n-24-60.pdf

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Required Procedures to Claim a Section 45Q Credit for Utilization of Carbon Oxide

Notice 2024-60

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-

1
Unless otherwise specified, all “Section” or “§” references are to sections of the Code or the Income Tax
Regulations (26 CFR part 1).

2

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

SECTION 2. BACKGROUND
.01 Congress enacted the credit for the sequestration of carbon dioxide under
§ 45Q in § 115 of the Energy Improvement and Extension Act of 2008, Public Law 110-

2
Pursuant to § 1.45Q-4(e), taxpayers may choose to apply the rules in § 1.45Q-4 for taxable years
beginning on or after January 1, 2018, provided the taxpayer applies §§ 1.45Q-1, 1.45Q-2, 1.45Q-3,
1.45Q-4, and 1.45Q-5 in their entirety and in a consistent manner. Alternatively, taxpayers may choose
to rely on the rules in § 1.45Q-4 as contained in the notice of proposed rulemaking (REG-112339-19)
published in the Federal Register (85 FR 34050) on June 20, 2020 (2020 proposed regulations), for
taxable years beginning on or after February 9, 2018, and before January 15, 2021, provided the
taxpayer follows proposed §§ 1.45Q-1, 1.45Q-2, 1.45Q-3, 1.45Q-4, and 1.45Q-5 of the 2020 proposed
regulations in their entirety and in a consistent manner.
3
Pursuant to § 13801(g) of the IRA, §§ 6417 and 6418 apply to taxable years beginning after December
31, 2022. See 136 Stat. at 2013.

3

343, Div. B, Title I, 122 Stat. 3765, 3829 (October 3, 2008). Congress amended § 45Q
several times thereafter, including significantly by § 41119 of the Bipartisan Budget Act
of 2018, Public Law 115-123, Div. D, Title II, 132 Stat. 64, 162 (February 9, 2018), to
apply to all carbon oxides, and most recently on August 16, 2022, by § 13104 of the
IRA, 136 Stat. 1924.

.02 Section 45Q(a)(2)(B)(ii) allows a § 45Q utilization credit of $10 per metric ton
of qualified carbon oxide captured by the taxpayer using carbon capture equipment that
is originally placed in service at a qualified facility before February 9, 2018, and utilized
by the taxpayer in a manner described in § 45Q(f)(5).
.03 Section 45Q(a)(4)(B)(ii) allows a § 45Q utilization credit of the applicable
dollar amount (as determined under § 45Q(b)(1)) per metric ton of qualified carbon
oxide captured by the taxpayer using carbon capture equipment that is originally placed
in service at a qualified facility on or after February 9, 2018, during the 12-year period
beginning on the date the equipment was originally placed in service, and utilized by the
taxpayer in a manner described in § 45Q(f)(5).
.04 Section 45Q(f)(5)(A) provides that “utilization of qualified carbon oxide”
means (i) the fixation of such qualified carbon oxide through photosynthesis or
chemosynthesis, such as through the growing of algae or bacteria; (ii) the chemical
conversion of such qualified carbon oxide to a material or chemical compound in which
such qualified carbon oxide is securely stored; or (iii) the use of such qualified carbon
oxide for any other purpose for which a commercial market exists (with the exception of
use as a tertiary injectant in a qualified enhanced oil or natural gas recovery project), as
determined by the Secretary of the Treasury or her delegate (Secretary).

4

.05 Section 45Q(f)(5)(B)(i) provides a methodology to determine the amount of
qualified carbon oxide utilized by the taxpayer. Such amount is equal to the metric tons
of qualified carbon oxide that the taxpayer demonstrates, based upon an LCA of
greenhouse gas emissions and subject to such requirements as the Secretary, in
consultation with the Secretary of Energy and the Administrator of the Environmental
Protection Agency (EPA), determines appropriate, were (i) captured and permanently
isolated from the atmosphere, or (ii) displaced from being emitted into the atmosphere,
through use of a process described in § 45Q(f)(5)(A).
.06 Section 45Q(f)(5)(B)(ii) provides that for purposes of determining the amount
of qualified carbon oxide utilized by the taxpayer for purposes of § 45Q(a)(2)(B)(ii) or
(a)(4)(B)(ii), the term “lifecycle greenhouse gas emissions” has the same meaning given
such term under § 211(o)(1)(H) of the Clean Air Act (42 U.S.C. 7545(o)(1)(H)), as in
effect on February 9, 2018, except that “product” is substituted for “fuel” each place it
appears in 42 U.S.C. 7545(o)(1)(H).
.07 On June 2, 2020, the Treasury Department and the IRS published a notice of
proposed rulemaking under § 45Q (REG-112339-19, 85 FR 34050) (proposed
regulations). After consideration of all comments received in response to the proposed
regulations, on January 15, 2021, the Treasury Department and the IRS published final
regulations under § 45Q in the Federal Register (T.D. 9944; 86 FR 4728).
.08 For purposes of § 45Q(a)(2)(B)(ii) or (a)(4)(B)(ii) and § 1.45Q-1(b)(ii) and
(c)(2)(ii), § 1.45Q-4(b)(2) provides that the amount of qualified carbon oxide determined
to be utilized by the taxpayer for purposes of computing the § 45Q utilization credit
cannot exceed the amount of qualified carbon oxide measured at the source of capture.

