Notice 2007-53

Qualifying Gasification Project
Program
Notice 2007–53
SECTION 1. PURPOSE
This notice updates the procedures for
the allocation of credits under the qualifying gasification project program of § 48B
of the Internal Revenue Code and defines certain terms for purposes of § 48B.
The purpose of the qualifying gasification
project program is to consider and award
certifications for qualified investment eligible for credits under § 48B to qualifying
gasification project sponsors. To further
this purpose, the method of allocation is
being modified for allocation rounds after
2006. Under the modified method of allocation, the U.S. Department of Energy
(“DOE”) will rank a certified project relative to other certified projects and credits
will be allocated to projects based on the
DOE ranking. The modified allocation
method will substantially favor projects
that capture and sequester carbon dioxide
emissions and will favor to a lesser extent
projects optimized for future carbon dioxide capture.
SECTION 2. BACKGROUND AND
CHANGES
.01 Section 46 provides that the amount
of the investment credit for any taxable
year is the sum of the credits listed in § 46.
That list includes the qualifying gasification project credit.
.02 The qualifying gasification project
credit is provided under § 48B. Section
48B(a) provides that the qualifying gasification project credit for a taxable year is
an amount equal to 20 percent of the qualified investment (as defined in § 48B(b))
for that taxable year in qualifying gasification projects.
.03 The term “qualifying gasification
project” is defined in § 48B(c)(1) as meaning any project that (A) employs gasification technology, (B) will be carried out
by an eligible entity (as defined in section 3.02 of this notice), and (C) includes
a qualified investment of which an amount
not to exceed $650 million is certified under the qualifying gasification program as
eligible for credit under § 48B. Pursuant
to § 48B(c)(2), gasification technology is

June 25, 2007

any process that converts a solid or liquid product from coal (as defined in section 3.01 of this notice), petroleum residue
(as defined in § 48B(c)(8)), biomass (as
defined in § 48B(c)(4)), or other materials
that are recovered for their energy or feedstock value into a synthesis gas composed
primarily of carbon monoxide and hydrogen for direct use or subsequent chemical
or physical conversion.
.04 The qualifying gasification project
credit generally is allowed in the taxable
year in which the eligible property (as defined in § 48B(c)(3)) is placed in service
(as defined in section 3.05 of this notice)
by the taxpayer. Further, the at-risk rules
in § 49 and the recapture and other special
rules in § 50 apply to the qualifying gasification project credit.
.05 Section 48B(d)(1) provides that the
Secretary, in consultation with the Secretary of Energy, shall establish a qualifying gasification project program to consider and award certifications for qualified
investment eligible for credits under § 48B
to qualifying gasification project sponsors.
The Treasury Department and the Internal
Revenue Service established this program
in Notice 2006–25, 2006–11 I.R.B. 609.
Pursuant to § 48B(d)(2), certificates of eligibility may be issued under the program
only during the 10-year period beginning
on October 1, 2005.
.06 This notice modifies the qualifying
gasification project program established in
Notice 2006–25 in a number of respects.
The significant changes made by this notice include the following:
(1) Large and Mid-Size Business Division (LMSB) of the Service will allocate
the qualifying gasification project credits. The filing instructions in section 5.04
provide LMSB addresses to reflect this
change.
(2) Section 3 defines certain terms for
purposes of § 48B.
(3) The method of allocation is modified for allocation rounds after 2006.
Under the modified method of allocation,
the DOE will rank a certified project relative to other certified projects and credits
will be allocated to projects based on the
DOE ranking. The modified allocation
method will substantially favor projects
that capture and sequester carbon dioxide
emissions and will favor to a lesser extent
projects optimized for future carbon dioxide capture. Section 4.02(4) reflects this

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change in the method by which credits
under § 48B are allocated to projects.
(4) Section 4.02(8) provides that the
period for submitting the application for
§ 48B certification (i) ends on March 3,
2008, for the 2007–08 allocation round and
(ii) begins on March 4, 2008, and ends on
March 2, 2009, for the 2008–09 allocation
round. Changes also are made to the dates
in sections 4.02(10) and (12) for accepting or rejecting a taxpayer’s application for
§ 48B certification and for executing closing agreements.
(5) Section 4.02(9) provides that the
due date for the application for DOE certification is October 31, that DOE will rank
certified projects, and that the due date
for the DOE certification and ranking is
March 1. Section 4.02(8) also clarifies
that the DOE certification and ranking (for
projects determined to be feasible) are provided to the Service.
(6) Section 4.02(12) provides that a successor in interest must execute a new closing agreement with the Service no later
than the due date (including extensions) of
the successor in interest’s Federal income
tax return for the taxable year in which the
transfer occurs.
(7) The information required to be included in the application for DOE certification is modified. Section 5.02 requires
submission of additional information regarding the priority benefits of the project.
Appendix B provides additional information regarding program policy factors. Applicants will no longer be required to submit independent financial reports.
(8) Section 5.03 requests that a taxpayer
submit with the application for § 48B certification a declaration consenting to the disclosure by the Service of certain return information if the taxpayer is awarded an allocation of qualifying gasification project
credits. The form of the declaration is set
forth in Appendix C.
(9) Sections 5.03(1) and 5.04 require
that a taxpayer submit one paper copy and
one electronic version on a floppy disc or
a CD of the application for § 48B certification (including the application for DOE
certification).
(10) Section 6.02 provides more details
on who may sign the penalties of perjury
statement.
(11) Section 6.03 provides that the Service and the DOE must be informed if the
plans for the project change in any signifi-

2007–26 I.R.B.

cant respect from the plans set forth in the
applications for § 48B and DOE certification, and also provides the consequences
of any significant change to the plans set
forth in the applications.
(12) Section 6.06 provides that the
DOE will offer debriefings to applicants
that submitted an application for DOE
certification.
(13) Section 9 provides guidance regarding Freedom of Information Act requests for records relating to the qualifying
gasification project program.
SECTION 3. DEFINITIONS
The following definitions apply for purposes of § 48B and this notice:
.01 Coal. Section 48B(c)(6) defines the
term “coal” as meaning anthracite, bituminous coal, subbituminous coal, lignite, and
peat. Coal includes waste coal (that is, usable material that is a byproduct of the previous processing of anthracite, bituminous
coal, subbituminous coal, lignite, or peat).
Examples of waste coal include fine coal
of any of the listed ranks, coal of any of the
listed ranks obtained from a refuse bank
or slurry dam, anthracite culm, bituminous
gob, and lignite waste.
.02 Eligible entity. Section 48B(c)(7)
defines “eligible entity” as meaning any
person whose application for certification
is principally intended for use in a domestic project that employs domestic gasification applications related to chemicals, fertilizers, glass, steel, petroleum residues,
forest products, and agriculture (including
feedlots and dairy operations). For purposes of § 48B, a qualifying gasification
project is carried out by an eligible entity
if the project supplies more than 50 percent
of the thermal output in British thermal
unit (Btu) from the gasification process in
the form of synthesis gas for direct use
or subsequent chemical or physical conversion in an application related to one or
more of the industries listed in § 48B(c)(7)
or if more than 50 percent of the fuel input
in Btu to the gasification process is supplied from one or more of the industries
listed in § 48B(c)(7).
.03 Total synthesis gas capacity. The
total synthesis gas capacity of a project is
the total MMBtu per hour of the synthesis gas (higher heating value (HHV)) at the
gasifier outlet of the project. The synthesis
gas must be composed primarily of carbon

