Carbon Capture Tax Rules Raise Transparency, Clawback Issues

Bloomberg Tax: Carbon Capture Tax Rules Raise Transparency, Clawback Issues

May 29, 2020

United States
United States
United States

Eversheds Sutherland Partner Amish Shah is quoted in this Bloomberg Tax article on the release of long-awaited proposed rules for an expanded tax credit for companies that capture and store carbon dioxide.

The proposed rules—which companies can apply as far back as Feb. 9, 2018, the date a budget law expanded the credit—would allow the Internal Revenue Service to recapture the credits because of leakage up to five years after the tax breaks are claimed. 

But that proposed five-year period could effectively stretch to as many as 17 years based on the way the rules are written, Amish pointed out. "You can be in year 12 and have a potential recapture event based on CO2 that was injected back in year one," he said. "So there’s a problem there in that I don’t think they really did what they suggested they’re going to do in the preamble."

 

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