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FW: [CDR] Do it right – the IRS shows why it pays to comply with storage standards #irs #tax


Paul S Anderson
 

Does any of the below mentioned 45Q tax credit for carbon capture transfer (current or in the future) to the placement of biochar into soil (or other long term storage)?  

 

Is anybody looking into this?  

 

Paul

 

Doc / Dr TLUD / Paul S. Anderson, PhD --- Website:   www.drtlud.com

         Email:  psanders@...       Skype:   paultlud

         Phone:  Office: 309-452-7072    Mobile & WhatsApp: 309-531-4434

Exec. Dir. of Juntos Energy Solutions NFP    Go to: www.JuntosNFP.org 

Inventor of RoCC kilns for biochar and energy:  See  www.woodgas.com

Author of “A Capitalist Carol” (free digital copies at www.capitalism21.org)

         with pages 88 – 94 about solving the world crisis for clean cookstoves.

 

From: carbondioxideremoval@... <carbondioxideremoval@...> On Behalf Of Andrew Lockley
Sent: Thursday, April 30, 2020 4:26 PM
To: CarbonDioxideRemoval@... <CarbonDioxideRemoval@...> <carbondioxideremoval@...>
Subject: [CDR] Do it right – the IRS shows why it pays to comply with storage standards

 

[This message came from an external source. If suspicious, report to abuse@...]


https://www.catf.us/2020/04/do-it-right/

 

Do it right – the IRS shows why it pays to comply with storage standards

Kurt Waltzer

KURT WALTZER

April 30, 2020

Thanks to Senator Robert Menendez’s (D-NJ) persistent efforts, the IRS just provided him with details on how it is enforcing compliance with the 45Q tax credit for carbon capture, utilization and storage (CCUS). The IRS letter underscores the importance of transparency and appropriate oversight of geologic storage as a part of deploying this technology necessary to combat climate change.

 

The 45Q tax program requires secure geologic storage of CO2 in order for taxpayers to claim the credit. Since 2009, IRS guidance has required taxpayers to obtain an approved monitoring, reporting, and verification (MRV) plan and annually report the amount of securely stored emissions to EPA’s Greenhouse Gas Reporting Program.

 

Based on discrepancies in data reported by EPA and the IRS, it’s become clear that companies have been claiming tax credits, which were not reported to EPA. The first indication that the IRS was disallowing these credits came through a 2013 opinion memorandum that disallowed credits when a taxpayer didn’t have an approved MRV plan. Until now, however, the IRS hadn’t provided details on how many credits were disallowed relative to those claimed.

 

The IRS letter to Senator Menendez reveals the following details:

 

Most (99.9%) of the $1 billion in credits claimed to date were claimed by 10 taxpayers, each of whom who claimed at least $1 million in credits;

Three of those ten taxpayers were in compliance with the requirement to have MRV plans approved by the EPA;

The IRS has taken action against 4 of those ten taxpayers for claiming credits without having EPA-approved MRV plans;

Of the $1 billion in claimed credits, $893 million were claimed without being in compliance with EPA requirements. To date, the IRS has disallowed $531 million credits for noncompliance;

Three of the ten taxpayers still have open audits, with claims under investigation.

This letter underscores the following important points:

 

First, the system is working. If taxpayers don’t demonstrate secure geologic storage, they won’t get the credit – nor should they.

 

Second, efforts to undercut the current reporting program, such as Senator Hoeven’s bill to gut the MRV requirement needs to be permanently rejected. The bill, first proposed in 2015, attempts to eliminate transparent oversight of geologic storage for enhanced oil recovery. This move to weaken standards was supported by some oil companies, including Exxon and Denbury Resources and rejected by others, such as Occidental, Shell, and Core Energy. Occidental, Shell and Core, have the right idea – supporting strong and transparent oversight is necessary to protect public health and the environment and maintain confidence in the system.