2007–26 I.R.B.

monoxide and hydrogen for direct use or
subsequent chemical or physical conversion.
.04 Fuel Input.
(1) In general. The term “fuel input”
means, with respect to any type of fuel,
the amount of such fuel used during normal plant operations. The amounts of the
fuel used are measured (i) in British thermal units (Btus) on an energy input basis and (ii) pursuant to applicable standards prescribed by the American Society
for Testing and Materials (ASTM). For example, § 48B(d)(3)(D) provides that the
fuels identified in § 48B(c)(2) will at all
times cumulatively comprise at least 90
percent of the total fuels (fuels identified
in § 48B(c)(2) and any other fuel input)
required by the project. This requirement
is satisfied if, after completion and during
normal plant operations, the fuels identified in § 48B(c)(2) will cumulatively comprise at least 90 percent of the project’s total fuels measured in Btus on an energy input basis and pursuant to applicable ASTM
standards.
(2) Only normal plant operations taken
into account. Only fuel used during normal plant operations is taken into account
for purposes of § 48B. Normal plant operations are operations other than during
periods of initial plant certification, plant
startup, plant shutdown, interconnected
gasifier(s) shutdown for gasification system maintenance, or interruptions of the
supply of fuels identified in § 48B(c)(2)
to the project resulting from an event of
force majeure (including an act of God,
war, strike, or other similar event beyond
the control of the taxpayer). For example, the fuel input during the initial plant
certification may consist entirely of natural gas or other fuels not identified in
§ 48B(c)(2) because fuel used during initial plant certification is disregarded in
determining whether the requirement of
§ 48B(d)(3)(D) to use 90 percent of the
fuels identified in § 48B(c)(2) is satisfied.
.05 Placed In Service. For purposes
of § 48B, property is placed in service in
the taxable year in which the property is
placed in a condition or state of readiness
and availability for a specifically assigned
function. See § 1.46–3(d)(1)(ii) of the Income Tax Regulations. Thus, a qualifying
gasification project or eligible property (as
defined in § 48B(c)(3)) that is a part of the
project is placed in service in the taxable

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year in which the project is placed in a condition or state of readiness and availability
for producing synthesis gas from the feedstocks identified in § 48B(c)(2).
SECTION 4. QUALIFYING
GASIFICATION PROJECT PROGRAM
.01 In General. The Service will consider a project under the qualifying gasification project program only if the DOE
provides a certification (“DOE certification”) and ranking (if any) for the project.
Accordingly, for each qualifying gasification project, a taxpayer must submit: (1)
an application for certification by the DOE
(“application for DOE certification”), and
(2) an application for certification under
§ 48B by the Service (“application for
§ 48B certification”). Both applications
may be submitted only during the 3-year
period beginning on February 21, 2006.
Certifications will be issued and credits
will be allocated to projects in annual allocation rounds. The initial allocation round
was conducted in 2006. Additional allocation rounds will be conducted in 2007–08
and, if necessary, in 2008–09.
.02 Program Specifications.
(1) The Service determines the amount
of the qualifying gasification project credits allocated to a qualifying gasification
project at the time the Service accepts the
application for § 48B certification for that
project in accordance with section 4.02(9)
of this notice. The qualified investment
in the project will be certified as eligible
for the credit to the extent such investment does not exceed the amount of the
credit allocated to the project multiplied by
five. See section 5 of this notice for the
requirements applicable to the application
for DOE certification and the application
for § 48B certification.
(2) The certification for a project cannot apply to more than $650 million of the
qualified investment in the project. Thus,
the maximum amount of qualifying gasification project credits that will be allocated
to a project is $130 million.
(3) Pursuant to § 48B(d)(1), the aggregate amount of credits allocated to all qualifying gasification projects may not exceed $350 million. In the 2006 allocation
round, $349,663,000 of credits was allocated. Therefore, $337,000 of credits is
available for allocation in 2007–08.

June 25, 2007

(4) DOE will rank the certified projects
in descending order (that is, first, second,
third, etc.) and the $337,000 available for
allocation will be allocated as follows in
the allocation round in 2007–08:
(a) If the requested allocation of credits
for projects that DOE has certified does not
exceed the amount available for allocation,
each certified project will be allocated the
full amount of credit requested.
(b) If the requested allocation of credits for projects that DOE has certified exceeds the amount available for allocation,
the amount available for allocation will be
allocated as follows:
(i) The project receiving the highest
ranking (that is, first) will be allocated
the full amount of credit requested (but
not exceeding the amount available for
allocation) before any credit is allocated
to a lower-ranked project. The amount
available for allocation is reduced by the
amount of credit so allocated and only the
remainder is available for allocation to a
lower-ranked project.
(ii) Second and lower-ranked projects
will be entitled to similar priority in the allocation of credits and allocations to such
projects will similarly reduce the remainder of the amount available for allocation
until the amount available for allocation is
exhausted.
(5) If the amount available for allocation is not fully allocated in the 2007–08
allocation round, a similar allocation round
will be conducted in 2008–09. Generally,
the results of each year will be announced.
See section 5.03(2) of this notice for further information about this announcement.
(6) If the same project would otherwise
be allocated credits under both the qualifying gasification project program under this
notice and the qualifying advanced coal
project program under Notice 2007–52,
2007–26 I.R.B. 1456, the following rules
apply:
(a) The qualifying gasification project
credit may not be allocated to the project
with respect to any qualified investment
under § 48B for which a qualifying advanced coal project credit is allowed under
§ 48A; and
(b) The qualifying gasification project
credit may be allocated to the project with
respect to the qualified investment under
§ 48B for which a qualifying advanced
coal project credit is not allowed under
§ 48A.

June 25, 2007

(7) For each allocation round, there will
be an annual application period during
which a taxpayer may file its application
for § 48B certification. The Service will
consider a project in an allocation round
only if the application for § 48B certification for the project is submitted during the
application period for that round and the
DOE provides the DOE certification and
the DOE ranking (if any) for the project
before the end of that application period.
(8) For the allocation round conducted
in 2007–08, the application period begins
on October 3, 2006, and ends on March 3,
2008, and any completed application for
§ 48B certification received by the Service
after October 2, 2006, and before March
4, 2008, will be deemed to be submitted by the taxpayer on March 3, 2008.
For the allocation round to be conducted
in 2008–09, the application period begins
on March 4, 2008, and ends on March 2,
2009, and any completed application for
§ 48B certification received by the Service
after March 3, 2008, and before March 3,
2009, will be deemed to be submitted by
the taxpayer on March 2, 2009. For purposes of this notice, an application that
is submitted by U.S. mail will be treated
as received by the Service on the date of
the postmark and an application submitted by a private delivery service will be
treated as received by the Service on the
date recorded or the date marked in accordance with § 7502(f)(2)(C).
(9) See section 5.02 of this notice and
Appendix B to this notice for the information to be submitted to the DOE in an application for DOE certification. Appendix
B to this notice also provides the instructions and address for filing the application
for DOE certification. The DOE will determine the feasibility of the project and,
if the project is determined to be feasible,
will provide a DOE certification for the
project to the Service. If the DOE certifies two or more projects, the DOE also
will rank each of the projects it certifies
(for example, first, second, third, etc.) relative to other certified projects. If an application for DOE certification is postmarked
on or before October 31 of a calendar year,
the DOE will determine the feasibility of
the project and (for projects determined to
be feasible) provide the DOE certification
and the DOE ranking (if any) to the Service by March 1 of the year following that
calendar year.

