Publish Date
Sep 24, 2026
TAW
A single module, inverter, or wafer may be subject to six separate tests. Four are applied by agencies with no tax jurisdiction, and they can produce different answers on identical facts.
Alvarez & Marsal advises developers, manufacturers, tax equity investors, and credit purchasers on the credit, customs, and national security rules that now run against the same bill of materials, out of one tax and trade team.
Three federal actions in twenty-nine days, from three agencies, none of which administer the Internal Revenue Code. Between July 28 and August 26, 2026, the Federal Communications Commission (FCC) closed the United States market to new foreign-produced power inverters, the President imposed minimum import prices and tariffs on polysilicon and its derivatives by proclamation under §232 of the Trade Expansion Act of 1962 (the “§232 proclamation”), and Executive Order 14421 (the EO) declared a national emergency over foreign-produced bulk-power system equipment.[1] The Department of Energy (DOE) followed on September 9, 2026, with a request for information (RFI) on how to implement the order, with comments due October 9, 2026.
Between them, those three actions and the credit rules already in the Code produce six separate tests that a single bill of materials may need to satisfy, on four different timelines. Two of the three actions never mention the Internal Revenue Code.
The FCC action goes further. The Department of War determination underlying the FCC’s August 20, 2026, Covered List modification quotes §45X, the material assistance limitation at §45X(c)(1)(C), and the prohibited foreign entity definition, and relies on them in concluding that inverters eligible for the credit are not foreign-produced.[2] A determination made for credit purposes now bears on whether equipment may be authorized for sale.
Each action is described in the reference section at the end of this alert.
A module, inverter, or wafer is now subject to six separate tests. Four go to the origin of the article or its content: the Buy American content standard the FCC applies, the place-of-assembly test in the executive order, the country of origin for Harmonized Tariff Schedule of the United States (HTSUS) classification under the §232 proclamation, and the domestic cost percentage for the domestic content bonus credit. Two go to the status of a person: the Covered Foreign Entity definition in the executive order and the prohibited foreign entity rules in the Code, the latter combined with a quantitative cost ratio. The tests were drafted independently, ask mostly different questions, and can produce different results on identical facts.
Final assembly in the United States alone takes equipment outside the executive order because §5(c) asks only where the article was assembled and sets no content threshold. The same unit fails the FCC test unless domestic component cost exceeds 65%. The same unit may fail the material assistance cost ratio while satisfying both because that ratio measures the share of direct costs traceable to a prohibited foreign entity rather than the location of assembly.
The two tests inside the Code diverge most sharply. The domestic content computation and the material assistance computation draw on the same safe harbor tables and the same manufactured product and component framework, and they ask opposite questions. A component manufactured in the United States by an entity owned by a prohibited foreign entity counts toward domestic content and is attributable to a prohibited foreign entity for material assistance purposes.[9] Failing the first costs a bonus. Failing the second costs the credit.
The consequences are not evenly distributed. In most cases, only two or three of the six tests apply to a given participant.
A single duty moves three numbers, and not in the same direction. Capitalized into basis, it increases the §48E credit. Where it attaches to a foreign-manufactured product and is added to total manufactured product costs, it reduces the domestic cost percentage and puts the domestic content bonus at risk. Where it is imposed on material sourced from a prohibited foreign entity, it reduces the material assistance cost ratio, which is addressed in the section that follows.
