This regulation provides guidance concerning the costs subject to the enhanced oil recovery credit, the circumstances under which the credit is available, and procedures for certifying to the Internal Revenue Service that a project meets the requirements of section 43(c) of the Internal Revenue Code. Owners of operating mineral interests use Form 8830 to claim the enhanced oil recovery credit, a part of the general business credit.
Section 43(a) provides that for purposes of section 38, the enhanced oil recovery credit for any taxable year is an amount equal to 15 percent of the taxpayerâs qualified enhanced oil recovery costs for such taxable year. The credit is claimed on Form 8830.
Section 43(b)(1) provides that the amount of the credit determined under subsection (a) for any taxable year shall be reduced by an amount which bears the same ratio to the amount of such credit (determined without regard to this paragraph) as â (A) the amount by which the reference price for the calendar year preceding the calendar year in which the taxable years begins exceeds $28, bears to (B) $6.
Section 43(b)(3)(B) of the Internal Revenue Code requires the Secretary to publish an inflation adjustment factor. Thus, taxpayers do not know whether the section 43 credit is available until the inflation adjustment information is published by the Secretary. The enhanced oil recovery credit under § 43 for any taxable year is reduced if the âreference price,â determined under § 45K(d)(2)(C), for the calendar year preceding the calendar year in which the taxable year begins is greater than $28 multiplied by the inflation adjustment factor for that year.
For taxable years 2019 and 2020, the section 43 credit was completely phased out and the Form 8830 was not needed. For taxable year 2021, due to a decrease in oil prices, the section 43 credit was not phased out and was fully available, Notice 2021-47. However, because the publication of the inflation adjustment information was published later than usual, the Form 8830 was not able to be revised under normal procedures. It is being revised currently and needs to be published for use by taxpayers in preparing their returns for the 2021 taxable year.
The IRS plans to release Form 8830 on March 30, 2022, and thus requests approval of the control number by that date. Given the inability to seek public comment during such a short timeframe, IRS respectfully requests a waiver from the requirement to publish notice in the Federal Register seeking public comment during the period of Office of Management and Budget review. However, public comment will be solicited in conjunction with the subsequent extension of the approval to collect this information.
US Code:
26 USC 43
Name of Law: Enhanced oil recovery credit
Form 8830 was not issued for 2019 and 2020 because it did not apply for those years due to the price of crude oil; however, it applied again for tax years beginning in 2021. Notice 2021-47 includes the previously published figures for tax years beginning in the 1991 through 2020 calendar years and reflects that for calendar year 2021, the guidance is similar to that provided for 2016 and 2017 when the enhanced oil recovery credit was determined without regard to the phase-out for crude oil price increases. The changes in burden hours for this ICR, were made to reflect said changes notified in Notice 2021-47. This will increase the number of responses by 1,550 and annual burden by 11,067 hours.
On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9 and the related provisions of 5 CFR 1320.8(b)(3).
The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:
(i) Why the information is being collected;
(ii) Use of information;
(iii) Burden estimate;
(iv) Nature of response (voluntary, required for a benefit, or mandatory);
(v) Nature and extent of confidentiality; and
(vi) Need to display currently valid OMB control number;
If you are unable to certify compliance with any of these provisions, identify the item by leaving the box unchecked and explain the reason in the Supporting Statement.
Form 8830 Form 8830
Emergency Justification Memo F8830_Signed.pdf
2022 Supporting Statement (emg) 1545-1292lvd.docx
Form 8830