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(10) By April 30 of the calendar year
in which an application for § 48B certification is deemed to be submitted (as determined under section 4.02(8) of this notice), the Service will accept or reject the
taxpayer’s application for § 48B certification and will notify the taxpayer, by letter,
of its decision.
(11) A taxpayer that receives an acceptance letter under section 4.02(10) of this
notice has 7 years from the date of the acceptance letter to place the project in service and if the project is not placed in service by the end of that period then the acceptance letter is void.
(12) If the taxpayer’s application for
§ 48B certification is accepted, the acceptance letter will state the amount of
the credit allocated to the project and the
amount of qualified investment that is certified as eligible for the credit. If a credit
is allocated to a taxpayer’s project, the taxpayer will be required to execute a closing agreement in the form set forth in Appendix A to this notice. By June 30 of
the calendar year in which an application
for § 48B certification is accepted, the taxpayer must execute and return the closing
agreement to the Service at the appropriate address listed in section 5.04 of this notice or listed in later guidance published in
the Internal Revenue Bulletin. The Service will execute and return the closing
agreement to the taxpayer by August 31 of
such calendar year. The executed closing
agreement applies only to the accepted taxpayer. Accordingly, any successor in interest must execute a new closing agreement
with the Service no later than the due date
(including extensions) of the successor in
interest’s Federal income tax return for the
taxable year in which the transfer occurs.
If the successor in interest does not execute a new closing agreement, the following rules apply:
(a) In the case of an interest acquired at
or before the time the qualifying gasification project is placed in service, any credit
allocated to the project will be fully forfeited (and rules similar to the recapture
rules of § 50(a) apply with respect to qualified progress expenditures); and
(b) In the case of an interest acquired
after the qualifying gasification project is
placed in service, the project ceases to be
investment credit property and the recapture rules of § 50(a) (and similar rules with

2007–26 I.R.B.

respect to qualified progress expenditures)
apply.
SECTION 5. APPLICATIONS FOR
CERTIFICATIONS
.01 In General. An application for
§ 48B certification and a separate application for DOE certification must be
submitted for each qualifying gasification project. If an application for DOE
certification does not include all of the information required by section 5.02 of this
notice and meet the requirements in sections 6.01 and 6.02 of this notice, the DOE
may decline to accept the application. If
an application for § 48B certification does
not include all of the information listed in
section 5.03 of this notice and meet the
requirements in sections 6.01 and 6.02
of this notice, the application will not be
accepted by the Service.
.02 Information Required in the Application for DOE Certification. An application for DOE certification must include all
of the information requested in Appendix
B to this notice and all of the following:
(1) The name, address, and taxpayer
identification number of the taxpayer. If
the taxpayer is a member of an affiliated
group filing consolidated returns, also provide the name, address, and taxpayer identification number of the common parent of
the group.
(2) The name and telephone number of
a contact person.
(3) The name and address (or other
unique identifying designation) of the
qualifying gasification project.
(4) A statement specifying the projected placed-in-service date of the qualifying gasification project.
(5) The estimated total cost of the
project and the estimated total qualified
investment in the eligible property that
will be part of the project.
(6) The amount of the qualifying gasification project credit requested for the
project.
The amount requested must
not exceed $130 million (the maximum
amount permitted under § 48B(a) and
(c)(1)(C)).
(7) If the taxpayer is or will be requesting an amount of the qualifying advanced
coal project credit under § 48A for the
same project, a statement specifying the
amount of credit the taxpayer is or will be
requesting under § 48A.

2007–26 I.R.B.

(8) The exact total synthesis gas capacity (as defined in section 3.03 of this notice) of the project.
(9) A statement specifying whether
the project is entitled to priority for carbon capture capability (as defined in
§ 48B(c)(5)), for using renewable fuel, or
for having project teams with experience
that demonstrates successful and reliable
operations of the gasification technology on the domestic fuels identified in
§ 48B(c)(2), and, if entitled to priority, a
statement identifying which of these priorities apply to the project.
(10) Documentation or other evidence
establishing that the taxpayer is financially
viable without the receipt of additional
federal funding associated with the qualifying gasification project.
.03 Information To Be Included in the
Application for § 48B Certification.
(1) Information required in the application for § 48B certification. An application
for § 48B certification must include all of
the following:
(a) The name, address, and taxpayer
identification number of the taxpayer. If
the taxpayer is a member of an affiliated
group filing consolidated returns, also provide the name, address, and taxpayer identification number of the common parent of
the group.
(b) The name, telephone number, and
fax number of a contact person. For such
person, attach a properly executed power
of attorney, preferably on Form 2848,
Power of Attorney and Declaration of
Representative.
(c) One paper copy and one electronic
version on a floppy disc or a CD of the
completed application for DOE certification submitted with respect to the project
in accordance with section 5.02 of this notice.
(2) Consent to disclosure of allocation.
In order to provide the public with information on how the qualifying gasification project credits authorized by Congress
have been allocated and facilitate oversight of the qualifying gasification project
program, the Service intends to publish the
results of the allocation process. The Service expects that a list identifying the taxpayers and projects to which credits are allocated and specifying the amount of credit
allocated to each would be of particular interest to the public. Pursuant to § 6103,
consent is required in order to disclose any

1477

return information with respect to taxpayers awarded an allocation. Therefore, the
Service requests that each taxpayer submit with the application for § 48B certification a declaration, consenting to the
disclosure by the Service of the following
return information in the event a qualifying gasification project credit is allocated
to the taxpayer’s project: (a) the name of
the taxpayer; (b) if the taxpayer is a member of an affiliated group filing consolidated returns, the name of the common
parent of the group; (c) the type and location of the project to which the application
relates; and (d) the amount of the qualifying gasification project credit allocated to
the project. To provide a valid consent, the
declaration must be in the form set forth in
Appendix C. A taxpayer is not required to
consent to disclosure of this information in
order to receive an allocation of the qualifying gasification project credit, and neither the presence nor the absence of such
a consent will be taken into account in the
evaluation of a taxpayer’s application. The
Service will not publish any return information relating to a taxpayer if the taxpayer does not consent to disclosure of this
information or does not receive an allocation of the qualifying gasification project
credit.
.04 Instructions and Address for Filing § 48B Application. One paper copy
and one electronic version on a floppy
disc or a CD of the application for § 48B
certification must be submitted. Applications for § 48B certification should be
marked: SECTION 48B APPLICATION
FOR CERTIFICATION. There is no user
fee for these applications.
(1) Applications submitted by U.S. mail
must be sent to:
Internal Revenue Service
Industry Director, Natural Resources
and Construction
Attn: Executive Assistant
1919 Smith Street
Stop HOU 1000
Houston, TX 77002
Applications submitted by a private delivery service must be sent to:

