use of renewable fuels, or because the project team has experience that demonstrates successful and reliable operations of the gasification technology on domestic fuels identified in § 48B(c)(2), insert:

4. (1) If the Project fails to use gasification technology as defined in § 48B(c)(2) or is not carried out by an eligible entity as defined in § 48B(c)(7), the qualifying gasification project credit in the amount of $[insert the number in WHEREAS clause #3] allocated to the Project is fully forfeited.

(2) If, at any time, the fuels identified in § 48B(c)(2) with respect to the gasification technology for the Project do not cumulatively comprise at least 90 percent of the total fuels (fuels identified in § 48B(c)(2) and any other fuel input) required by the Project for the production of chemical feedstocks, liquid transportation fuels, or co-production of electricity, the Project ceases to be investment credit property and the recapture rules of § 50(a) apply. ]

2006–11 I.R.B. 614 March 13, 2006

[If the Project is a priority project for carbon capture capability, for use of renewable fuels, or because the project team has experience that demonstrates successful and reliable operations of the gasification technology on domestic fuels identified in § 48B(c)(2), insert:

4. (1) If the Project fails to use gasification technology as defined in § 48B(c)(2) or is not carried out by an eligible entity as defined in § 48B(c)(7), the qualifying gasification project credit in the amount of $[insert the number in WHEREAS clause #3] allocated to the Project is fully forfeited.

(2) If, at any time, the fuels identified in § 48B(c)(2) with respect to the gasification technology for the Project do not cumulatively comprise at least 90 percent of the total fuels (fuels identified in § 48B(c)(2) and any other fuel input) required by the Project for the production of chemical feedstocks, liquid transportation fuels, or co-production of electricity, the Project ceases to be investment credit property and the recapture rules of § 50(a) apply.

(3) If the Project fails to provide [insert priority benefits in WHEREAS clause #2(4)] on the date the Project is placed in service, the qualifying gasification project credit in the amount of $[insert the number in WHEREAS clause #3] allocated to the Project is fully forfeited. ]

5. Taxpayer will not claim the qualifying advanced coal project credit under § 48A for any qualified investment for which the qualifying gasification project credit is allowed under § 48B.

6. If Taxpayer elects to claim the qualifying gasification project credit on the qualified progress expenditures paid or incurred by Taxpayer during the taxable year for construction of a qualifying gasification project, rules similar to the recapture rules in § 50(a)(2)(A) through (D) apply.

7. This agreement applies only to Taxpayer. Any successor in interest must execute a new closing agreement with the IRS. If the interest is acquired at or before the time the Project is placed in service and the successor in interest fails to execute a new closing agreement, the qualifying gasification project credit in the amount of $[insert the number in WHEREAS clause #3] allocated to the Project is fully forfeited. If the interest is acquired after the time the Project is placed in service and the successor in interest fails to execute a new closing agreement, the Project ceases to be investment credit property and the recapture rules of § 50(a) apply.

THIS AGREEMENT IS FINAL AND CONCLUSIVE EXCEPT:

1. The matter it relates to may be reopened in the event of fraud, malfeasance, or misrepresentation of a material fact;

2. It is subject to the Internal Revenue Code sections that expressly provide that effect be given to their provisions (including any stated exception for § 7122) notwithstanding any law or rule of law; and

3. If it relates to a tax period ending after the date of this Closing Agreement, it is subject to any law enacted after such date, which applies to the tax period.

By signing, the parties certify that they have read and agreed to the terms of this Closing Agreement.

Taxpayer: [insert name and identifying number]

By: Date Signed:

[insert name]

Title: [insert title]

[insert taxpayer’s name]

Commissioner of Internal Revenue

By: Date Signed:

[insert name]

Title: Associate Chief Counsel, Passthroughs and Special Industries, CC:PSI

March 13, 2006 615 2006–11 I.R.B.

I have examined the specific matters involved and recommend the acceptance of the proposed agreement.

(Receiving Officer) (Title) Date Signed

I have reviewed the specific matters involved and recommend the acceptance of the proposed agreement.

