SECTION 6. REQUIREMENTS — Internal Revenue Bulletin 2024-34

REAPPROVAL OF AN APPROVED LCA

.01 Overview . Except as provided in sections 6.03 and 6.04 of this notice, a taxpayer may treat an approved LCA as approved for the taxable year for which the LCA Report was submitted and the following two taxable years (three-year approval period). Alternatively, a taxpayer may choose to submit a new LCA Approval Request to the IRS and the DOE (in the manner described in section 4 of this notice) for any taxable year.

.02 Periodic Resubmissions . A taxpayer wishing to claim the § 45Q utilization credit after the three-year approval period must submit a new LCA Approval Request to the IRS and the DOE (in the manner described in section 4 of this notice). If the IRS approves this LCA, then a new three-year approval period will

.03 DOE Technical Review Process . Section 1.45Q-4(c)(6) provides that an LCA Report will be subject to a DOE Technical Review. The DOE Technical Review may be either a Conformance Review or a Critical Review.

(1) Conformance Review . (a) Defined . A Conformance Review is a type of DOE Technical Review conducted to ensure that an LCA conforms to applicable ISO 14040:2006 and ISO 14044:2006 standards and the latest revision, as of the beginning of the year in which the LCA is submitted, of NETL’s Carbon Dioxide Utilization (CO2U) Life Cycle Analysis Guidance for the U.S. DOE Office of Fossil Energy and Carbon Management and 45Q Addendum to the CO2U LCA Guidance Document .

(b) Procedure . The DOE will perform a Conformance Review if a taxpayer’s LCA Approval Request includes an LCA Report that has been verified by an independent third party as adhering to applicable standards and best practices. Upon performing a Conformance Review, the DOE may determine that a Critical Review is warranted.

(2) Critical Review . (a) Defined . A Critical Review is a type of DOE Technical Review conducted to ensure that an LCA Approval Request conforms to applicable ISO 14040:2006 and ISO 14044:2006 standards and the NETL’s Carbon Dioxide Utilization (CO2U) Life Cycle Analysis Guidance for the U.S. DOE Office of Fossil Energy and Carbon Management and 45Q Adden- dum to the CO2U LCA Guidance Docu- ment . The scope of the Critical Review is expanded beyond the scope of the Conformance Review to include a detailed technical assessment of the LCA model and supporting data.

(b) Procedure . The DOE will perform a Critical Review if a taxpayer’s LCA Approval Request includes an LCA Report that has not been verified by an independent third party. Additionally, the DOE may perform a Critical Review if the DOE determines that further review is warranted after performing a Conformance Review.

(3) DOE Requests for Supplemental Information . Upon receipt of an LCA Approval Request, the DOE will review the LCA Approval Request for complete

ness and identify any questions for the taxpayer. The DOE will contact the taxpayer if additional or clarifying information is needed to complete the Technical Review and will send questions directly to the taxpayer by email to expedite the review process. In response to the DOE’s request for additional information, taxpayers must provide all supplemental information to both the DOE and the IRS within forty-five (45) calendar days from the date of the DOE request (in the manner described in section 4 of this notice). If the taxpayer does not furnish the supplemental information to the DOE and to the IRS (in the manner described in section 4 of this notice) within forty-five (45) calendar days from the date of the DOE request, then the IRS generally will deny the taxpayer’s LCA Approval Request in writing. The IRS may grant an extension to the 45-day response period on a case-by-case basis if a taxpayer experienced a force majeure event. The taxpayer must request an extension in writing before the end of the 45-day period and provide an explanation of why an extension is necessary. The DOE will not otherwise communicate with taxpayers about the status of a pending LCA Approval Request.

(4) Upon completion of its Technical Review, the DOE will notify the IRS whether it concurs with the results of the Taxpayer’s LCA Report.

.04 IRS Determination - (1) In General. Section 1.45Q-4(c)(6) provides that the IRS will determine whether to approve the LCA and will notify the taxpayer. The taxpayer must receive approval of the taxpayer’s LCA prior to claiming the § 45Q utilization credit on any federal income tax return. The IRS will determine whether to approve a complete LCA based on its review and the results of the DOE Technical Review.

(2) Effect of LCA Review and Determi- nation . Review of the LCA is neither an examination nor an inspection of books for purposes of § 7605(b) and will not preclude or impede (under § 7605(b) or any administrative provisions adopted by the IRS) the IRS from later examining a return or inspecting books or records with respect to any taxable year for which the § 45Q utilization credit is claimed. Approval of the LCA does not mean that the IRS has

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apply (unless the LCA analyzes a period of less than six months or there is a Material Change (as defined in section 6.04(1) of this notice)).

(1) Example . X, a calendar year taxpayer, utilizes qualified carbon oxides in 2022 in the manufacture of a product for which a commercial market exists. In 2023, X submits an LCA Approval Request to the IRS and the DOE analyzing X’s utilization data for all twelve months of 2022. The IRS approves the LCA in 2023. X claims a § 45Q utilization credit on X’s 2022 tax return. X may rely on the LCA to claim a § 45Q utilization credit for 2023 and 2024 provided that it follows the requirements in section 6.04(3) of this notice. If X wishes to claim a § 45Q utilization credit for 2025, it will need to submit a new LCA Approval Request to the IRS and the DOE for 2025.