June 25, 2007

Internal Revenue Service
Industry Director, Natural Resources
and Construction
Attn: Executive Assistant
1919 Smith Street, Floor P2
Stop HOU 1000
Houston, TX 77002
(2) Applications may also be hand delivered Monday through Friday between
the hours of 8 a.m. and 4 p.m. Central time
to:
Internal Revenue Service
Industry Director, Natural Resources
and Construction
Attn: Executive Assistant
1919 Smith Street, Floor P2
Stop HOU 1000
Houston, TX 77002
SECTION 6. OTHER REQUIREMENTS
.01 Signature. Each submission under
section 5 of this notice must be signed and
dated by the taxpayer. A stamped signature or faxed signature is not permitted.
.02 Penalties of Perjury Statement.
(1) Each submission under section 5 of
this notice must be accompanied by the
following declaration: “Under penalties of
perjury, I declare that I have examined this
submission, including accompanying documents, and, to the best of my knowledge
and belief, all of the facts contained herein
are true, correct, and complete.”
(2) The declaration must be signed and
dated by the taxpayer. The person signing for the taxpayer must have personal
knowledge of the facts. Further, the declaration must be signed by an officer on behalf of a corporation, a general partner on
behalf of a state-law partnership, a member-manager on behalf of a limited liability company, a trustee on behalf of a trust,
and the proprietor in the case a sole proprietorship. If the taxpayer is a member of
an affiliated group filing consolidated returns, the declaration also must be signed
by a duly authorized officer of the common
parent of the group. A stamped signature
or faxed signature is not permitted.
.03 Significant Change in Plans. The
Service and DOE must be informed if the
plans for the project change in any significant respect from the plans set forth in the
applications for § 48B and DOE certification. Any significant change to the plans

June 25, 2007

set forth in the applications will have the
following effects:
(1) The Service will disregard any certification or ranking provided by DOE unless DOE is informed of the change before
the date on which DOE provides the certification or ranking (that is, the Service will
not consider the project unless DOE provides a new, timely certification and ranking (if any) on or after the date on which
DOE is informed of the change); and
(2) Any acceptance provided by the
Service and any allocation or certification
based on that acceptance will be void unless the Service is informed of the change
before the date on which the acceptance
is provided under section 4.02(10) of this
notice.
.04 Effect of an Acceptance or Allocation. An acceptance or allocation by the
Service under this notice is not a determination that a project qualifies for the
qualifying gasification project credit under
§ 48B. The Service may, upon examination (and after any appropriate consultation with DOE), determine that the project
does not qualify for this credit.
.05 No Right to a Conference or Appeal.
A taxpayer does not have a right to a conference relating to any matters under this
notice. Further, a taxpayer does not have
a right to appeal the decisions made under
this notice (including the acceptance or rejection of the application for DOE or § 48B
certification or the amount of credit allocated to the project) to an Associate Chief
Counsel or any other official of the Service.
.06 DOE Debriefings. Although a taxpayer does not have a right to a conference
relating to any matters under this notice,
the DOE will offer debriefings to all applicants that submitted an application for
DOE certification. This debriefing will be
held by the DOE after the Service has accepted the applications for § 48B certification (as determined under section 4.02(10)
of this notice). The sole purpose of the
debriefing is to enable applicants to develop better proposals in future allocation
rounds by providing DOE’s review of the
strengths and weaknesses of their application for DOE certification.

1478

SECTION 7. REVIEW AND
REDISTRIBUTION
.01 In General. Section 48B(d)(1) provides for the review and redistribution of
credits allocated under the qualifying gasification project program under rules similar to the rules of § 48A(d)(4).
.02 Review and Redistribution of Credits.
(1) In general. If, after the allocation
round in 2008–09, the aggregate credit of
$350 million is not fully subscribed (that
is, the aggregate credit is not fully allocated), an additional program for applications for certification to allocate the remaining credits will be conducted. Future guidance will prescribe the procedures
applicable to applications for certification
with respect to the remaining credits.
(2) Reduction or forfeiture of allocated
credits. Under the closing agreement set
forth in Appendix A to this notice, the
qualifying gasification project credits allocated under section 4 of this notice will be
reduced or forfeited in certain situations.
A taxpayer must notify the Service of the
amount of any reduction or forfeiture required under the closing agreement. This
notification must be sent to the appropriate
address listed in section 5.04 of this notice
or listed in later guidance published in the
Internal Revenue Bulletin.
The amount of any reduction or forfeiture of the allocated credits will be returned and included in the aggregate credit
remaining to be allocated in the allocation round following the reduction or forfeiture. If the reduction or forfeiture occurs after the allocation round in 2008–09,
future guidance will prescribe procedures
applicable to applications for certification
with respect to the returned credits.
SECTION 8. QUALIFIED PROGRESS
EXPENDITURES
.01 Section 48B(b)(3) provides that
rules similar to the rules of § 46(c)(4)
and (d) (as in effect on the day before the
enactment of the Revenue Reconciliation
Act of 1990) shall apply for purposes of
§ 48B. Former §§ 46(c)(4) and 46(d) provided the rules for claiming the investment
credit on qualified progress expenditures
(as defined in former § 46(d)(3)) made
by a taxpayer during the taxable year for

2007–26 I.R.B.

the construction of progress expenditure
property (as defined in former § 46(d)(2)).
.02 In the case of self-constructed property (as defined in former § 46(d)(5)(A)),
former § 46(d)(3)(A) defined qualified
progress expenditures to mean the amount
that is properly chargeable (during the
taxable year) to capital account with respect to that property. With respect to
a qualifying gasification project that is
self-constructed property, amounts paid or
incurred are chargeable to capital account
at the time and to the extent they are properly includible in computing basis under
the taxpayer’s method of accounting (for
example, after applying the requirements
of § 461, including the economic performance requirement of § 461(h)).
.03 To claim the qualifying gasification
project credit on the qualified progress expenditures paid or incurred by a taxpayer
during the taxable year for construction of
a qualifying gasification project, the taxpayer must make an election under the
rules set forth in § 1.46–5(o) of the Income Tax Regulations. The taxpayer may
not make the qualified progress expenditures election for a qualifying gasification
project until the taxpayer has received an
acceptance letter for the project under section 4.02(10) of this notice.
.04 If a taxpayer makes the qualified
progress expenditures election pursuant to
section 8.03 of this notice, rules similar
to the recapture rules in § 50(a)(2)(A)-(D)
apply. In addition to the cessation events
listed in § 50(a)(2)(A), examples of other
events that will cause the project to cease
being a qualifying gasification project are:
(1) Failure to place the project in service
within 7 years from the date of the acceptance letter under section 4.02(10) of this
notice; or
(2) A significant change to the plans for
the project as set forth in the applications
for § 48B and DOE certification and, under
section 6.03 of this notice, the Service’s
acceptance of the project is void as a result
of the change.

2007–26 I.R.B.

SECTION 9. DISCLOSURE OF
INFORMATION
.01 In general. Any information contained in the application for DOE certification or the application for § 48B
certification is subject to § 6103 and to
any other applicable exemption set forth
in the Freedom of Information Act (the
FOIA). Examples of FOIA exemptions
include FOIA trade secrets and commercial or financial information exemption of
5 U.S.C. 552(b)(4) and the FOIA personal
privacy exemption of 5 U.S.C. 552(b)(6)).
.02 FOIA requests. Anyone interested
in submitting a request for records under
the FOIA with respect to the qualifying
gasification project program under § 48B
(including a request for records relating
to the application for DOE certification)
should direct a request that conforms to
the Service’s FOIA regulations, found at
26 C.F.R. § 601.702, to the following address:
IRS FOIA Request
Baltimore Disclosure Office
Room 940
31 Hopkins Plaza
Baltimore, MD 21201
SECTION 10. EFFECT ON OTHER
DOCUMENTS
Notice 2006–25 is clarified, modified,
amplified, and superseded.
SECTION 11. EFFECTIVE DATE
This notice is effective June 7, 2007.
SECTION 12. PAPERWORK
REDUCTION ACT
The collection of information contained
in this notice has been reviewed and approved by the Office of Management and
Budget in accordance with the Paperwork
Reduction Act (44 U.S.C. § 3507) under
control number 1545–2002.