Proclamation 11052 imposes minimum import prices (MIP) on polysilicon and its derivatives, and an additional 15% ad valorem duty on polysilicon ingots and downstream derivatives, for entries and warehouse withdrawals on or after December 4, 2026.[16] An importer that certifies and enters below the applicable floor pays a specific duty equal to the difference; an importer that submits no documentation pays a specific duty equal to the full floor.[17]
The certification has two paths. An importer may certify that the first arm’s-length sale in the United States will occur at or above the applicable MIP, or that the sale is pursuant to fixed terms in a contract entered into before August 6, 2026. The second path matters for any importer already under a signed supply agreement and should be checked first. Two cautions apply. The certification is keyed to the first arm’s-length sale price, but the shortfall duty is keyed to entered value on the entry summary, so certifying a compliant downstream sale does not cure a low entered value. A certification found materially inaccurate results in a permanent import prohibition for the importer and its affiliates, on a metric the importer frequently does not control.[18]
The 15% duty is also not uniformly additive. For products of Japan, Korea, Taiwan, Switzerland, Liechtenstein, and European Union member states, the §232 duty and the Column 1 general rate together total 15%, so the incremental §232 amount is 15% less the Column 1 rate. For the United Kingdom the §232 rate is 10%. For all other origins the 15% applies in addition to every other duty, including antidumping and countervailing duties. The incremental duty therefore depends on origin.[19]
Customs duties are part of the cost of acquiring imported property and are capitalized into its basis.[20] The §48E credit is computed on the basis of qualified property, so a higher landed cost produces a larger energy tax credit.[21] The §45Y credit is computed on electricity produced and sold and is not a function of equipment cost.[22]
For a 100 MW DC project procuring modules from an origin subject to the full 15% duty, at an entered value of $0.28 per watt against the $0.38 minimum import price:
The domestic content bonus depends on a domestic cost percentage: domestic manufactured product and component costs over total manufactured product costs, against a construction-year threshold, plus a separate requirement that structural steel and iron be United States produced.[23]
Where the duty attaches to a foreign-manufactured product, it increases the denominator and leaves the numerator unchanged. For an input to a United States product, the level matters. A module assembled in the United States from imported cells is a non-U.S. manufactured product, because cells are a listed component, so the cell duty enters the denominator alone. A United States cell made from imported wafers is a United States component, because the rules do not look through to subcomponents, so the wafer duty enters both sides.[24] An approved onshoring plan removes the duty: covered products and production equipment enter duty-free during construction.[25]
The applicable threshold is 50% for construction beginning in 2026 and 55% for 2027 and later.[26] On the project above, if duty is included in the denominator, the percentage falls from 52.0% to 42.1% on identical equipment purchased after December 4, 2026.
The MACR is total direct costs less PFE direct costs, over total direct costs, tested against a threshold that rises each year and differs by credit and component type.[31] Failure disallows the credit entirely rather than reducing it.
For eligible components, the ratio is computed on total direct material costs paid or incurred within the meaning of §461 and the regulations under §263A.[33] Customs duties on materials that become an integral part of the component are direct material costs under those rules, and Notice 2026-15 confirms that the §45X cost base generally includes freight-in and tariffs.[34] §232 duties therefore enter the MACR computation directly. Where the duty is imposed on material sourced from a PFE, it increases both PFE direct costs and total direct costs, which leaves the numerator unchanged while enlarging the denominator. The ratio falls.
A manufacturer with $50 million of total direct costs, of which $20 million is PFE-sourced, has a MACR of 60%. A $6 million §232 duty on that PFE-sourced material produces total direct costs of $56 million and PFE direct costs of $26 million, for a MACR of 53.6%. The physical bill of materials has not changed.
The statute compounds this where knowledge is present. A taxpayer that knows, or has reason to know, that a manufactured product or eligible component was produced by a PFE must treat all direct costs with respect to that product as attributable to a PFE rather than a proportionate share.[35] The same standard voids reliance on a supplier certification the taxpayer knows, or has reason to know, is inaccurate.
§2(b) of the executive order authorizes DOE to order the disconnection, replacement, or removal of foreign manufactured or foreign operated bulk-power system equipment acquired or installed before the date of the order, after considering reliability, replacement availability, and continuity of service.[38] Grid-connected inverters and battery energy storage systems appear by name in the equipment list.[39]
Investment credit property disposed of, or ceasing to be investment credit property, before the close of the five-year recapture period triggers recapture at 100% in the first year, reducing by 20 percentage points for each full year thereafter.[40] A project with $100 million of eligible basis, claiming a 30% credit, subject to a removal order during the third year, would face recapture of $18 million.
Where the credit was transferred under §6418, recapture liability of this type follows the credit to the transferee.[41]
Foreign-produced power inverters were added to the FCC Covered List on July 28, 2026, and the entry was modified on August 20, 2026, and covered equipment cannot receive the equipment authorization that is a prerequisite to importation, marketing, or sale.[42] Models authorized before July 28, 2026, and installed units are unaffected. The second determination concludes that inverters eligible for the §45X credit for domestic production are not foreign-produced. The nationality of the manufacturer was already irrelevant under the first determination. Its reasoning quotes the material assistance limitation, which excludes from eligible component status any property including material assistance from a prohibited foreign entity.[43]
For a company weighing a United States polysilicon, ingot, or wafer facility, the three actions point the same direction, and the largest of the available incentives closes at the end of this year.