(Reviewing Officer) (Title) Date Signed

2006–11 I.R.B. 616 March 13, 2006

APPENDIX B

APPLICATION FOR DOE CERTIFICATION

REQUEST FOR SUPPLEMENTAL APPLICATION INFORMATION FOR DOE

Pursuant to Notice 2006–25 establishing the Qualifying Gasification Project Program, the Internal Revenue Service (“IRS”) will certify that the investment in a project is eligible for a credit under § 48B of the Internal Revenue Code only if, among other things, the IRS receives from the Department of Energy (“DOE”) a certification of feasibility and consistency with energy policy goals (“DOE certification”) for the project. This DOE certification shall assure that the applications selected meet the requirements of § 48B and the intent of § 48B to provide credits to projects that are both technically and economically feasible.

The IRS and DOE seek to certify applications that demonstrate a high likelihood of being successfully implemented by the applicants. To qualify, projects must be economically feasible and use the appropriate gasification technology.

This request for submission of supplemental application information:

1. Describes the information to be provided by the applicant seeking a DOE certification, and

2. Lists the evaluation criteria, and Program Policy Factors to be used by DOE in the evaluation of applications.

In conducting this evaluation, the DOE may utilize assistance and advice from qualified personnel from other Federal agencies and/or non-conflicted contractors. DOE will obtain assurances in advance from all evaluators that application information shall be kept confidential and used only for evaluation purposes. DOE reserves the right to request clarifications and/or supplemental information from some or all applicants through written submissions and/or oral presentations.

Notice is given that DOE may determine whether or not to provide a DOE certification to the IRS at any time after the application has been received, without further exchanges or discussions. Therefore, all applicants are advised to submit their most complete and responsive application.

Applications will not be returned.

SUBMISSION INFORMATION FOR DOE CERTIFICATION APPLICATION

A. General

This request, together with the information in sections 5.02, 6.01, and 6.02 of Notice 2006–25 includes all the information needed to complete an application for DOE certification. All applications shall be prepared in accordance with this request in order to provide a standard basis for evaluation and to ensure that each application will be uniform as to format and sequence.

Each application should clearly demonstrate the applicant’s capability, knowledge, and experience in regard to the requirements described herein.

Applicants should fully address the requirements of Notice 2006–25 and this request and not rely on the presumed background knowledge of reviewers. DOE may reject an application that does not follow the instructions regarding the organization and content of the application when the nature of the deviation and/or omission precludes meaningful review of the application.

B. Unnecessarily Elaborate Applications

Unnecessarily elaborate brochures or other presentations beyond those sufficient to present a complete and effective application are not desired. Elaborate art work, graphics and pictures are neither required nor encouraged.

C. Application Submission for DOE Certification

The application submission to DOE must include the information and documentation required by sections 5.02, 6.01, and 6.02 of Notice 2006–25.

A project will not be considered in the allocation round conducted in a calendar year unless the application for DOE certification of the project is postmarked by June 30 of that calendar year. Two paper copies and one electronic version on a floppy disc or a CD of the Application must be submitted to:

Melissa Robe National Energy Technology Laboratory 3610 Collins Ferry Road Morgantown, WV 26507

March 13, 2006 617 2006–11 I.R.B.

Note that under section 5 of Notice 2006–25, one paper copy must be sent to the IRS as part of the application for IRS certification. The project will not be considered in the allocation round conducted in a calendar year unless the application is submitted to the IRS by the date specified for that calendar year in section 4.02(7) of Notice 2006–25.

THE INFORMATION REQUIRED BY THIS REQUEST MUST BE SUBMITTED USING THE FORMAT AND THE HEADINGS OF THE PROJECT INFORMATION MEMORANDUM AS DESCRIBED BELOW.

To aid in evaluation, applications shall be clearly and concisely written and logically assembled. All pages of each part shall be appropriately numbered and identified with the name of the applicant and the date.

The application, including the Project Information Memorandum, MUST be formatted in one of the following software applications:

Microsoft Word ^tm 2002 or later edition

Microsoft Excel ^tm 2002 or later edition

Adobe Acrobat ^tm PDF 6.0 or later edition

Financial models should be submitted using the Excel ^tm spreadsheet and must include calculation formulas and assumptions.

The applicant is responsible for the integrity and structure of the electronic files. The DOE will not be responsible for reformatting, restructuring or converting any files submitted under this announcement.