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An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
OMB control number.
The collections of information in this
notice are in sections 4, 5, 6, 7, and Appendix B of this notice. This information
is required to obtain an allocation of qualifying gasification project credits. This information will be used by the Service to
verify that the taxpayer is eligible for the
qualifying gasification project credits. The
collection of information is required to obtain a benefit. The likely respondents are
business or other for-profit institutions.
The estimated total annual reporting
burden is 1,700 hours.
The estimated annual burden per respondent varies from 50 to 125 hours, depending on individual circumstances, with
an estimated average of 85 hours. The estimated number of respondents is 20.
The estimated annual frequency of responses is on occasion.
Books or records relating to a collection
of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally, tax returns and tax return
information are confidential, as required
by 26 U.S.C. § 6103.
SECTION 13. DRAFTING
INFORMATION
The principal author of this notice
is Ruba Nasrallah of the Office of Associate Chief Counsel (Income Tax &
Accounting). For further information regarding this notice, contact Jaime Park
of the Office of Associate Chief Counsel (Passthroughs & Special Industries)
at (202) 622–3110 (not a toll-free call).
For further information regarding the application for § 48B certification, contact
Kimberly Edwards, Executive Assistant,
Office of the Industry Director, Natural Resources and Construction, at (713)
209–3615 (not a toll-free number).

June 25, 2007

APPENDIX A
CLOSING AGREEMENT

Under § 7121 of the Internal Revenue Code, [insert taxpayer’s name, address, and identifying number] (“Taxpayer”) and the
Commissioner of Internal Revenue (“Commissioner”) make the following closing agreement:
WHEREAS:
1. On or before March [insert date and year], Taxpayer submitted to the Internal Revenue Service (“IRS”), an application for
certification under the qualifying gasification project program described in Notice 2007–53 (“Application for § 48B Certification”);
2. Taxpayer’s Application for § 48B Certification is for the qualifying gasification project (the “Project”) described below—
(1) The Project will be located at [insert address or other identifying designation];
(2) The Project will have a total synthesis gas capacity (as defined in section 3.03 of Notice 2007–53) of at least [insert
number] total MMBtu per hour of synthesis gas. The synthesis gas is composed primarily of carbon monoxide and hydrogen for
direct use or subsequent chemical or physical conversion;
(3) The fuels identified in § 48B(c)(2) will at all times cumulatively comprise at least 90 percent of the total fuel input (as
defined in section 3.04(1) of Notice 2007–53 and including fuels identified in § 48B(c)(2) and any other fuel input) required by the
Project for normal plant operations (as defined in section 3.04(2) of Notice 2007–53) for the production of chemical feedstocks,
liquid transportation fuels, or co-production of electricity; and
3. On [insert date of acceptance letter issued under section 4.02(9) of Notice 2007–53], the IRS accepted Taxpayer’s Application
for § 48B Certification for the Project and allocated a qualifying gasification project credit under § 48B in the amount of $[insert
number] to the Project.
NOW IT IS HEREBY DETERMINED AND AGREED FOR FEDERAL INCOME TAX PURPOSES THAT:
1. The total amount of the qualifying gasification project credit to be claimed for the Project under § 48B(a) must not exceed
$[insert the number in WHEREAS clause #3].
2. If the Project is not placed in service by Taxpayer within 7 years of [insert the date in WHEREAS clause #3], the qualifying
gasification project credit in the amount of $[insert the number in WHEREAS clause #3] allocated to the Project is fully forfeited.
3. If the plans for the Project change in any significant respect from the plans set forth in the application for DOE certification
(as defined in section 4.01 of Notice 2007–53) and the Application for § 48B Certification (as defined in section 4.01 of Notice
2007–53) and, under section 6.03 of Notice 2007–53, the acceptance of Taxpayer’s Application for § 48B Certification on [insert
the date in WHEREAS clause #3] is void, the qualifying advanced coal project credit in the amount of $[insert the number in
WHEREAS clause #3] allocated to the Project is fully forfeited.
4. (1) If the Project fails to use gasification technology as defined in § 48B(c)(2) or is not carried out by an eligible entity
(as defined in section 3.02 of Notice 2007–53), the qualifying gasification project credit in the amount of $[insert the number in
WHEREAS clause #3] allocated to the Project is fully forfeited.
(2) If, at any time, the fuels identified in § 48B(c)(2) with respect to the gasification technology for the Project do not cumulatively comprise at least 90 percent of the total fuel input (as defined in section 3.04(1) of Notice 2007–53 and including fuels
identified in § 48B(c)(2) and any other fuel input) required by the Project for normal plant operations (as defined in section 3.04(2)
of Notice 2007–53) for the production of chemical feedstocks, liquid transportation fuels, or co-production of electricity, the Project
ceases to be investment credit property and the recapture rules of § 50(a) apply.
5. Taxpayer will not claim the qualifying advanced coal project credit under § 48A for any qualified investment for which the
qualifying gasification project credit is allowed under § 48B.

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6. If Taxpayer elects to claim the qualifying gasification project credit on the qualified progress expenditures paid or incurred
by Taxpayer during the taxable year(s) during which the Project is under construction and if the Project ceases to be a qualifying
gasification project (whether before, at the time, or after the Project is placed in service), rules similar to the recapture rules in
§ 50(a)(2)(A) through (D) apply.
7. This agreement applies only to Taxpayer. Any successor in interest must execute a new closing agreement with the IRS. If the
interest is acquired at or before the time the Project is placed in service and the successor in interest fails to execute a new closing
agreement, the qualifying gasification project credit in the amount of $[insert the number in WHEREAS clause #3] allocated to the
Project is fully forfeited. If the interest is acquired after the time the Project is placed in service and the successor in interest fails
to execute a new closing agreement, the Project ceases to be investment credit property and the recapture rules of § 50(a) apply.
THIS AGREEMENT IS FINAL AND CONCLUSIVE EXCEPT:
1. The matter it relates to may be reopened in the event of fraud, malfeasance, or misrepresentation of a material fact;
2. It is subject to the Internal Revenue Code sections that expressly provide that effect be given to their provisions (including
any stated exception for § 7122) notwithstanding any law or rule of law; and
3. If it relates to a tax period ending after the date of this Closing Agreement, it is subject to any law enacted after such date,
which applies to the tax period.
By signing, the parties certify that they have read and agreed to the terms of this Closing Agreement.
Taxpayer: [insert name and identifying number]
By:

Date Signed:
[insert name]

Title: [insert title]
[insert taxpayer’s name]
Commissioner of Internal Revenue
Date Signed:

By:
[insert name]
Title: [insert title]

I have examined the specific matters involved and recommend the acceptance of the proposed agreement.
(Receiving Officer)
(Title)
Date Signed
I have reviewed the specific matters involved and recommend the acceptance of the proposed agreement.
(Reviewing Officer)
(Title)
Date Signed