Solar ingot and wafer production qualifies for the §48D advanced manufacturing investment credit under the final regulations at 35% of the qualified investment in an advanced manufacturing facility.[46] The credit is available by elective payment, so a manufacturer without current tax capacity can monetize it as a payment rather than carry it forward.[47]
The credit does not apply to property the construction of which begins after December 31, 2026.[48] That is less than four months from the date of this alert. Construction is established under Treas. Reg. §1.48D-5, which permits either physical work of a significant nature or payment or incurrence of five percent or more of the total cost of the property, in each case followed by continuous construction or continuous efforts.[49] Planning, financing, permitting, surveys, environmental and engineering studies, and site clearing are excluded from physical work of a significant nature even where their cost enters depreciable basis.[50]
Two other measures support the same investment. §45X provides a production credit on the output at $3 per kilogram for solar grade polysilicon and $12 per square meter for photovoltaic wafers.[51] And the §232 minimum import prices set a floor under the price of competing imports at $21 per kilogram for polysilicon and $100 per kilogram for ingots and wafers, effective December 4, 2026.[52]
The commercial response to a December 4, 2026, effective date is to accelerate procurement. Two provisions, administered by different agencies under different statutes, are directed at that response.
Clause (11) of the proclamation directs the Secretary to restrict imports by any company, and its affiliates, determined to be stockpiling polysilicon or its derivatives before the effective date, in coordination with U.S. Customs and Border Protection (CBP).[54] §7701(a)(52)(D)(v) directs Treasury to prescribe rules preventing abuse of the existing contract exception through stockpiling of any manufactured product, eligible component, or constituent element, and preventing evasion where the facts and circumstances demonstrate that construction of a facility has not, in fact, begun.[55] Neither provision defines stockpiling, and Treasury has issued no guidance under (D)(v). Commerce issued a temporary final rule effective September 22, 2026, that bars further entries by an importer of record whose import volumes are substantially greater than its historic averages, and limits importers of record registered on or after August 6, 2026, to nominal weekly quantities (for example, 55 modules or 2,000 cells) absent a waiver.[82]
The proclamation also limits the alternatives to acceleration. Covered product admitted to a foreign trade zone must be admitted under privileged foreign status, and manufacturing drawback is available only where the article is not subject to an antidumping or countervailing duty order, is a product of a Trade Agreement Partner, and has polysilicon content sourced entirely from a Trade Agreement Partner country, a combination a United States project developer will rarely satisfy.[56]
Beginning of construction remains relevant to the analysis, though less so than it was before July 4, 2026. The material assistance thresholds for §§45Y and 48E key off the calendar year construction begins and differ by asset: a qualified facility starting in 2026 faces 40%, against 45% for one starting in 2027, while energy storage technology faces 55% and 60% on the same two years. Projects that began construction in 2025 or earlier are outside the material assistance rules entirely. A manufacturer pursuing §48D must begin construction by December 31, 2026. Beginning of construction for material assistance purposes is determined under Notices 2013-29 and 2018-59 as in effect on January 1, 2025.[57]
The meaning of “initiated.” The order applies only to transactions initiated after August 26, 2026. The term appears once and is not defined. For a framework agreement signed in 2025, with releases issued in 2027, whether initiation occurs at the framework or at the release determines whether a pipeline is inside or outside the prohibition. None of the 36 questions in DOE’s request for information addresses it.
The scope of covered equipment, and whether it applies to load-side equipment. The order provides that items not on its enumerated list, or with broader application unrelated to the security concerns identified, are not within its scope. Whether uninterruptible power supply systems and backup generation sited at a data center or other large load are covered depends on the qualifier opening §5(b), which DOE has not addressed.[58] DOE has asked industry to propose voltage, capacity, connectivity, function, location and criticality thresholds.
Prequalification criteria. §2(e) permits the Secretary to publish a list of pre-qualified equipment and vendors exempt from the prohibition. One of the 36 RFI questions addresses licensing, mitigation, and prequalification together.
Stockpiling. Treasury must prescribe anti-circumvention rules under §7701(a)(52)(D)(v) and has not done so. Commerce’s September 22, 2026, temporary final rule sets volume-based criteria and a waiver process under clause (11) through December 3, 2026, but does not define stockpiling or address tax consequences. Taxpayers accelerating fourth-quarter procurement should confirm when their importer of record registered with CBP.
Safe harbor tables. Treasury must issue PFE-specific tables by December 31, 2026. Until then, and for construction beginning on or before the sixtieth day after issuance, taxpayers may use the Notice 2025-08 tables and supplier certifications.[59]
Recapture on a removal order, and the reading of “eligible” in the FCC determination. Both discussed above.
Four of the six tests are applied by agencies that do not administer the Code, and three of the six change with the same duty. A&M runs both sides of that out of one team, so the trade position and the credit position are developed from the same facts rather than reconciled afterward.