(2) Procedures for Periodic Resub- missions . A resubmission under this section 6.02 must state in its cover report (described in section 3.04 of this notice) that the LCA Approval Request is being resubmitted under section 6.02 of this notice.

.03 Resubmission after Limited Initial Period . If a taxpayer submits the taxpayer’s initial LCA Approval Request for an LCA that analyzes a period of less than six (6) months, then the taxpayer may treat the approved LCA as approved for the taxable year for which the LCA Report is submitted and the following taxable year (twoyear approval period). A taxpayer wishing to claim the § 45Q utilization credit after the two-year approval period must submit a new LCA Approval Request to the IRS and the DOE (in the manner described in section 4 of this notice). If the IRS approves this new LCA, then a new threeyear approval period will apply (unless the LCA analyzes a period of less than six months or there is a Material Change (as defined in section 6.04(1) of this notice)).

(1) Example . X, a calendar year taxpayer, begins utilizing qualified carbon oxides in August 2022 in the manufacture of a product for which a commercial market exists. In 2023, X submits an LCA Approval Request to the IRS and the DOE analyzing X’s utilization data for five months of 2022. The IRS approves the LCA in 2023. X claims a § 45Q utilization credit on X’s 2022 tax return. X may rely

on the LCA to claim a § 45Q utilization credit for 2023 provided that it follows the requirements in section 6.04(3) of this notice. If X wishes to claim a § 45Q utilization credit for 2024, then it will need to submit a new LCA Approval Request to the IRS and the DOE for 2024. Thereafter, X will be subject to the periodic resubmission requirements in section 6.02 of this notice.

(2) Procedures for Resubmissions after Limited Initial Period . A resubmission under this section 6.03 must state in the cover page of its LCA Report (described in section 3.04 of this notice) that the LCA Approval Request is being resubmitted under section 6.03 of this notice.

.04 Resubmission due to Material Change .

(1) Material Change Defined . A Material Change is any change to the taxpayer’s process described in the LCA that reduces the “Life Cycle Displacement Factor” (DF) by an amount greater than 0.05 from the value of that metric from the taxable year in which the original LCA was approved by the IRS (Original DF).

(a) Life Cycle Displacement Fac- tor . The value of the DF is a ratio that measures the amount of carbon dioxide equivalents displaced per unit of carbon oxide captured and utilized as defined in the NETL’s 45Q Addendum to the CO2U LCA Guidance Document . The change in the DF is calculated separately for each of the two subsequent taxable years after the Original DF is determined. The change in the DF is calculated as the difference between the Original DF and the DF for the applicable subsequent taxable year (DFn). A Material Change occurs if the Original DF exceeds the DF for the applicable subsequent taxable year by an amount greater than 0.05 of the Original DF as shown in the following formula:

Original DF – DFn (subsequent taxable year 1 or 2) > 0.05

(b) Calculation of Displacement Factor in Taxable Years Subsequent to Approval of Original LCA for Determi- nation of Material Change . The taxpayer must calculate DFs for subsequent taxable years using only the changes that have affected the per unit carbon oxide utilization product direct inputs and outputs

(and the associated emissions) for the taxpayer’s process described in the proposed system in the original LCA to determine whether there has been a Material Change. This Material Change determination will be subject to review by the IRS and the DOE.

(2) Procedures for Resubmission due to Material Change . If a Material Change (as defined in section 6.04(1) of this notice) occurs, then a taxpayer must resubmit the taxpayer’s LCA to the IRS and the DOE (in the manner described in section 4 of this notice). The taxpayer must receive approval of the taxpayer’s resubmitted LCA from the IRS and DOE before a § 45Q utilization credit may be determined for any additional taxable year on Form 8933, Carbon Oxide Seques- tration Credit . A resubmission under this section 6.04 must state in the cover page of its LCA Report (described in section 3.04 of this notice) that the LCA is being resubmitted due to a Material Change and explain the Material Change.

(3) Procedures if no Material Change Exists . A taxpayer must calculate DFs as provided in section 6.04(1)(b) of this notice to determine whether a Material Change has occurred during each taxable year between required resubmissions to the IRS and the DOE. Based on this annual self-assessment, if the taxpayer finds that no Material Change has occurred, the taxpayer may treat the approved LCA as approved for the remainder of the threeyear approval period in section 6.01 of this notice or the two-year approval period in section 6.03 of this notice as long as the taxpayer continues to use the Original DF in that approved LCA for calculating the taxpayer’s § 45Q utilization credit. The taxpayer must make an affirmative statement that no Material Change has occurred within the taxable year and append the statement to the Form 8933 on which the § 45Q utilization credit is claimed. The taxpayer must satisfy the recordkeeping requirements of § 6001 and § 1.6001–1 to support the taxpayer’s determination that no Material Change has occurred. After review of the affirmative statement, the IRS may contact the taxpayer stating that an updated LCA submission is necessary. The affirmative statement must provide the following information:

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(a) The date on which the LCA was previously approved by the IRS;

(b) A statement that the taxpayer has determined that no Material Change (as defined in section 6.04(1) of this notice) has occurred;

“Under penalties of perjury, I declare that I have examined the information contained in this affirmative statement and the documents that substantiate this affirmative statement, and to the best of my knowledge and belief, it is true, correct, and complete.”

(d) The following additional statement:

“I further declare that I have authority to sign this document on behalf of the taxpayer.”