WASHINGTON, D.C. — The Internal Revenue Service and the Department of the Treasury on Friday issued new guidance aimed at easing compliance for businesses claiming carbon capture tax credits while also launching a digital overhaul of the federal whistleblower system designed to accelerate reports of tax fraud.
In a notice released December 19, Treasury and the IRS outlined a temporary safe harbor for taxpayers seeking to claim the federal tax credit for carbon capture and sequestration under Section 45Q of the Internal Revenue Code. The credit was expanded and modified by the One, Big, Beautiful Bill and applies to qualified carbon oxide captured and securely stored during calendar year 2025.
The guidance allows companies to claim the credit even if the Environmental Protection Agency does not activate its electronic Greenhouse Gas Reporting Tool for the 2025 reporting year by June 10, 2026. Under the safe harbor, affected taxpayers may submit an annual report to a qualified independent engineer or geologist, who must certify that the carbon capture and storage activity complies with federal greenhouse gas reporting requirements in effect as of December 31, 2025.
Treasury and the IRS said taxpayers may rely on the notice until formal regulations are issued, including future rules governing measurement and verification standards. The guidance primarily affects businesses involved in carbon capture projects that plan to claim the credit for activity occurring in 2025.
Separately, the IRS Whistleblower Office announced the launch of a new digital version of Form 211, the application used by individuals to report tax noncompliance and apply for whistleblower awards. The move allows tips to be submitted electronically, replacing a process that previously relied on paper filings.
Acting Whistleblower Office Director Erick Martinez said the digital form is intended to make it easier for individuals to securely submit information from a phone or computer while reducing errors and processing costs.
The IRS said whistleblowers have played a significant role in enforcing tax laws, with more than $7.86 billion collected since 2007 from cases tied to whistleblower-provided information. During that same period, the agency has awarded more than $1.4 billion to whistleblowers.
Officials said the modernization effort is part of a broader push to strengthen voluntary compliance by reinforcing the consequences of tax evasion while improving access to reporting tools. Paper submissions of Form 211 will continue to be accepted, though the agency is encouraging electronic filing.
Both initiatives take effect immediately and reflect the administration’s focus on combining expanded tax incentives with stepped-up enforcement and digital modernization across the federal tax system.
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