5

.09 Section 1.45Q-4(c)(1) provides that for purposes of determining the amount
of qualified carbon oxide utilized by the taxpayer, the term “lifecycle greenhouse gas
emissions” means the aggregate quantity of greenhouse gas emissions (including direct
emissions and significant indirect emissions such as significant emissions from land use
changes)
4
related to the full product life cycle, including all stages of product and
feedstock production and distribution, from feedstock generation or extraction through
the distribution and delivery and use of the finished product to the ultimate consumer,
with the mass values for all greenhouse gases adjusted to account for their relative
global warming potential according to Table A-1 of 40 CFR Part 98 subpart A. Such
emissions are expressed in carbon dioxide equivalent (CO
2
-e).
.10 Section 1.45Q-4(c)(2) provides that the taxpayer verifies the amount of
qualified carbon oxide utilized through an LCA. An LCA must demonstrate that the
proposed system, inclusive of the taxpayer’s process, results in a net reduction of
CO
2
-e compared to a comparison system.
SECTION 3. LCA REPORT STANDARDS AND REQUIREMENTS
.01 LCA Report. Section 1.45Q-4(c)(2) requires that the results of a taxpayer’s
LCA be documented in a written LCA Report. In the case of a taxpayer that owns
multiple qualified facilities for which it wishes to claim a § 45Q utilization credit, a
separate LCA Report is required for each qualified facility.
.02 LCA Report Standards. Section 1.45Q-4(c)(3) requires that an LCA Report
be prepared in conformity with and contain documentation that conforms with
International Organization for Standardization (ISO) 14040:2006, Environmental

4
See 42 U.S.C. 7545(o)(1)(H) (Clean Air Act).

6

management – Life cycle assessment – Principles and framework and ISO 14044:2006,
Environmental management — Life cycle assessment — Requirements and guidelines.
To ensure conformity with these ISO standards, the LCA Report must be completed in
accordance with the most current revision, as of the beginning of the year in which the
LCA is submitted, of the DOE’s National Energy Technology Laboratory’s (NETL)
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: https://www.netl.doe.gov/LCA/CO2U
(NETL CO2U LCA Guidance
Document) and https://www.netl.doe.gov/LCA/CO2U/45Q (NETL 45Q Addendum).
5

Section 1.45Q-4(c)(3) further provides that an LCA may consist of direct and indirect
data in conformity with ISO 14040:2006 and 14044:2006. Direct and indirect data are
also generally known within ISO standards as primary and secondary data. For
purposes of § 45Q, an LCA must rely upon direct, or primary, data to address the actual
operational performance of the taxpayer’s system for the taxable year for which the LCA
Report is submitted.
.03 I
ndependent Third-Party Statement. Section 1.45Q-4(c)(4) provides that an
LCA Report must be performed or verified by an independent third party. If an
independent third-party review is conducted, then it must include an assessment of an
LCA model and supporting data and be performed in accordance with ISO 14071:2014,
Environmental management — Life cycle assessment — Critical review processes and
reviewer competencies: Additional requirements and guidelines to ISO 14044:2006. An
LCA Report also must provide a statement documenting the qualifications of the