 

Fortunately, Congress has repeatedly declined Senator Hoeven’s bill. Most notably, Congress rejected this attempt to weaken standards when, in 2018, it took much needed action to improve the 45Q program and make it far more useful in terms of driving CCUS deployment. Any future efforts to move Senator Hoeven’s bill in Congress, or other attempts to weaken transparency and oversight, should be permanently abandoned. To do otherwise would imperil a critical tool in combating climate change.

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Roger Faulkner
 

That is an excellent question. No matter how low the tax incentive is, getting it recognized in the wall would be extremely important right now. The tax rate and tax benefit can be ratcheted up later.


On Fri, May 1, 2020 at 12:53 AM, Paul S Anderson
<psanders@...> wrote:

Does any of the below mentioned 45Q tax credit for carbon capture transfer (current or in the future) to the placement of biochar into soil (or other long term storage)?  

 

Is anybody looking into this?  

 

Paul

 

Doc / Dr TLUD / Paul S. Anderson, PhD --- Website:   www.drtlud.com

         Email:  psanders@...       Skype:   paultlud

         Phone:  Office: 309-452-7072    Mobile & WhatsApp: 309-531-4434

Exec. Dir. of Juntos Energy Solutions NFP    Go to: www.JuntosNFP.org 

Inventor of RoCC kilns for biochar and energy:  See  www.woodgas.com

Author of “A Capitalist Carol” (free digital copies at www.capitalism21.org)

         with pages 88 – 94 about solving the world crisis for clean cookstoves.

 

From: carbondioxideremoval@... <carbondioxideremoval@...> On Behalf Of Andrew Lockley
Sent: Thursday, April 30, 2020 4:26 PM
To: CarbonDioxideRemoval@... <CarbonDioxideRemoval@...> <carbondioxideremoval@...>
Subject: [CDR] Do it right – the IRS shows why it pays to comply with storage standards

 

[This message came from an external source. If suspicious, report to abuse@...]


https://www.catf.us/2020/04/do-it-right/

 

Do it right – the IRS shows why it pays to comply with storage standards

Kurt Waltzer

KURT WALTZER

April 30, 2020

Thanks to Senator Robert Menendez’s (D-NJ) persistent efforts, the IRS just provided him with details on how it is enforcing compliance with the 45Q tax credit for carbon capture, utilization and storage (CCUS). The IRS letter underscores the importance of transparency and appropriate oversight of geologic storage as a part of deploying this technology necessary to combat climate change.

 

The 45Q tax program requires secure geologic storage of CO2 in order for taxpayers to claim the credit. Since 2009, IRS guidance has required taxpayers to obtain an approved monitoring, reporting, and verification (MRV) plan and annually report the amount of securely stored emissions to EPA’s Greenhouse Gas Reporting Program.

 

Based on discrepancies in data reported by EPA and the IRS, it’s become clear that companies have been claiming tax credits, which were not reported to EPA. The first indication that the IRS was disallowing these credits came through a 2013 opinion memorandum that disallowed credits when a taxpayer didn’t have an approved MRV plan. Until now, however, the IRS hadn’t provided details on how many credits were disallowed relative to those claimed.

 

The IRS letter to Senator Menendez reveals the following details:

 

Most (99.9%) of the $1 billion in credits claimed to date were claimed by 10 taxpayers, each of whom who claimed at least $1 million in credits;

Three of those ten taxpayers were in compliance with the requirement to have MRV plans approved by the EPA;

The IRS has taken action against 4 of those ten taxpayers for claiming credits without having EPA-approved MRV plans;

Of the $1 billion in claimed credits, $893 million were claimed without being in compliance with EPA requirements. To date, the IRS has disallowed $531 million credits for noncompliance;

Three of the ten taxpayers still have open audits, with claims under investigation.

This letter underscores the following important points:

 

First, the system is working. If taxpayers don’t demonstrate secure geologic storage, they won’t get the credit – nor should they.