Readers familiar with the three actions can skip to the notes, which contain the detail and the citations.
Equipment on the FCC Covered List cannot receive equipment authorization, which is a prerequisite to importation, marketing, or sale, so a listing closes the domestic market to new models while leaving previously authorized models and installed units untouched.[60] On a Department of War determination that power inverters produced in a foreign country pose an unacceptable risk regardless of the producer’s nationality, the Bureau listed them on July 28, 2026, defining “foreign-produced” by reference to the Buy American standard: not a domestic end product under 48 CFR §25.101(a), meaning United States manufacture with domestic component cost above 65% through 2028 and 75% from 2029.[61] A second determination, implemented August 20, 2026, narrowed the device class to utility-interactive inverters under UL 1741 and confirmed that the connectivity element covers any device designed, equipped, or configured to accept a remote communication component, wired or wireless, so a hardwired utility-scale inverter is covered.[62] It also concluded that inverters eligible for §45X are not foreign-produced. The manufacturer’s nationality was irrelevant under the first determination and remains so. Unauthorized models may seek temporary conditional approval from the Department of War or Homeland Security.[63]
§232 of the Trade Expansion Act of 1962 authorizes the President to adjust imports found to threaten to impair national security, following a Commerce investigation and report.[64] Proclamation 11052, issued August 6, 2026, on a Commerce report concerning polysilicon and its derivatives, uses two mechanisms effective for entries on or after December 4, 2026: minimum import prices on the HTSUS subheadings in Annexes I and II ($21 per kilogram for polysilicon, $100 per kilogram for ingots and wafers, $0.22 per watt for cells, and $0.38 per watt for modules) and an additional 15% ad valorem duty.[65]
The floor is enforced by certification at entry rather than by price control. An importer may document that the first arm’s-length sale in the United States will occur at or above the floor, or that the sale is pursuant to fixed terms in a contract entered into before August 6, 2026; no documentation means a specific tariff equal to the full floor, and documentation plus entry below the floor means a tariff equal to the shortfall.[66] Materially inaccurate documentation, or material failure to comply, permanently bars that importer and its affiliates from importing polysilicon and its derivatives, with penalties available in addition.[67] Adjusted rates apply to certain trading partners, foreign trade zone admissions are limited to privileged foreign status, manufacturing drawback survives only for Trade Agreement Partner content, and a separate onshoring program accepts plans committing to domestic capacity with construction beginning by January 20, 2029.[68]
The executive order of August 26, 2026, declares a national emergency over foreign-produced bulk-power system electric equipment and prohibits its acquisition, importation, transfer, or installation by any person or property subject to United States jurisdiction where a foreign country or national has any interest, including through an interest in a supply contract.[69] Three conditions limit it: the transaction must have been initiated after the date of the order; the Secretary of Energy must determine that the equipment or an associated component, software, firmware, or remote-access capability was supplied by a person owned or controlled by, or subject to the jurisdiction of, a Covered Foreign Entity; and the Secretary must find an undue risk of sabotage, unauthorized access, malicious remote action, supply disruption, or catastrophic effects on critical infrastructure, or an otherwise unacceptable risk. Nothing is prohibited automatically. The order runs on determinations that have not been made, under rules due December 24, 2026.[70]
§2(b) authorizes the Secretary, on the same determinations, to order identification, isolation, monitoring, disconnection, replacement, or removal of equipment acquired or installed before the date of the order. §2(d) applies the prohibitions notwithstanding any contract, license, or permit predating the order. §2(e) permits prequalification of equipment and vendors.[71] Covered equipment is an enumerated list running from substation transformers and grid-connected inverters through battery energy storage systems, uninterruptible power supply systems supporting critical infrastructure, backup generators, protective relaying, and industrial control systems, introduced by “items used in bulk-power system substations, control rooms, or power generating stations,” and closed by an exclusion for items not listed or having broader application unrelated to the security concerns identified; the bulk-power system itself excludes local distribution.[72] A Covered Foreign Entity is a country or a person owned or controlled by, or subject to the jurisdiction of, a government subject to a United States arms embargo or ITAR sanctions under 22 CFR §126.1, or determined by the Secretary to be engaged in conduct detrimental to national security or foreign policy.[73]