The Project Information Memorandum, excluding Appendices, shall not exceed seventy-five (75) pages. Pages in excess of the page limitation will not be considered for evaluation. All text shall be typed, single spaced, using 12 point font, 1 inch margins, and unreduced 8-1/2-inch by 11-inch pages. Illustrations and charts shall be legible with all text in legible font. Pages shall be sequentially numbered. Except as otherwise noted herein the page guidelines previously set forth constitute a limitation on the total amount of material that may be submitted for evaluation. No material may be incorporated in any application by reference as a means to circumvent the page limitation.

D. Form of Project Information Memorandum

PROJECT INFORMATION MEMORANDUM

I. SUMMARY AND INTRODUCTION

II. TECHNOLOGY AND TECHNICAL INFORMATION

Provide a description of the proposed technology, including sufficient supporting information (such as process flow diagrams, equipment descriptions, information on each major process unit and the total plant, compositions of major streams, and the technical plan for achieving the goals proposed for the project) as would be needed to allow DOE to confirm that the technical requirements of § 48B could, in principle, be met. Specifically, the applicant should:

input (fuels defined in § 48B(c)(2) and any other fuel input) for the project.

2006–11 I.R.B. 618 March 13, 2006

suppliers of major subsystems or equipment, which support the capabilities of the applicant to construct and operate the facility.

sonable consideration for, and is capable of, accommodating equipment necessary to capture carbon dioxide for later use or sequestration. Include the project status and relevant information from ongoing engineering activities. Also include in an appendix any engineering report or reports used by the applicant to develop the project and to estimate costs and operating performance.

III. SITE CONTROL AND OWNERSHIP

project to be constructed and operated on a long-term basis.

supply, water supply, transportation, and public policy requirements.

IV. UTILIZATION OF PROJECT OUTPUT

ments of intent from potential customers.

pendent market study has been completed, provide a copy of the applicant-prepared market study.

V. PROJECT ECONOMICS

Describe the project economics and provide satisfactory evidence of economic feasibility as demonstrated through the financial forecast and the underlying project assumptions.

Discuss the market potential for the proposed technology beyond the project proposed by the applicant.

Show calculation for the amount of tax credit applied for based on allowable cost.

VI. PROJECT DEVELOPMENT AND FINANCIAL PLAN

Provide the total project budget and major plant costs, e.g., development, operating, capital, construction, and financing costs. Describe the overall approach to project development and financing sufficient to demonstrate project viability. Provide a complete explanation of the source and amount of project equity. Provide a complete explanation of the source and amount of project debt. Provide the audited financial statements for the applicant for the most recently ended three fiscal years, and the unaudited quarterly interim financial statements for the current fiscal year. Applicant should demonstrate that the award recipient is financially viable without the receipt of additional federal funding associated with the proposed project.

For internally financed projects, provide evidence that the applicant has sufficient assets to fund the project with its own resources. Identify any internal approvals required to commit such assets. Include in an appendix copies of any board resolution or other approval authorizing the applicant to commit funds and proceed with the project.

For projects financed through debt instruments either unsecured or secured by assets other than the project, provide evidence that the applicant has sufficient creditworthiness to obtain such financing along with a discussion of the status of such instruments. Identify any internal approvals required to commit the applicant to pursue such financing. Include in an appendix, copies of any board resolution or other approval authorizing the applicant to commit to such financing.

For projects financed through investor equity contributions, discuss the source and status of each contribution. Discuss each investor’s financial capability to meet its commitments. Include in an appendix, copies of any executed investment agreements.

March 13, 2006 619 2006–11 I.R.B.

If financing through a public offering or private placement of either debt or equity is planned for the project, provide the expected debt rating for the issue and an explanation of applicant’s justification for the rating. Describe the status of any discussions with prospective investment bankers or other financial advisors.

For projects employing nonrecourse debt financing, provide a complete discussion of the approach to, and status of, such financing.

In an appendix, provide (1) an Excel based financial model of the project, with formulas, so that review of the model calculations and assumptions may be facilitated; provide pro-forma project financial, economic, capital cost, and operating assumptions, including details of all project capital costs, development costs, interest during construction, transmission interconnection costs, other operating expenses, and all other costs and expenses, and (2) a report of an independent financial analyst in accordance with the instructions in Section G of this Appendix B.

