Page 86 - IRS Business Tax Credits Guide

12:51 - 5-Jan-2023
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Fileid: … ns/i8933/202212/a/xml/cycle06/source
The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
date you first satisfy either the Physical Work Test or the Requirements). Section 45(b)(8)(C) provides that each
Five Percent Safe Harbor Test. If you fail to satisfy the taxpayer, contractor, or subcontractor who employs four
Five Percent Safe Harbor Test in one year due to cost or more individuals to perform construction, alteration, or
overruns (as defined in section 6.03 of Notice 2020-12), repair work for the construction of a qualified facility must
you won’t be prevented from using the Physical Work Test employ one or more qualified apprentices to perform such
in a later year to establish beginning of construction, work (Apprenticeship Participation Requirements).
provided that occurs before January 1, 2033. See Notice 2022-61 for details.
To determine your qualification for the section
! 45Q increased credit amounts allowed for Recapture
CAUTION meeting the prevailing wage and apprenticeship A recapture event occurs when qualified carbon oxide for
requirements (below), affecting facilities the construction which a carbon oxide sequestration credit has been
of which began, or certain property the installation of claimed ceases to be captured, disposed of, or used as a
which began, on or after January 30, 2023, see Notice tertiary injectant during the recapture period. Recapture
2022-61, 2022-52 I.R.B. 561, available at IRS.gov/irb/ events are determined separately for each project
2022-52_IRB#NOT-2022-61. Additionally, proposed involving capture, disposal, or use of qualified carbon
regulations and other guidance for the prevailing wage oxide as a tertiary injectant.
and apprenticeship requirements will be issued later.
Qualified carbon oxide ceases to be captured,
Prevailing Wage Requirements disposed of, or used as a tertiary injectant if the leaked
For any qualified facility and any carbon capture amount of qualified carbon oxide in the tax year exceeds
the amount of qualified carbon oxide disposed of in
equipment placed in service at such facility, you must secure geological storage or used as a tertiary injectant in
ensure that any laborers and mechanics employed by you that same tax year.
or any contractor or subcontractor in (i) the construction of
such facility or equipment, and (ii) for any tax year, for any If a recapture event occurs during a project’s recapture
portion of such tax year that’s within the period described period and you have claimed a credit for that project, you
in section 45Q(a)(3)(A) or (4)(A), the alteration or repair of must report the following information on a Form 8933 filed
such facility or such equipment, must be paid wages at with your federal income tax return or Form 1065 for the
rates not less than the prevailing rates for construction, tax year for which the recapture event occurred.
alteration, or repair of a similar character in the locality in • The recapture amount (as defined in Regulations
which such facility and equipment are located as most section 1.45Q-5(e));
recently determined by the Secretary of Labor, in • The quantity of leaked qualified carbon oxide (in metric
accordance with subchapter IV of chapter 31 of title 40, tons) (as defined in Regulations section 1.45Q-5(c));
United States Code. See Notice 2022-61 for details. • The statutory credit rate at which the credits were

For information on how to correct a failure to satisfy the originally calculated; and
prevailing wage requirements, and the penalty related to • A statement that describes how you became aware of
the failure, see section 45(b)(7)(B) and Notice 2022-61. the recapture event, how the leaked amount was
determined, and the identity and involvement of any
Apprenticeship Requirements regulatory agencies.
Section 45(b)(8)(A)(i) provides that to meet the Elective Payment of Applicable
apprenticeship requirements you must ensure that, for the
construction of any qualified facility, not less than the Credits
applicable percentage of the total labor hours of the For tax years beginning after 2022, you can elect under
construction, alteration, or repair work (including such section 6417 for your carbon oxide sequestration credit to
work performed by any contractor or subcontractor) for be treated as making a payment against the tax imposed
such facility is, subject to section 45(b)(8)(B), performed by subtitle A (for the tax year for which the carbon oxide
by qualified apprentices. Under section 45(b)(8)(A)(ii), for sequestration credit was determined) equal to the amount
purposes of section 45(b)(8)(A)(i), the applicable of such credit. See section 6417.
percentage is (i) in the case of a qualified facility the Transfer of Carbon Oxide
construction of which begins before January 1, 2023,
10%; (ii) in the case of a qualified facility the construction Sequestration Credits
of which begins after December 31, 2022, and before
January 1, 2024, 12.5%; and (iii) in the case of a qualified For tax years beginning after 2022, you can elect under
facility the construction of which begins after December section 6418 to transfer all (or any portion specified in the
election) of your carbon oxide sequestration credits to an
31, 2023, 15%. unrelated third party (transferee) for cash. The cash
Section 45(b)(8)(B) provides that the requirement payment received by you won’t be treated as taxable
under section 45(b)(8)(A)(i) is subject to any applicable income, and the third party transferee can’t deduct the
requirements for apprentice-to-journeyworker ratios of the cash payment. Once a carbon oxide sequestration credit
Department of Labor or the applicable State is transferred to a third party under section 6418, the third
Apprenticeship Agency (Apprenticeship Ratio party can’t transfer it again. See section 6418.

Instructions for Form 8933 (Rev. 12-2022) -7-