SECTION 1. PURPOSE

This notice describes the information that must be included in a written report described in § 1.45Q-4(c)(2) of the Income Tax Regulations (LCA Report) and provides the procedures a taxpayer must follow to submit the LCA Report and required supporting information to the Internal Revenue Service (IRS) and the Department of Energy (DOE) for review under § 1.45Q-4(c)(5) before any credit for carbon oxide sequestration allowed under § 45Q(a)(2)(B)(ii) or (a)(4)(B)(ii) of the Internal Revenue Code (Code) is determined for qualified carbon oxide utilized by the taxpayer in the manner described in § 45Q(f)(5) (§ 45Q utilization credit). ¹ As required by § 1.45Q-4(c) (6), the IRS must approve the lifecycle analysis (LCA) of greenhouse gas emissions (as defined in § 1.45Q-4(c)(1)) documented in the LCA Report with respect to carbon capture equipment placed in service on or after February 9, 2018, before any § 45Q utilization credit otherwise satisfying the applicable requirements of § 45Q and §§ 1.45Q-1, 1.45Q-2, and 1.45Q-4 is determined. Accordingly, the IRS must approve the taxpayer’s LCA before the taxpayer may claim any § 45Q utilization credit determined with respect to a taxpayer on any federal income tax return for a taxable year beginning on or after January 13, 2021 (that is, the taxable years to which § 1.45Q-4 applies). ²

The Department of the Treasury (Treasury Department) and the IRS anticipate

issuing proposed regulations to update §§ 1.45Q-1 through 1.45Q-4 for amendments made by § 13104 of Public Law 117–169, 136 Stat. 1818 (August 16, 2022), commonly known as the Inflation Reduction Act of 2022 (IRA), as well as to adopt certain aspects of the guidance provided by this notice. The Treasury Department and the IRS published final regulations (REG-101607-23) in the Federal Register (89 FR 17546) under §§ 1.6417-1 through 1.6417-6 with respect to any § 45Q utilization credit determined with respect to a taxable year beginning after December 31, 2022, as an applicable credit for purposes of making an elective payment election under § 6417. Additionally, on June 21, 2023, the Treasury Department and the IRS published a notice of proposed rulemaking (REG-101610-23) in the Federal Register (88 FR 40496), with respect to any § 45Q utilization credit determined with respect to a taxable year beginning after December 31, 2022, as an eligible credit for purposes of making an election under § 6418. ³