DOE published a request for information on September 9, 2026, seeking comment before developing implementing measures.[74] An RFI is not a proposed rule and provides no reliance. Its significance is that the scope of the prohibition is still being written, and DOE has asked industry to propose the answer. Of the 36 questions, two have the most commercial significance: A2 asks what voltage, capacity, connectivity, function, location, and criticality thresholds should apply to inverters, storage, uninterruptible power systems, backup generators, industrial control systems, and combined transmission-distribution facilities; A3 asks when an associated component, software, firmware, or remote-access capability falls within a transaction review. Responses are due October 9, 2026, in docket DOE-HQ-2026-1123 or to BulkPowerEO@doe.gov, with confidential business information excluded from the portal.[75]
The material assistance restrictions at §7701(a)(52) disqualify a facility, energy storage technology, or eligible component production facility whose material assistance cost ratio falls below the applicable threshold, disallowing the credit entirely rather than reducing it.[76] They apply to §§45Y, 48E, and 45X and do not apply to the legacy §45 and §48 credits available to projects that began construction by the end of 2024. For a facility, the ratio runs on total direct costs of manufactured products incorporated on completion of construction; for an eligible component, it runs on total direct material costs paid or incurred within the meaning of §461 and the regulations under §263A, with no labor component, and qualified interconnection property requires its own computation.[77] Notice 2026-15 sets the actual direct cost method as the baseline and provides three interim safe harbors — Identification, Cost Percentage, and Certification — with reliance conditioned on a knows-or-has-reason-to-know standard that taints the full direct cost of a tainted product.[78] An election excludes costs under binding written contracts predating June 16, 2025, and beginning of construction is determined under Notices 2013-29 and 2018-59, as in effect on January 1, 2025.[79] Treasury must issue PFE-specific tables by December 31, 2026, and mineral-specific thresholds by December 31, 2027, and prescribe anti-circumvention rules.[80] Deficiencies are subject to a six-year assessment period and a one percent substantial understatement threshold; a false supplier certification is subject to a penalty of the greater of 10% of the underpayment or $5,000.[81]
Alvarez & Marsal’s cross-functional tax and trade team advises developers, manufacturers, and investors across the full life cycle of clean energy tax compliance. We conduct PFE screening and effective control analysis (including ownership, debt, licensing, and contractual review), perform project- and component-level MACR modeling, and assess eligibility under evolving safe harbor guidance. We also support prevailing wage and apprenticeship (PWA) compliance, domestic content adder analysis, ITC/PTC structuring decisions, and audit-ready documentation buildouts.
Our approach integrates technical interpretation, cost accounting, manufacturing origin analysis, and supply chain diligence so that credits are defensible under OBBBA and related IRS guidance.
For more information reach out to our team using the contact information below:
Kyle Seipert – Managing Director, Global Transaction Tax
Steven Schmoll – Senior Director, National Tax Office
Louis Conde – Senior Director, Global Trade
Chase Duncan – Senior Associate, Global Trade
[1]National Security Determination on the Threat Posed by Foreign-Produced Power Inverters (Dep’t of War, July 27, 2026); FCC Pub. Notice DA 26-786 (rel. July 28, 2026); Proclamation 11052 (Aug. 6, 2026); FCC Pub. Notice DA 26-870 (rel. Aug. 20, 2026); Executive Order 14421 of Aug. 26, 2026, Declaring a National Emergency to Secure the United States Bulk-Power System, 91 FR 55995 (Aug. 31, 2026); Securing the United States Bulk-Power System, 91 FR 57322 (Sept. 9, 2026) (request for information).
[2]Second Power Inverter National Security Determination, quoting 26 U.S.C. §45X(c)(1)(C) and the prohibited foreign entity definition at I.R.C. §7701(a)(52).
[3]48 CFR §25.101(a); FCC, FAQs on Recent Updates to the Covered List Regarding Foreign-Produced Advanced Robotic Devices and Power Inverters.
[4]Executive Order 14421 of Aug. 26, 2026, §5(c).
[5]Id. §5(e).
[6]Proclamation 11052, cls. (1)(a), (2), (4); Annexes I and II.
[7]I.R.C. §48E(a)(3)(B); §45Y(g)(11). For projects other than offshore wind the manufactured product threshold is 40% for construction beginning before 2025, 45% in 2025, 50% in 2026 and 55% for 2027 and later. All manufacturing processes for structural steel and iron components must occur in the United States.
[8]I.R.C. §§45X(c)(1)(C), 45Y, 48E; Notice 2026-15, 2026-11 I.R.B. 658 (Feb. 12, 2026).
[9]Notice 2026-15 (the material assistance and domestic content analyses use the same manufactured product and component framework for different purposes); steel and iron are excluded from the material assistance cost ratio and subject to a separate requirement for domestic content purposes.