VII. PROJECT CONTRACT STRUCTURE

Describe the current status of each of the agreements set forth below. Include as an appendix copies of the contracts or summaries of the key provisions of each of the following agreements:

any studies of price and amount of raw materials that have been prepared. Include a summary of any supply contracts and a copy of the contracts.

arrangement, including firm price, liquidated damages, hold-backs, performance guarantees, etc.

VIII. PERMITS INCLUDING EVIRONMENTAL AUTHORIZATIONS

sary to commence construction of the project.

tions and reviews.

IX. PROJECT SCHEDULE

tiate that the project will meet the 7 year requirement for placing the plant in service.

2006–11 I.R.B. 620 March 13, 2006

APPENDICES

deed, or an executed contract to purchase or lease the site.

ment, raw material supply, water supply, and public policy reasons.

interim financial statements for the current fiscal year.

If an appendix listed above is not provided, include in its place a complete explanation of the reasons for the omission.

E. Evaluation Criteria:

Industrial Gasification Projects: will be evaluated on whether they meet all the requirements of § 48B.

Technical: will be evaluated on whether the applicant has demonstrated the capability to accomplish the technical objectives.

Site: will be evaluated on the basis that the site requirement for ownership or control has been met, and that the site is suitable for the proposed project.

Economic: will be evaluated on whether the project has demonstrated economic feasibility, taking into consideration the submitted financial and project development and structural information and financial plan.

Schedule: will be evaluated on the applicant’s ability to meet the 7 year placed-in-service requirement.

F. Program Policy Factors to be used by DOE in the evaluation of applications and a description of how they will be applied.

These factors, while not indicators of the applicant’s merit, e.g., technical excellence, cost, applicant’s ability, etc., may be essential to the process of selecting the application(s) that, individually or collectively, will best achieve the objectives of the authorizing legislation. Such factors are often beyond the control of the applicant. Applicants should recognize that some very good applications may not receive selection for certification because they do not fit within a mix of projects and technologies that maximize the probability of achieving the overall objective of deployment of industrial gasification technology. Therefore, the following Program Policy Factors may be used individually or collectively by DOE following application of evaluation criteria to determine which of the applications shall receive certification by DOE.

March 13, 2006 621 2006–11 I.R.B.

G. Instructions for independent financial reports

The applicant shall provide an independent report by a qualified Independent Financial Analyst (such as a bank, investment bank, or other independent financial advisory firm). In the report, the Independent Financial Analyst shall describe qualifications and experience that establish the Analyst’s competence to evaluate project financing for projects similar in scope and size to the Applicant’s project. The Independent Financial Analyst shall provide a thorough, independent review of the Applicant’s approach to project financing. The report shall include the opinion of the Independent Financial Analyst as to the Applicant’s likelihood to achieve financial closure in accordance with the Applicant’s financing plan.

Required Certification by Independent Financial Analyst:

The report shall be certified by the Independent Financial Analyst, who shall (a) acknowledge that the report has been prepared for submission to the Department of Energy as a part of an application by applicant for an investment credit, and (b) certify that the Independent Financial Analyst has no obligation to the applicant and has acted to the best of its ability as an independent expert.

At a minimum, the Independent Financial Analyst shall:

• Review the financial calculations, including rates of return and coverage ratios. • Confirm the calculation of the amount of the tax credit applied for. • Review the project development cost budget. • Review and comment on the source of funding and evidence of funding. • Review and comment on project debt and equity sources. • Confirm that the application includes the required financial reports and debt ratings. • Describe and comment on the capabilities of the applicant to provide the required financing for the project, and the

likelihood of obtaining financing from a source other than the applicant, if such financing is required by the project.

.02 Under § 25C(b), the maximum amount of the credit allowable to a taxpayer under § 25C(a) for all taxable years is $500 ($200 in the case of amounts paid or incurred for exterior windows (including storm windows and skylights)). In addition, the maximum amount of credit allowed is—

(1) $50 for any advanced main air circulating fan;

(2) $150 for any qualified natural gas, propane, or oil furnace or hot water boiler; and

(3) $300 for any item of energy-efficient building property (that is, property described in section 5.01(1)–(7) of this notice).

.03 Section 25C(g) and § 1333(c) of the Energy Policy Act provide that the credit applies to property placed in service after December 31, 2005, and before January 1, 2008.

Credit for Nonbusiness Energy Property

Notice 2006–26