On November 3, 2022, the Internal Revenue Service (IRS) issued three notices (“November 3 Notices”) requesting public input on the climate and clean energy incentives contained in the Inflation Reduction Act (“IRA”). The November 3 Notices request comments by December 2, 2022, on the amendments, extensions, and enhancements of the IRA’s energy tax benefits. The November 3 Notices follow an initial set of six notices that were issued by the IRS on October 5, 2022 to seek public input on other aspects of the energy tax incentives contained in the IRA.

The November 3 Notices seek public input on specific questions and also general comments to mitigate potential ambiguity in the IRA. The November 3 Notices request comments about the following clean energy tax credits to ensure that the changes are adequately implemented based on stakeholder feedback:

• Amendments to Internal Revenue Code (“IRC”) Sections 45W, 30(C), and 30(D) – Notice 2022-56 requests comments related to tax credits for qualified clean commercial vehicles (IRC Section 45W) and alternative fuel vehicle refueling property (IRC Section 30C). Specifically, the notice seeks input on factors and data to determine whether a vehicle is of “comparable size and use” under Section 45W(b)(3); clarifications to the definition of “mobile machinery” under Section 45W(c); how to reconcile the income limitations and manufacturer’s retail price limitations under Section 45(d)(1) and 30D(f); guidance for qualified manufacturers on how to meet the definition of “qualified commercial vehicle” in Section 45W(c)(1) as required by Section 30(D)(1)(C); and how to clarify the meaning of “property of a character subject to an allowance for depreciation” to obtain the Alternative Fuel Vehicle Refueling Property Credit under Section 30(C).
• Amendments to IRC Section 45Q – Notice 2022-57 requests comments related to the tax credit for carbon capture and sequestration and specifically requests guidance on determining which direct air capture (“DAC”) technologies and methodologies should qualify for an increased credit (IRC Section 45Q). Importantly, the November 3 Notice requests feedback on which existing and emerging technologies potentially meet the definition of a “DAC Facility” under Section 45Q as well as methodologies that taxpayers could use to determine and verify the amount of qualified carbon oxides captured by a DAC Facility. Importantly, this notice seeks clarification on how the IRS should assess the records provided by taxpayers to substantiate the capture of qualified carbon oxides by electricity generating facilities and guidance for how the IRS might calculate the credit reduction for tax-exempt bonds under IRC Section 45Q(f)(8). 
• IRC Section 45V and 45Z – Notice 2022-58 requests comments on the clean hydrogen production tax credit and specifically requests guidance for clarifying the definitions of “qualified clean hydrogen” and “lifecycle greenhouse gas emissions” from well-to-gate systems and the allocation of lifecycle greenhouse gas emissions to co-products from the clean hydrogen production process under IRC Section 45V. The notice also seeks factors for assessing the definition of the “sale” at retail for purposes of IRC Section 45Z(a)(4)(C). Finally, the notice seeks guidance on establishing an emissions rate for sustainable aviation fuel under IRC Section 45Z(b)(1)(B)(iii).

The November 3 Notices, in conjunction with the six notices issued in October, are part of the IRS’s effort to engage taxpayers and stakeholders in the implementation of the IRA. Public input is essential to the development of guidance for the tax incentives contained in the IRA, which utilizes tax incentives for three-quarters of its $369 billion climate change investment.

Interested parties should follow the instructions in the November 3 Notices to provide feedback by the December 2, 2022 deadline.

The author wishes to thank Husch Blackwell fall clerk Mackinlee Rogers for their contribution to this article.

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