[10]Proclamation 11052, cl. (2)(a).
[11]Executive Order 14421 of Aug. 26, 2026, §2(d).
[12]Executive Order 14421 of Aug. 26, 2026, §5(b).
[13]Id. §§5(a), 5(b).
[14]Id. §5(b) (enumeration introduced by “items used in bulk-power system substations, control rooms, or power generating stations,” and excluding items “that have broader application beyond the bulk-power system unrelated to the national security concerns identified in this order”); id. §5(a) (excluding facilities used in the local distribution of electric energy). DOE has not addressed the question; see 91 FR 57322, question A2.
[15]Securing the United States Bulk-Power System, 91 FR 57322 (Sept. 9, 2026), question A2.
[16]Supra note 6.
[17]Proclamation 11052, cls. (2)(b)–(c).
[18]Proclamation 11052, cls. (2)(a)–(c), (3).
[19]Proclamation 11052, cls. (5)(b) (products of Japan, Korea, Taiwan, Switzerland, Liechtenstein, and European Union member states), (5)(c) (United Kingdom); see infra note 68.
[20]I.R.C. §1012; Treas. Reg. §1.263(a)-1(d)(1), §1.263(a)-2 (amounts paid to acquire tangible property are capital expenditures). Section 263A applies in addition because a taxpayer constructing a facility or manufacturing an eligible component is producing property: Treas. Reg. §1.263(a)-1(c)(2) defines produce as construct, build, install or manufacture, with the same meaning as I.R.C. §263A(g)(1), so the cost of an imported module is a direct cost of property produced by the taxpayer rather than property acquired for resale. Duty on material that becomes an integral part of that property is therefore a direct material cost under Treas. Reg. §1.263A-1(e)(2)(i), rather than an indirect cost. I.R.C. §7701(a)(52)(D)(ii) computes the material assistance cost ratio on total direct material costs within the meaning of §461 and the regulations under §263A.
[21]I.R.C. §48E(a).
[22]I.R.C. §45Y(a).
[23]I.R.C. §48E(a)(3)(B). The applicable threshold is 50% for construction beginning in 2026 and 55% for 2027 and later. The steel or iron requirement applies to construction materials made primarily of steel or iron that are structural in function, requires all manufacturing processes to occur in the United States, does not apply to steel or iron within a manufactured product, and excludes nuts, bolts, and similar fasteners. Notice 2023-38 §3.02.
[24]Notice 2023-38, 2023-22 I.R.B. 872, §3.03(1) (a manufactured product is a U.S. manufactured product only if all manufacturing processes take place in the United States and all of its manufactured product components are of U.S. origin; a manufactured product component is of U.S. origin if it is manufactured in the United States, regardless of the origin of its subcomponents), §3.03(2)(b) (domestic manufactured products and components cost is the cost of U.S. manufactured products plus the cost of U.S. components of non-U.S. manufactured products), §3.04, Table 2 (photovoltaic cells are a manufactured product component of the module). Neither Notice 2024-41 nor Notice 2025-08 modified §3.03(1). The safe harbor applies the same rule: a domestically manufactured cell counts as domestic whatever the origin of its wafer unless the taxpayer elects the higher percentages for cells made from domestic wafers, and a module’s production cost counts only if all of its components are domestic. Notice 2025-08 §8.03(5) and n.8 to the solar tables.
[25]Proclamation 11052, cl. (6)(c) (a company with an approved onshoring plan may import necessary production equipment and covered products, in volumes commensurate with its committed investment, without paying §232 duties, with the benefit tied to the construction period and contingent on progress under the plan).
[26]Supra note 23.
[27]Notice 2023-38 §3.03(2)(c) (total manufactured products cost is the sum of the direct costs, within the meaning of Treas. Reg. §1.263A-1(e)(2)(i), paid or incurred by the manufacturer of each manufactured product), as modified by Notice 2024-41 only to permit the elective safe harbor in lieu of those cost rules.
[28]Notice 2023-38 (manufactured product and component framework); Notice 2024-41 and Notice 2025-08 (Cost Percentage Safe Harbor tables). Because the safe harbor assigns fixed percentages rather than relying on actual direct costs, customs duties do not enter the computation.
[29]Notice 2026-15 (Cost Percentage Safe Harbor); see infra note 36.
[30]Notice 2024-41 §4.03(2); Notice 2025-08 §8.03(2) (no partial safe harbor reliance: an electing taxpayer must apply the table for its project type in its entirety).