5
See the preamble to T.D 9944, 89 FR 4728, 4745.

7

independent third party, including proof of appropriate U.S. or foreign professional
license, and an affidavit from the third party stating that it is independent from the
taxpayer. If a § 45Q(f)(3)(B) election has been made, then the affidavit must state that
the third party is independent from both the electing taxpayer and the credit claimant. In
addition, the statement must be made under penalties of perjury.
.04 LCA Report Cover Page Requirements. The LCA Report must include a
cover page that includes the following information:
(1) Name and location of the facility where the qualified carbon oxide is utilized
(utilization facility);
(2) Name and Taxpayer Identification Number (TIN) (for example, Employer
Identification Number (EIN)) of the taxpayer claiming the credit based on the LCA
Report;
(3) Name and TIN (for example, EIN) of the operator of the utilization facility (if
other than the taxpayer);
(4) Taxable year for which the LCA Report is being submitted;
(5) Name, relationship to the taxpayer, mailing address, email address, and
phone number of a person whom the IRS can contact regarding the LCA Report. If this
person is not an employee of the taxpayer, an IRS Form 2848, Power of Attorney and
Declaration of Representative, must accompany the LCA Report;
(6) An attestation that the applicable requirements of § 45Q and §§ 1.45Q-1,
1.45Q-2, and 1.45Q-4 are satisfied. Such attestation must include confirmation of the
following:
(a) the carbon oxide for which the § 45Q utilization credit is being claimed is

8

qualified carbon oxide within the meaning of § 45Q(c);
(b) the qualified carbon oxide for which the § 45Q utilization credit is being
claimed is captured by a qualified facility within the meaning of § 45Q(d);
(c) the qualified carbon oxide for which the § 45Q utilization credit is being
claimed was captured in the United States (within the meaning of § 638(1)), or a U.S.
territory (within the meaning of the term “possession” set forth in § 638(2));
(d) in the case of a resubmission of an LCA Approval Request under section 6.02
of this notice, that there has been no Material Change (within the meaning of section
6.04 of this notice) since the prior LCA was approved; and
(7) A declaration, applicable to the LCA Approval Request (including the LCA
and the cover page information required by section 3.04 of this notice) signed by a
person currently authorized to bind the taxpayer in these matters, in the following form:
“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.”
SECTION 4. LCA APPROVAL REQUEST PROCEDURES
.01 Overview. A taxpayer satisfies the procedural requirements of § 1.45Q-
4(c)(5) by submitting an LCA Approval Request to the IRS and a duplicate to the DOE
for its technical review. An LCA Approval Request must include:
(1) An LCA Report meeting all applicable requirements of section 3 of this notice;
(2) Supplemental information that supports the LCA Report data (as described in
section 4.02 of this notice);

9

(3) An Independent Third-Party Statement (as defined in section 3.03 of this
notice); and
(4) If an independent third party has performed the LCA analysis and prepared
the LCA Report, an LCA model.
.02 Supplemental Information. For purposes of section 4.01(2) of this notice, the
supplemental information that supports the LCA Report data must contain all necessary
details supporting the LCA Report data, calculations, and conclusions. For example,
supplemental information may include (as applicable) the proposed system’s production
and maintenance schedules, periods of other stoppages and interruptions, the actual
throughput while in production, changes in the supplied input energy and materials and
ingredients (such as chemical composition, concentration, and system-poisoning
impurities), and deviations from the actual process technology from the description in
the LCA Report. Additionally, a taxpayer must disclose (to the IRS only) whether any
previously-filed claim for the § 45Q utilization credit was adjusted and why it was
adjusted.
.03 S
ubmission of the LCA Approval Request. The IRS and the DOE will accept
LCA Approval Requests submitted by taxpayers on a rolling basis. A taxpayer must
submit a LCA Approval Request to the IRS and a copy to the DOE using the procedures
provided in this section 4.
(1) Submissions to the IRS. Taxpayers must mail the LCA Approval Request
(including the model if the LCA Report was not verified by an independent third party)
on a USB thumb drive, to:
Internal Revenue Service
Office of Associate Chief Counsel (PSI)

10

1111 Constitution Ave, N.W.
Branch 6 (CC:PSI:6), Room 5114
Washington, DC 20224

Taxpayers also must fax or e-fax a complete LCA Approval Request to the IRS at
(844) 255-4817.
(2) Submissions to the DOE. When a taxpayer submits an LCA Approval
Request to the IRS, the taxpayer also must send an email to the DOE at
LCA45Q@hq.doe.gov indicating the taxpayer’s intent to submit an LCA for DOE
technical review. The DOE will respond with instructions for submitting a copy of the
LCA Approval Request and any subsequent information directly to the DOE.
SECTION 5. LCA APPROVAL REQUEST REVIEW
.01 Overview of LCA Approval Request Review. The IRS will first review the
LCA Approval Request for completeness and adequacy of the materials provided. This
review is based on (i) the material provided in the LCA Report and (ii) any other
materials provided by the taxpayer as required under sections 3 and 4 of this notice. If
the IRS finds that the LCA Approval Request is complete, then the IRS will request a
technical review by DOE (DOE Technical Review). The LCA Approval Request Review
generally will be completed within four (4) months of the date of receipt of a complete
LCA Approval Request (Review Period). If the LCA Approval Request is incomplete, or
either the DOE or the IRS need to request any additional or clarifying information from
the taxpayer, then the LCA Approval Request Review may not be completed within the
Review Period.
.02 I
ncomplete LCA Approval Request.

