IR-2020-35, February 19, 2020 WASHINGTON — The Internal Revenue Service today issued guidance to help businesses understand how legislation passed in 2018 may benefit those claiming carbon capture credits. Today's guidance addresses the definition of "beginning of construction" and provides a safe harbor for partnership allocations of the credit. After the enactment of the Bipartisan Budget Agreement in February 2018, the IRS issued Notice 2019-32PDF requesting comments from taxpayers regarding the changes to the carbon capture credit in the new law. After carefully considering the comments, the IRS is issuing guidance to provide clarity, especially regarding the definition of "beginning of construction." In Notice 2020-12PDF, the IRS provides guidance to help businesses determine when construction has begun on a qualified facility or on carbon capture equipment that may be eligible for the carbon capture credit. This notice provides broad guidance in lieu of taxpayers requesting private letter rulings in this area. In Revenue Procedure 2020-12PDF, the IRS creates a safe harbor for the allocation rules for carbon capture partnerships similar to the safe harbors developed for partnerships receiving the wind energy production tax credit and the rehabilitation credit. The safe harbor simplifies the application of carbon capture credit rules to partnerships able to claim the credit. The IRS anticipates issuing further guidance in the near future on issues ranging from secure geological storage to utilization to recapture of the credit for those claiming credits for carbon capture.