[31]I.R.C. §7701(a)(52)(B), (C). Thresholds for qualified facilities and energy storage technology key off the calendar year construction begins; thresholds for eligible components key off the calendar year of sale. Critical mineral thresholds are 0% for sales after December 31, 2025 and before January 1, 2030, then 25% (2030), 30% (2031), 40% (2032) and 50% thereafter, and Treasury must issue mineral-specific thresholds by December 31, 2027 that equal or exceed those figures. I.R.C. §7701(a)(52)(C)(i)(V), (ii).
[32]Supra note 31.
[33]I.R.C. §7701(a)(52)(D)(ii)(I)(aa). The §45Y and §48E ratio is computed on total direct costs attributable to manufactured products incorporated into the facility. I.R.C. §7701(a)(52)(D)(i).
[34]Notice 2026-15 (the §45X cost base generally includes freight-in and tariffs, with a reseller look-through to the entity that actually manufactured the constituent material).
[35]I.R.C. §7701(a)(52)(D)(iii)(III).
[36]Notice 2026-15 (Cost Percentage Safe Harbor, using assigned cost percentages from the domestic content safe harbor tables in Notices 2023-38, 2024-41 and 2025-08). Incremental production facilities may not use this safe harbor, and most §45X eligible components are not listed in the tables.
[37]I.R.C. §7701(a)(52)(D)(iv). The election requires a binding written contract entered into before June 16, 2025, and either placement in service before January 1, 2030 (January 1, 2028 for an applicable facility under §45Y(d)(4)(B)) in a facility the construction of which began before August 1, 2025, or, for a constituent element, material or subcomponent, use in a product sold before January 1, 2030.
[38]Executive Order 14421 of Aug. 26, 2026, §2(b). Before directing isolation, disconnection, replacement or removal the Secretary must consider effects on reliability and safety, the availability of secure replacements and continuity of essential service, and may establish phased compliance.
[39]Executive Order 14421 of Aug. 26, 2026, §5(b) (utility-scale and other grid-connected inverters; battery energy storage systems).
[40]I.R.C. §50(a)(1); Treas. Reg. §1.47-1(a). The recapture percentage is 100% for a disposition or cessation within one full year after placement in service, reducing by 20 percentage points for each additional full year, with no recapture after five full years.
[41]I.R.C. §6418(g)(3)(A) (recapture under §50(a) with respect to a transferred credit is taken into account by the transferee taxpayer rather than the eligible taxpayer).
[42]FCC Pub. Notice DA 26-786; FCC Pub. Notice DA 26-870. The entry text was unchanged by the August 20, 2026 modification, which revised the definitions of “power inverters” and “foreign-produced power inverters” on which it depends. The entry reads: “Foreign-produced power inverters, except power inverters which have been granted a Conditional Approval by DoW or DHS.”
[43]Supra note 2.
[45]I.R.C. §6695B (penalty for false supplier certification, greater of 10% of the underpayment or $5,000, for certifications provided after December 31, 2025); see also I.R.C. §§6662(m), 6501(o).
[46]I.R.C. §48D(a); T.D. 10009. The One, Big, Beautiful Bill Act increased the rate from 25% to 35% for qualified property placed in service after December 31, 2025.
[47]I.R.C. §48D(d). The credit is monetized by elective payment and is not transferable under §6418.
[48]I.R.C. §48D(e). The credit applies only to property the construction of which begins before January 1, 2027.
[49]Treas. Reg. §1.48D-5(b)(1), (b)(2), (e) (continuity requirement, satisfied by continuous construction or continuous efforts). The continuity safe harbor deems the requirement met where the property is placed in service no more than ten calendar years after the year construction began. §1.48D-5(e)(6).
[50]Treas. Reg. §1.48D-5(c)(2)(ii). Work to produce property held in a vendor’s inventory is likewise excluded; Treas. Reg. §1.48D-5(b)(1) (either test), (c) (physical work test), (d) (five percent safe harbor); §1.48D-5(a)(1) (credit unavailable where construction begins after December 31, 2026, the date specified in I.R.C. §48D(e)).
[51]I.R.C. §45X(b)(1). The credit is $3 per kilogram for solar grade polysilicon and $12 per square meter for photovoltaic wafers.
[52]Proclamation 11052, cl. (1)(a).
[53]Treas. Reg. §1.48D-5(d)(2). All costs properly included in the basis of the property count toward the five percent figure.
[54]Proclamation 11052, cl. (11).
[55]I.R.C. §7701(a)(52)(D)(v)(I), (II).
[56]Proclamation 11052, cl. (7) (foreign trade zone admission only under privileged foreign status); 19 CFR §§146.41, 146.43; cl. (8) (manufacturing drawback conditions); see infra note 68.