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APPENDIX B
APPLICATION FOR DOE CERTIFICATION
REQUEST FOR SUPPLEMENTAL APPLICATION INFORMATION FOR DOE
The Internal Revenue Service (“IRS”) and the Department of Energy (“DOE”) seek to certify applications that demonstrate a high
likelihood of being successfully implemented by the applicants. To qualify, projects must be economically feasible and use the
appropriate gasification technology.
This request for submission of supplemental application information:
1. Describes the information to be provided by the applicant seeking a certification of feasibility, and
2. Lists the evaluation criteria and Program Policy Factors to be used by DOE in the evaluation of applications.
In conducting this evaluation, the DOE may utilize assistance and advice from qualified personnel from other Federal agencies
and/or non-conflicted contractors. DOE will obtain assurances in advance from all evaluators that application information shall be
kept confidential and used only for evaluation purposes. DOE reserves the right to request clarifications and/or supplemental
information from some or all applicants through written submissions and/or oral presentations.
Notice is given that DOE may determine whether or not to provide a certification to the IRS at any time after the application has
been received, without further exchanges or discussions. Therefore, all applicants are advised to submit their most complete
and responsive application.
Applications will not be returned.
SUBMISSION INFORMATION FOR DOE CERTIFICATION APPLICATION
A. General
This request, together with the information in sections 5.02, 6.01, and 6.02 of Notice 2007–53 includes all the information needed
to complete an application for DOE certification. All applications shall be prepared in accordance with this request in order to
provide a standard basis for evaluation and to ensure that each application will be uniform as to format and sequence.
Each application should clearly demonstrate the applicant’s capability, knowledge, and experience in regard to the requirements
described herein.
Applicants should fully address the requirements of Notice 2007–53 and this request and not rely on the presumed background
knowledge of reviewers. DOE may reject an application that does not follow the instructions regarding the organization and
content of the application when the nature of the deviation and/or omission precludes meaningful review of the application.
B. Unnecessarily Elaborate Applications
Unnecessarily elaborate brochures or other presentations beyond those sufficient to present a complete and effective application
are not desired. Elaborate art work, graphics and pictures are neither required nor encouraged.
C. Application Submission for DOE Certification
The application submission to DOE must include the information and documentation required by sections 5.02, 6.01, and 6.02
of Notice 2007–53.
An application will not be considered in the allocation round conducted in 2007–08 unless it is postmarked by October 31, 2007,
and will not be considered in the allocation round conducted in 2008–09 unless it is postmarked by October 31, 2008. Two paper
copies and one electronic version on a floppy disc or a CD of the Application must be submitted to:
Melissa Robe
National Energy Technology Laboratory
3610 Collins Ferry Road
Morgantown, WV 26507
Note that under section 5.03(1) of Notice 2007–53, one paper copy and one electronic version must be sent to the IRS as part of
the application for IRS certification. The application for IRS certification will not be considered in the allocation round conducted
in 2007–08 unless it is submitted to the IRS by March 3, 2008, and will not be considered in the allocation round conducted in
2008–09 unless it is submitted to the IRS by March 2, 2009.

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THE INFORMATION REQUIRED BY THIS REQUEST MUST BE SUBMITTED USING THE FORMAT AND THE
HEADINGS OF THE PROJECT INFORMATION MEMORANDUM AS DESCRIBED BELOW.
To aid in evaluation, applications shall be clearly and concisely written and logically assembled. All pages of each part shall be
appropriately numbered and identified with the name of the applicant and the date.
The application, including the Project Information Memorandum, MUST be formatted in one of the following software
applications:
Microsoft Wordtm 2002 or later edition
Microsoft Exceltm 2002 or later edition
Adobe Acrobattm PDF 6.0 or later edition
Financial models should be submitted using the Exceltm spreadsheet and must include calculation formulas and assumptions.
The applicant is responsible for the integrity and structure of the electronic files. The DOE will not be responsible for
reformatting, restructuring or converting any files submitted under this announcement.
The Project Information Memorandum, excluding Appendices, shall not exceed seventy-five (75) pages. Pages in excess of the
page limitation will not be considered for evaluation. All text shall be typed, single spaced, using 12 point font, 1 inch margins,
and unreduced 8–1/2-inch by 11-inch pages. Illustrations and charts shall be legible with all text in legible font. Pages shall be
sequentially numbered. Except as otherwise noted herein the page guidelines previously set forth constitute a limitation on the
total amount of material that may be submitted for evaluation. No material may be incorporated in any application by reference
as a means to circumvent the page limitation.
D. Form of Project Information Memorandum
PROJECT INFORMATION MEMORANDUM
I. SUMMARY AND INTRODUCTION

•
•
•
•

Description of the Project
Financing and Ownership Structure
Describe the main parties to the project, including background, ownership and related experience
Current Project Status and Schedule to Beginning of Construction

II. TECHNOLOGY AND TECHNICAL INFORMATION
Provide a description of the proposed technology, including sufficient supporting information (such as vendor guarantees, process
flow diagrams, equipment descriptions, information on each major process unit and the total plant, compositions of major streams,
and the technical plan for achieving the goals proposed for the project) as would be needed to allow DOE to confirm that the
technical requirements of § 48B are met. Specifically, the applicant should:

•
•
•
•
•
•

Provide evidence sufficient to demonstrate that the proposed technology will employ gasification technology as defined in
§ 48B(c)(2).
Present information sufficient to justify the total amount of synthesis gas (as defined in § 48B(c)(2)) to be produced by the
project (synthesis gas capacity). Provide the total MMBtu/hr of the syngas (HHV) at the gasifier outlet.
Provide evidence sufficient to ensure that fuels defined in § 48B(c)(2) will comprise 90 percent of the total fuel input (fuels
defined in § 48B(c)(2) and any other fuel input) for the project. Provide the total quantities of CO, H2, CH4, CO2, and water
in the syngas.
Identify the domestic industry for which the proposed project is intended to be used.
Identify the specific products and quantities produced by the proposed project, providing sufficient evidence to support claims.
Provide evidence that indicates, for projects using non renewable fuels, the gasification technology design reflects reasonable
consideration for, and is capable of, accommodating equipment necessary to capture carbon dioxide for later use or sequestration. Include the project status and relevant information from ongoing engineering activities. Also include in an appendix any
engineering report or reports used by the applicant to develop the project and to estimate costs and operating performance.

III. APPLICANT’S CAPABILITY TO ACCOMPLISH THE TECHNICAL OBJECTIVES
Provide a narrative supporting the applicant’s capability to accomplish the technical objectives of the proposed project, including
supporting documentation demonstrating that the applicant has assembled a team that is formally committed to participate in
the proposed project.

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•
•
•
•

Provide information to support that the applicant has assembled a team with the skills and resources needed to implement the
project as proposed. Provide signed agreements or letters from team members demonstrating that the proposed team members
are fully committed to the project.
Provide information, including examples of prior similar projects completed by applicant, EPC contractor, and suppliers of
major subsystems or equipment, which support the capabilities of the applicant and its team members to design, construct,
permit, and operate the facility. The applicant should demonstrate that the team members have a corporate history of successful
completion of similar projects.
Provide information to support that key personnel of the applicant and its team members have knowledge, experience, and
adequate degree of involvement to successfully implement the project.
Include the project status and relevant information from ongoing engineering activities. Also include in an appendix any engineering report or reports used by the applicant to develop the project and to estimate costs and operating performance. Included
copies of any signed agreements to support project status claims regarding preliminary design studies, FEED, and EPC-type
agreements.

