Two months after the passage of the One Big Beautiful Bill Act, which trimmed the lifespan of most of the Inflation Reduction Act’s clean energy tax credits, the industry is still trying to understand the implications of the legislation’s new foreign entity of concern rules and hoping for clarity from upcoming Treasury Department guidance.
“I discuss this almost every day, it seems like,” said Vinson & Elkins tax partner Jenny Speck. “Having clear, administrable rules is the first step, because we already have a statute that creates ambiguity. We’re hearing that this is priority guidance — it should be at the top of their list in terms of what they’re working on.”
The FEOC provisions in OBBBA were expanded from the IRA’s original rule restricting foreign entities of concern – entities with ties to China, Russia, North Korea or Iran – from claiming clean vehicle tax credits. The new FEOC rules apply to the 45X advanced manufacturing credit, the 45Y production credit, and the 48E investment credit.