[57]Notice 2013-29; Notice 2018-59, each as in effect on January 1, 2025.
[58]Supra note 14.
[59]I.R.C. §7701(a)(52)(D)(iii)(I), (II). Prior to issuance, and for construction beginning on or before the sixtieth day after issuance, a taxpayer may use the Notice 2025-08 tables and may rely on supplier certifications meeting the requirements of §7701(a)(52)(D)(iii)(IV).
[60]47 U.S.C. §1601(a); 47 CFR §§1.50002(a), 1.50003; 47 CFR §2.903(a) (covered equipment may not receive equipment authorization); 47 CFR §2.911(d)(5)(i) (applicant certification that equipment is not covered); FCC Pub. Notice DA 26-786, at 3–4.
[61]National Security Determination on the Threat Posed by Foreign-Produced Power Inverters (Dep’t of War, July 27, 2026); 48 CFR §25.101(a); FCC, FAQs on Recent Updates to the Covered List Regarding Foreign-Produced Advanced Robotic Devices and Power Inverters.
[62]Second Power Inverter National Security Determination (Dep’t of War, Aug. 19, 2026); FCC Pub. Notice DA 26-870 (rel. Aug. 20, 2026).
[63]DA 26-870, Appendix A (updated Covered List); the Second Power Inverter National Security Determination is Appendix B; 47 CFR §§2.932(b), 2.1043(b); DA 26-870.
[64]19 U.S.C. §1862; Proclamation 11052 also invokes §604 of the Trade Act of 1974 and 3 U.S.C. §301.
[65]Proclamation 11052, cl. (1)(a); Annex I (HTSUS subheadings 2804.61.0000; 3818.00.0020, .0040, .0045, .0050, .0091; 8541.42.0010, .0080; 8541.43.0010, .0080); Annex II (HTSUS ch. 99, subch. III, U.S. note 42; headings 9903.45.30–9903.45.36).
[66]Proclamation 11052, cls. (2)(a)–(c).
[67]Id. cl. (3).
[68]Id. cls. (5)(b), (5)(c); Id. cl. (7); 19 CFR §§146.41, 146.43; Id. cl. (8); Id. cl. (6)(a).
[69]Executive Order 14421 of Aug. 26, 2026, Declaring a National Emergency to Secure the United States Bulk-Power System, 91 FR 55995 (Aug. 31, 2026); 50 U.S.C. §1701 et seq.; 50 U.S.C. §1601 et seq.; 3 U.S.C. §301; Id. §2(a).
[70]Id. §3(b). Section 4(a) requires recommended revisions to the Federal Acquisition Regulation within 180 days, and §4(b) directs the FAR Council to consider proposing amendments within 90 days of receiving them.
[71]Id. §§2(b), 2(d), 2(e). Section 2(f) separately prohibits evasion, attempted evasion and conspiracy.
[72]Id. §§5(a), 5(b).
[73]Id. §5(e); 22 CFR §126.1.
[74]Securing the United States Bulk-Power System, 91 FR 57322 (Sept. 9, 2026), FR Doc. 2026-18370, RIN 1901-AB79, Docket No. DOE-HQ-2026-1123 (Office of Cybersecurity, Energy Security, and Emergency Response).
[75]Id. A public webinar was held September 16, 2026. Contact: Eric Rollison, Assistant Director, Technology Development, CESER, 202-586-1769.
[76]I.R.C. §7701(a)(52)(A).
[77]I.R.C. §7701(a)(52)(D)(i), (ii); I.R.C. §7701(a)(52)(E)(iv)(III); §48E(b)(4).
[78]Notice 2026-15, supra note 8; I.R.C. §7701(a)(52)(D)(iii)(III); I.R.C. §7701(a)(52)(D)(iii)(IV).
[79]I.R.C. §7701(a)(52)(D)(iv); I.R.C. §7701(a)(52)(F); Notice 2013-29; Notice 2018-59, each as in effect on January 1, 2025.
[80]I.R.C. §7701(a)(52)(C)(ii), (D)(iii)(I), (D)(v).
[81]I.R.C. §§6501(o), 6662(m), 6695B.
[82] Measures to Restrict Stockpiling of Polysilicon and Polysilicon Derivatives Under Proclamation 11052, 15 CFR pt. 705, Supp. No. 1 (temporary final rule, effective Sept. 22, 2026, through Dec. 3, 2026), FR Doc. 2026-19537 (scheduled for publication Sept. 24, 2026).