 

Second, efforts to undercut the current reporting program, such as Senator Hoeven’s bill to gut the MRV requirement needs to be permanently rejected. The bill, first proposed in 2015, attempts to eliminate transparent oversight of geologic storage for enhanced oil recovery. This move to weaken standards was supported by some oil companies, including Exxon and Denbury Resources and rejected by others, such as Occidental, Shell, and Core Energy. Occidental, Shell and Core, have the right idea – supporting strong and transparent oversight is necessary to protect public health and the environment and maintain confidence in the system.

 

Fortunately, Congress has repeatedly declined Senator Hoeven’s bill. Most notably, Congress rejected this attempt to weaken standards when, in 2018, it took much needed action to improve the 45Q program and make it far more useful in terms of driving CCUS deployment. Any future efforts to move Senator Hoeven’s bill in Congress, or other attempts to weaken transparency and oversight, should be permanently abandoned. To do otherwise would imperil a critical tool in combating climate change.

--
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Robert Lehmert
 

I'm looking into it, as are others. I'm trying to get a confirmation from my Congressman Peter Welch' staff. 

Meanwhile, this:

IRS Proposes Storage Rules For Carbon Capture Tax Credit

Law360 (May 28, 2020, 6:05 PM EDT) -- The IRS proposed long-awaited rules Thursday detailing how companies can qualify for carbon capture tax credits by demonstrating that they have securely stored or disposed of carbon that has been captured from the atmosphere.

The Dave Johnston coal-burning power plant in Glenrock, Wyoming. Proposed rules released Thursday by the Internal Revenue Service detail how projects to capture carbon oxides and store them underground can meet requirements for tax credits. (AP)

Thursday's guidance from the Internal Revenue Service details how carbon capture projects can show they meet the law's requirement that carbon oxides be securely stored deep underground in facilities such as salt deposits, oil reservoirs and unminable coal seams in order to qualify for the credit.

Treasury Secretary Steven Mnuchin said in a statement the proposed regulations should help businesses understand how to claim the credit and provide an incentive for the "safe and environmentally conscious storage for carbon oxides that would otherwise be emitted to the atmosphere."

Internal Revenue Code Section 45Q  provides a tax credit of up to $50 per metric ton for the permanent sequestration of carbon oxides, or $35 for enhanced oil recovery, in which carbon dioxide is injected into the ground to help extract oil from wells. The credit was revised under the Bipartisan Budget Act of 2018 .

Carbon capture and sequestration is a process by which carbon is seized at the point of emission — at power plants, for example — and then permanently stored, or sequestered, deep underground in saline reservoirs or in oil and gas fields. The aim is to reduce the amount of greenhouse gases in the atmosphere that contribute to climate change.

Last year, the IRS asked for feedback on whether companies should be able to continue to show compliance with the credit's secure geological storage requirements for enhanced oil recovery projects by adhering to the Environmental Protection Agency's greenhouse gas reporting standards, known as the Greenhouse Gas Reporting Program's Subpart RR, or whether any viable alternatives exist.

Under the proposed rules, the IRS said a standard known as ISO 27916 would be an acceptable alternative to Subpart RR for carbon stored in association with enhanced oil recovery.

The ISO standard "is a viable quantification methodology" for operators of Class II oil and gas wells, the agency said.

Some organizations, including the Carbon Utilization Research Council and the Environmental Defense Fund, had called on the IRS to allow ISO 27916 as an alternative.

However, the agency didn't agree with public feedback saying that companies should be required to publicly disclose documentation on the amount of carbon stored for purposes of the credit.

"There is no statutory requirement in Section 45Q for taxpayers, federal agencies or industry groups to publicly display this information or otherwise make it available," the agency said.

The proposed rules also provided details on the procedures for companies to allow third parties to claim the credit and for the agency to recapture the credit when carbon is not securely captured or disposed.

The tax credit's value depends upon the date by which equipment was placed in service — either before or after Congress' enactment of the Bipartisan Budget Act — and the type of treatment projects apply to the carbon.

In February, the IRS proposed rules on how companies could demonstrate they have begun construction on carbon sequestration projects.

--Editing by Robert Rudinger.

Update: This story has been updated to include more details about the proposed rules.

For a reprint of this article, please contact reprints@....