IV. SITE CONTROL AND OWNERSHIP

•
•
•
•
•

Provide evidence that the applicant owns or controls a site in the United States of sufficient size to allow the proposed project to
be constructed and operated on a long-term basis. Documentation such as a deed demonstrating the applicant owns the project
site, a signed option to purchase the site from the site owner, or a letter of intent by the site owner to sell the site to the applicant
should be provided.
Describe the current infrastructure at the site available to meet the needs of the project.
Provide documentation supporting applicant’s conclusion that the proposed site can fully meet all environmental, feedstock supply, water supply, transportation and public policy requirements. Such documentation may include signed agreements, letters
of intent, or term sheets, such as coal supply, water supply, and product transportation, etc., and regulatory approvals supporting
the key claims.
Provide detailed plans, schedules and status updates, particularly, for sites with pre-existing conditions that could impact the
proposed project. Pre-existing conditions may include, but are not limited to, sites with mandated environmental remediation
efforts; brown-field sites that will require building demolition; or sites requiring substantial rerouting of existing roads, railroads,
or pipelines prior to the start of the project.
Applicants must select one “proposed site.” However, projects with key physical or logistical elements that require close integration with another system for the project to succeed should provide information on all integrated systems regardless of where
they are located. Example 1: a gasification plant designed to operate exclusively on coals from a to-be-opened mine should
provide supporting documentation for the new mine. Example 2: an oxygen-blown gasification plant planning to purchase
oxygen from a third party who will construct a plant exclusively for this project should provide documentation for the oxygen
supplier.

V. UTILIZATION OF PROJECT OUTPUT

•
•
•

Provide evidence that a market exists for the products of the proposed project as evidenced by contracts or written statements
of intent from potential customers. Such documentation should be signed by authorizing officials by both the buyer and seller,
and may include: Sales Agreements, Letters of Intent, Memoranda of Understanding, and Option Agreements.
Describe any sales arrangements that exist or that may be contemplated and summaries of their key terms and conditions.
Include as an appendix any independent Market Study that has been done in connection with this project, or if no independent
market study has been completed, provide a copy of the applicant-prepared market study.

VI. PROJECT ECONOMICS
Describe the project economics and provide satisfactory evidence of economic feasibility as demonstrated through the financial
forecast and the underlying project assumptions. The project economic and financial assumptions should be clearly stated
and explained.
Discuss the market potential for the proposed technology beyond the project proposed by the applicant.
Show calculation for the amount of tax credit applied for based on allowable cost.

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VII. PROJECT DEVELOPMENT AND FINANCIAL PLAN
Provide the total project budget and major plant costs (e.g., development, operating, capital, construction, and financing costs).
Provide the estimated annual budget for and source of project development costs from the time of the application until the
beginning of construction, including legal, engineering, financial, environmental, overhead, and other development costs.
Describe the overall approach to project development and financing sufficient to demonstrate project viability. Provide a complete
explanation of the source and amount of project equity. Provide a complete explanation of the source and amount of project
debt. Provide the audited financial statements for the applicant for the most recently ended three fiscal years, and the unaudited
quarterly interim financial statements for the current fiscal year for (a) the applicant, (b) for any of the project parties providing
funding, and (c) for any third party funding source. If the applicant or another party does not have audited financial statements,
the applicant or the party should provide equivalent financial statements prepared by the applicant or the party, in accordance with
Generally Accepted Accounting Principles, and certified as to accuracy and completeness by the Chief Financial Officer of the
party providing the statements. Applicant should demonstrate that the award recipient is financially viable without the receipt of
additional federal funding associated with the proposed project.
For internally financed projects, provide evidence that the applicant has sufficient assets to fund the project with its own resources.
Identify any internal approvals required to commit such assets. Include in an appendix copies of any board resolution or other
approval authorizing the applicant to commit funds and proceed with the project.
For projects financed through debt instruments either unsecured or secured by assets other than the project, provide evidence that
the applicant has sufficient creditworthiness to obtain such financing along with a discussion of the status of such instruments.
Identify any internal approvals required to commit the applicant to pursue such financing. Include in an appendix, copies of any
board resolution or other approval authorizing the applicant to commit to such financing.
For projects financed through investor equity contributions, discuss the source and status of each contribution. Discuss each
investor’s financial capability to meet its commitments. Include in an appendix, copies of any executed investment agreements.
If financing through a public offering or private placement of either debt or equity is planned for the project, provide the expected
debt rating for the issue and an explanation of applicant’s justification for the rating. Describe the status of any discussions with
prospective investment bankers or other financial advisors.
For projects employing nonrecourse debt financing, provide a complete discussion of the approach to, and status of, such
financing. In an appendix, provide (1) an Excel based financial model of the project, with formulas, so that review of the model
calculations and assumptions may be facilitated; provide pro-forma project financial, economic, capital cost, and operating
assumptions, including detail of all project capital costs, development costs, interest during construction, other operating
expenses, and all other costs and expenses.
VIII. PROJECT CONTRACT STRUCTURE
Describe the current status of each of the agreements set forth below. Include as an appendix copies of the contracts or summaries
of the key provisions of each of the following agreements:

•
•
•
•
•
•

Raw Material Input Supply: describe the source and price of raw material inputs for the project. Include as an appendix any
studies of price and amount of raw materials that have been prepared. Include a summary of any supply contracts and a signed
copy of the contracts.
Transportation: explain the arrangements for transporting project inputs and outputs, including costs.
Operations & Maintenance Agreement: include a summary of the terms and conditions of the contract and a copy of the contract.
Shareholders Agreement: summarize key terms and include the agreement as an appendix.
Engineering, Procurement and Construction Agreement: describe the key terms of the existing or expected EPC contract arrangement, including firm price, liquidated damages, hold-backs, performance guarantees, etc.
Water Supply Agreement: confirm the amount, source, and cost of water supply.

IX. PERMITS INCLUDING ENVIRONMENTAL AUTHORIZATIONS

•
•
•
•

Provide a complete list of all federal, state, and local permits, including environmental authorizations or reviews, necessary to
commence construction of the project.
Explain what actions have been taken to date to satisfy the required authorizations and reviews, and the status of each.
Provide a description of the applicant’s plan to obtain and complete all necessary permits, and environmental authorizations
and reviews.
Existing permits and permit applications must be specific to the project proposed. If existing permits are not specific for the
proposed project (i.e., permits for oil-fired or natural gas-based systems), specific plans, procedures and schedules for reapplying, modifying and/or renegotiating permits should be provided.

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X. PROJECT SCHEDULE

•
•

Provide an overall project schedule which includes technical, business, financial, permitting and other factors to substantiate
that the project will meet the 7 year requirement for placing the plant in service.
The project schedule should be comprehensive and provide sufficient detail to demonstrate how applicant will meet the placedin-service requirement. The schedule should demonstrate that the applicant understands the required tasks, and has allowed
realistic times for accomplishing the technical and financial tasks. The schedule should include the milestone accomplishments
needed to obtain the financing for the project.

APPENDICES

•
•
•
•
•
•
•
•
•
•

Copy of internal or external engineering reports.
Copy of site plan, together with evidence that applicant owns or controls a site. Examples of evidence would include a deed,
or an executed contract to purchase or lease the site.
Information supporting applicant’s conclusion that the site is fully acceptable as the project site with respect to environment,
raw material supply, water supply, and public policy reasons.
Project Market Study.
Financial Model of project.
Financial statements for the applicant and other project funding sources for the most recently ended three fiscal years, and the
unaudited quarterly interim financial statements for the current fiscal year.
Expressions of interest or commitment letters from funding sources.
For each project contract, if no contract currently exists, provide a summary of the expected terms and conditions.
List of all federal, state, and local permits, including environmental authorizations or reviews, necessary to commence construction.
Copies of any contract or written statements from customers of intent to purchase project products.