11

(1) If any required information is missing from an LCA Approval Request, then
the IRS will contact the taxpayer directly by fax, e-fax, or phone. The taxpayer will have
forty-five (45) calendar days from the date of this request by the IRS to provide the
required information to both the IRS and DOE.
(2) Taxpayers should submit any supplemental information requested by the IRS
by fax or e-fax at (844) 255-4817.
(3) If the taxpayer does not furnish the supplemental information to the IRS and
DOE within forty-five (45) calendar days from the date of the IRS 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.
(4) Taxpayers should also submit any supplemental information requested by the
IRS to the DOE at LCA45Q@hq.doe.gov
.
.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

12

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 Addendum to the CO2U LCA Guidance Document. 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) P
rocedure. 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 completeness
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

13

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 Determination. 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

14

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 determined that all of the requirements of § 45Q have been
satisfied.
.05 Notification of Approval or Denial of LCA. The IRS will notify the taxpayer of
the approval or denial of the taxpayer’s LCA in writing.
.06 R
esubmission after Denial of LCA.
(1) Allowance. If an LCA is denied, and the deficiencies in the LCA can be
cured, then the taxpayer may revise the taxpayer’s LCA Approval Request and resubmit
it to the IRS and DOE (in the manner described in section 4 of this notice).
(2) P
rocedures for Resubmission After Denial. A resubmission under this section
5.06 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 after a denial by the IRS.
The resubmitted LCA Approval Request should explain in detail the reasons why the
original LCA Approval Request was denied and how the resubmitted LCA Approval
Request differs from the original LCA Approval Request.
.07 I
RS Administrative Review. If an LCA is denied solely on the basis of the IRS
review in section 5.01 of this notice (excluding a denial on the basis of completeness),
then the taxpayer will have an opportunity to request an IRS administrative review of
that denial.
SECTION 6. REQUIREMENTS FOR 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

15

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 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) Ex
ample. 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) P
rocedures for Periodic Resubmissions. 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 R
esubmission 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

16

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 (two-
year 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 three-year 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) P
rocedures 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 R
esubmission due to Material Change.

17

(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 Factor. 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 (DF
n
). 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 – DF
n

(subsequent taxable year 1 or 2)
> 0.05

(b) Calculation of Displacement Factor in Taxable Years Subsequent to Approval
of Original LCA for Determination 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) P
rocedures for Resubmission due to Material Change. If a Material Change

18

(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 Sequestration 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 three-year 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;
(c) A penalty of perjury statement that provides the following:
“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.”
SECTION 7. APPLICABILITY DATE
This notice applies with respect to LCA Reports submitted on or after [the date
that this notice is published in the Internal Revenue Bulletin]. Taxpayers that
received an approval of an LCA Report submitted before [the date that this notice is
published in the Internal Revenue Bulletin] may rely on the provisions of section 6 of
this notice (including the three-year approval period in section 6.01 of this notice and the
two-year approval period in section 6.03 of this notice) if they follow all of the provisions
of that section.
SECTION 8. PAPERWORK REDUCTION ACT
The collection of information contained in this notice has been reviewed and
approved by the Office of Management and Budget in accordance with the Paperwork
Reduction Act (44 U.S.C. § 3507) under control numbers 1545-2132, 1545-0074, and

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1545-0123.
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 3, 4, 5, and 6 of this
notice. This information is required to obtain an approval of an LCA, which is required
before a § 45Q utilization credit may be determined for a taxpayer. This information will
be used by the IRS and the DOE to verify that the taxpayer is eligible for the § 45Q
utilization credit. The collection of information is required to obtain a benefit. The likely
respondents are businesses or other for-profit institutions.
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 law.
Generally, tax returns and tax return information are confidential, as required by § 6103.
SECTION 9. DRAFTING INFORMATION
The principal authors of this notice David Selig and Maggie Stehn of the Office of
Associate Chief Counsel (Passthroughs & Special Industries). For further information
regarding this notice contact Mr. Selig or Ms. Stehn at (202) 317-6853 (not a toll-free
call).