Letter to the Hon. Gene Dodaro, Comptroller General of the United States - Whitehouse, Warren, Brown Call on Government Watchdog to Probe Coal Tax Credit Program Exploited by Wall Street

Letter

Dear Mr. Dodaro,

We write to request that the Government Accountability Office evaluate the implementation of the refined coal production tax credit established by Section 45 of the Internal Revenue Code. In order to claim this tax credit, refiners must demonstrate that their refined coal reduces emissions of nitrogen oxides (NOx) by 20 percent and emissions of either sulfur dioxide or mercury by 40 percent per unit of thermal energy compared to unrefined coal. In recent years, media reports suggest that refiners claimed approximately a billion dollars in tax credits annually using the refined coal production tax credit.

Current Internal Revenue Service guidance allows refiners to demonstrate that they have achieved the required reductions through laboratory analysis rather than measuring the actual emissions generated from the refined coal combusted at the power plant. However, a recent report analyzing other emissions data raises questions about the extent to which the use of refined coal is actually achieving the emissions reductions required to claim the refined coal production tax credit.[1]

Given the questions raised by the report and the cost of the tax credit, we request that the Government Accountability Office respond to the following questions:

1. Over the last decade, to what extent have refiners claimed the refined coal production tax credit?
2. What is known about the extent to which refiners have achieved the emissions reductions required to claim the refined coal production tax credit?
3. What processes and controls are in place to ensure that refiners are meeting the requirements to claim the refined coal production tax credit?

Thank you for your assistance with this request.

Source