Notice 2026-50, issued by the IRS on [date], extends the interim carbon sequestration safe harbour to enhanced oil and gas recovery projects and clarifies recapture reporting, while pushing the applicability window through 31 December of the year permanent MRV standards take effect.
The US Internal Revenue Service (IRS) has issued Notice 2026-50, expanding and extending the safe harbour previously established under Notice 2026-1. This administrative notice establishes an updated safe harbour for taxpayers claiming the Section 45Q tax credit for carbon oxide sequestration. It specifically addresses challenges created by the EPA’s proposal to eliminate certain greenhouse gas reporting obligations under Subpart RR.
Notice 2026-1 provided interim guidance in response to proposed Environmental Protection Agency (EPA) regulations that would remove certain reporting requirements for the geological sequestration of carbon dioxide under Subpart RR of the Greenhouse Gas Reporting Program.
IRS Notice 2026-50 modifies and amplifies the interim guidance previously established in Notice 2026-1. Both notices address a regulatory gap created by the Environmental Protection Agency’s (EPA) 16 September 2025. These proposed regulations sought to remove geological sequestration reporting obligations under subpart RR of the Greenhouse Gas Reporting Program (GHGRP) for reporting years after 2024.
To support taxpayers claiming the Section 45Q carbon oxide sequestration credit during this regulatory transition, Notice 2026-50 introduces several crucial expansions and extensions to the original safe harbour.
Key expansions of the safe harbour scope
Notice 2026-50 substantially widens the safety net for taxpayers in two critical areas:
Inclusion of enhanced oil or gas recovery (EOR) projects: Notice 2026-1 originally limited its safe harbour to secure geological storage in which the carbon dioxide was not used as a tertiary injectant. It did so because alternative standards (like the CSA/ANSI ISO 27916:2019 standard) were already available for EOR projects. Stakeholders pushed back: switching to that standard fast would mean real cost and timeline pain. Notice 2026-50 responds by extending the safe harbour to cover qualified carbon oxide used as a tertiary injectant, so EOR projects get the same relief as pure storage projects.
Clarification on recapture requirements: The IRS expanded the safe harbour to cover the determination of securely stored versus leaked carbon oxide for recapture purposes. Under § 1.45Q-5(a) and (c), a recapture event occurs if previously credited carbon oxide escapes into the atmosphere. Taxpayers can now rely on the safe harbour’s alternative reporting mechanism to calculate these volumes and satisfy recapture requirements.
Extension of the applicability date
Notice 2026-50 extends the safe harbour to geological storage occurring from 1 January 2025, through 31 December of the year in which Treasury and the IRS issue permanent regulations or further interim guidance establishing replacement MRV standards, reducing uncertainty for long-term projects.
Operational mechanics of the safe harbour
The safe harbour is triggered by “e-GGRT Unavailability”—meaning the EPA does not launch its electronic Greenhouse Gas Reporting Tool (e-GGRT) portal by March 31 of the calendar year immediately following the reporting year in question.
When e-GGRT is unavailable, taxpayers can satisfy Section 45Q requirements by doing the following:
- Maintain compliance with subpart RR: The geological storage must strictly comply with subpart RR requirements as they stood on 31 December 2025.
- Hold an approved MRV plan: The taxpayer must have a valid, EPA-approved Monitoring, Reporting, and Verification (MRV) plan that covers the dates of the storage.
- Obtain third-party certification: Instead of electronic submission to the EPA, the taxpayer must compile a physical Annual Report containing all the standard subpart RR documentation (including mass balance calculations and containment assurances) and submit it to a qualified independent engineer or geologist.
- Execute an independence affidavit: The independent engineer or geologist (who must be registered or certified in any State) must certify that the report is accurate, complete, and compliant with late-2025 subpart RR standards. This certification must be made under penalties of perjury and include an affidavit of independence.
- Observe strict timelines: Taxpayers must secure this certified report and documentation by the time they timely file their Federal income tax return (such as Form 1065) and Form 8933 (Carbon Oxide Sequestration Credit), including extensions.
Regulatory timeline and moving forward
The EPA extended the 2025 reporting deadline to 30 October 2026, while Treasury and the IRS are seeking public comments by the same date on whether ISO 27914:2026 can replace Subpart RR as the permanent standard for demonstrating secure geological storage under Section 45Q.
