IRS Issues Proposed Regulations On Section 45Q Carbon Oxide Sequestration Credits

The U.S. Internal Revenue Service (IRS) and the U.S. Treasury Department ("Treasury") have issued proposed regulations (REG-112339-19) providing valuable guidance on credits for the sequestration of qualified carbon oxide (CO) under Section 45Q of the Internal Revenue Code (the "Proposed Regulations"). Congress enacted Section 45Q in October 2008, but the credit program failed to attract widespread attention. Congress revised Section 45Q in 2018 intending to stimulate investor appetite, but developers remained cautious due to a lack of guidance and resulting uncertainty. The Proposed Regulations provide helpful guidance that should eliminate several key roadblocks faced by developers, but some questions still remain.