E. Evaluation Criteria:
Industrial Gasification Projects: will be evaluated on whether they meet all the requirements of § 48B.
Technical: will be evaluated on whether the applicant has demonstrated the capability to accomplish the technical objectives.
Site: will be evaluated on the basis that the site requirement for ownership or control has been met, and that the site is suitable for
the proposed project.
Economic: will be evaluated on whether the project has demonstrated economic feasibility, taking into consideration the submitted
financial and project development and structural information and financial plan.
Schedule: will be evaluated on the applicant’s ability to meet the 7 year placed-in-service requirement.
F. Program Policy Factors to be used by DOE in the evaluation of applications
Section 48B identifies minimum requirements for consideration for the qualifying gasification project credit, including the
project’s technical feasibility, cost, and applicant’s ability. In the event that there are more qualified (certifiable) applications than
there are available tax credits, the DOE will apply additional factors to rank eligible projects based on their ability to advance the
deployment of industrial gasification technology beyond its current state.
If there are two or more certified applications than available credits, DOE will rank the certified projects in descending order
(that is, first, second, third, etc.), based on evaluation of the following Program Policy Factors. Factors 1, 2, and 3 are Primary
Ranking Factors. A certified project that satisfies one of these factors will be ranked ahead of each project that satisfies only
factors listed below that factor. Specifically, all certified projects satisfying Factor 1 will be selected before any project
that does not satisfy Factor 1; all projects satisfying Factor 2 will be ranked ahead of any project that satisfies only Factor 3
and/or one or more Secondary Ranking Factors; and all projects satisfying Factor 3 will be ranked ahead of any project that
does not satisfy any Primary Ranking Factors.
Primary Ranking Factors:
1. Capture and sequestration of 50 percent or more of carbon dioxide emissions. Only projects capturing and
sequestering 50 percent or more of the plant’s carbon dioxide emissions will satisfy this factor. Within this factor,
higher rankings will be given to those projects capturing and sequestering higher percentages of plant carbon
dioxide emissions.

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2. Use of advanced technologies that optimize the plant for future carbon dioxide capture (for example, gasifier
sizing and pressure, air separation unit sizing, and quench system) as well as systems that are designed to capture
and sequester less than 50 percent of the carbon dioxide. Within this factor, higher rankings will be given to those
projects capturing and sequestering higher percentages of plant carbon dioxide emissions and/or requiring less
retrofitting to implement greater than 50 percent carbon capture and sequestration.
3. Location of the facility within 25 miles of potential carbon sequestration locations and carbon dioxide (CO2)
pipelines or pipeline easements. Within this factor, higher rankings will be given to those projects with the facility
located closer to potential carbon sequestration locations and carbon dioxide (CO2) pipelines or pipeline easements.
Secondary Ranking Factors:

•

Location of the facility relative to potential carbon sequestration locations and carbon dioxide (CO2) pipelines or pipeline easements (for facilities not meeting Factor 3).

•

Presentation of other environmental, economic, or performance benefits (including priority factors that are listed in section
5.02(9) of Notice 2007–53 and are not included in the Primary Ranking Factors).

•
•
•
•

Higher plant efficiency.
Geographic distribution of potential markets.
The ratio of total synthesis gas capacity (as defined in section 3.03 of Notice 2007–53) to requested tax credit.
Diversity of technology approaches and methods.

G. Supplemental Technical and Financial Guidance for Section D “Project Information Memorandum”
Technology and Technical Information

•

It is important that the applicant select a specific gasification system for their project. Without that decision, it is difficult to
provide the necessary specific design information needed for DOE to evaluate the project feasibility with respect to performance,
emissions, outputs of major streams as well as capital and operating costs.

Project Economics

•

Applicants should demonstrate the project’s economic feasibility and financial viability by providing a clear statement and
explanation of the economic and financial assumptions made by the applicant, and a financial forecast for the project. The
financial forecast should flow logically from the applicant’s assumptions and be consistent with them. Applicants should include
assumptions regarding financial and economic issues that may not be included in the project costs but have a direct impact on
the project. The examples given in the “Site Control and Ownership” section are relevant here and their impact on the project
economics should be discussed here.

Project Development and Financial Plan

•

The information provided by the applicant in this section should demonstrate that the applicant’s financial plan for developing
the project is feasible and that the applicant will have access to necessary financing. The applicant should explain the source
and timing for obtaining all financing, including the project development costs. It is important that the applicant explain and
provide evidence that it has the capacity to fund the pre-construction project development costs, together with a budget for and
description of those costs. Note that financial information is required for the applicant and for any other funding source.

Project Contract Structure

•

This section requires that the applicant demonstrate an understanding of the commercial contracting process and show progress
in establishing the framework of contracts and agreements that a project typically requires. Applicants should show that their
intended contract structure is reasonable and that their assumptions relative to price, terms, and conditions are consistent with
current market conditions. Evidence of final agreements, agreements in principle, or summaries of terms and conditions between the applicant and contract counterparties should be provided, if available.

2007–26 I.R.B.

1487

June 25, 2007

APPENDIX C
CONSENT TO PUBLIC DISCLOSURE
OF CERTAIN QUALIFYING GASIFICATION PROJECT PROGRAM
APPLICATION INFORMATION
In the event that the Application for § 48B Certification of [(Insert name of applicant-taxpayer here):
] (the
Applicant-Taxpayer) for an allocation of qualifying gasification project credits under section 48B of the Internal Revenue Code is
approved, the undersigned authorized representative of the Applicant-Taxpayer hereby consents to the disclosure by the Internal
Revenue Service through publication of a Notice in the Internal Revenue Bulletin or a press release of: (1) the name of the
Applicant-Taxpayer; (2) if the Applicant-Taxpayer is a member of an affiliated group filing consolidated returns, the name of the
common parent of the group; (3) the type and location of the project that is the subject of the Application for § 48B Certification;
and (4) the amount of the allocation, if any, of qualifying gasification project credits for such project. The undersigned understands
that this information might be published, broadcast, discussed, or otherwise disseminated in the public record.
This authorization shall become effective upon the execution thereof. Except to the extent disclosure is authorized herein,
the returns and return information of the undersigned taxpayer are confidential and are protected by law under the Internal
Revenue Code.
I certify that I have the authority to execute this consent to disclose on behalf of the taxpayer named below.
Date:
Signature:
Print name:
Title:
Name of Applicant-Taxpayer:
Taxpayer Identification Number:
Taxpayer’s Address:

Note: Treasury Regulations require that the Internal Revenue Service must receive this consent within 60 days after it is signed
and dated.

26 CFR 601.602: Tax forms and instructions.
(Also: Part 1, 6011, 6012, 6033, 6037, 6061, 1.6011–1(a), 1.6012–5, 301.6061–1(b).)

Rev. Proc. 2007–40
TABLE OF CONTENTS
SECTION 1. PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1489
SECTION 2. BACKGROUND AND CHANGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1489
SECTION 3. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1490
SECTION 4. ACCEPTANCE TO PARTICIPATE IN THE IRS e-file PROGRAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1490
SECTION 5. RESPONSIBILITIES OF AN AUTHORIZED IRS e-file PROVIDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1490
SECTION 6. PENALTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1491
SECTION 7. MONITORING AND SANCTIONING AN AUTHORIZED IRS e-file PROVIDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1492

June 25, 2007

1488

2007–26 I.R.B.