Publish Date

Sep 24, 2026

Six Tests, One Supply Chain: What Recent FCC, CBP, and DOE Actions Mean for Energy Tax Credits

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.

Key Takeaways

  • Three agencies with no tax jurisdiction now produce outcomes for energy tax credits on the same bill of materials, and their standards do not track the Code’s. A supply contract entered into before August 6, 2026, supports certification against the §232 minimum import price and provides no defense under the executive order, which applies notwithstanding any contract predating August 26, 2026.
  • §232 duties move three numbers in different directions. Capitalized into basis, they increase the §48E credit base. Added to total manufactured product costs, they reduce the domestic cost percentage, and, where they are imposed on material sourced from a prohibited foreign entity, they reduce the material assistance cost ratio against thresholds that rise each year.
  • A DOE removal order is a recapture event outside the seller’s control. Removal of an installed inverter or battery energy storage system within the five-year period is a disposition that triggers investment tax credit (ITC) recapture under §50(a), and where the credit was transferred under §6418, the buyer bears the liability.
  • A material assistance computation is now a path to equipment authorization. The FCC treats inverters eligible for §45X as not foreign-produced, so a methodology election made for credit purposes affects whether a model may be authorized for sale.
  • The §232 duties magnify the §48D opportunity for domestic ingot and wafer capacity, and it closes December 31, 2026. Solar ingot and wafer production qualifies for the 35% credit, available by elective payment. The minimum import prices set a floor of $100 per kilogram for competing ingot and wafer imports from December 4, 2026, and §45X supports the output, so the same investment earns a better return than it would have three months ago.
  • Comments on DOE’s request for information are due October 9, 2026. The scope of covered equipment is still open, and questions A2 and A3 ask industry to propose the voltage, capacity, connectivity, and criticality thresholds that will define it.

 

OVERVIEW

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.

THE FRAMEWORK

Six Tests of the Same Supply Chain

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.

Test Standard What It Determines Effective
FCC
Not a “domestic end product” under title 48 of the Code of Federal Regulations (CFR), §25.101(a): US manufacture plus domestic component cost exceeding 65% for items delivered 2024 through 2028 and 75% from 2029. An alternative route exists for inverters eligible for §45X.[3]
Whether a new inverter model may receive FCC equipment authorization, and therefore be imported, marketed, or sold.
July 28, 2026.
EO §5(c)
“Foreign-produced” means an article not manufactured, produced, or assembled in the United States. No content threshold applies.[4]
Whether equipment falls within the prohibition.
Transactions initiated after August 26, 2026.
EO §5(e)
Covered Foreign Entity: 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 International Traffic in Arms Regulations (ITAR) sanctions under 22 CFR §126.1, or designated by the Secretary.[5]
Whether a prohibited transaction determination may be made.
DOE rules due December 24, 2026.
§232 Proclamation
Country of origin for HTSUS classification, applied to the subheadings in Annexes I and II.[6]
Duty liability and the minimum import price floor.
Entries on or after December 4, 2026.
Domestic Content
Domestic manufactured product and component costs as a percentage of total manufactured product costs, against a threshold of 50% for construction beginning in 2026 and 55% for 2027 and later, together with a requirement that all manufacturing processes for structural steel and iron occur in the United States.[7]
Whether the project qualifies for the domestic content bonus credit.
By construction year.
Prohibited foreign entity (PFE) and material assistance cost ratio (MACR)
Entity ownership, debt and control thresholds, and the material assistance cost ratio.[8]
Credit eligibility, and through the FCC carve-out, market access.
Construction beginning after December 31, 2025; §45X sales from 2026.

 

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.

A&M Observation — A single pre-existing supply contract can produce opposite results under two of these instruments. Clause (2)(a) of the §232 proclamation permits an importer to certify that the first arm’s-length sale is pursuant to fixed terms in a contract entered into before August 6, 2026, and to avoid the minimum import price on that basis.[10] §2(d) of the executive order provides that its prohibitions apply notwithstanding any contract entered into before the date of the order.[11] A developer holding a 2025 framework agreement for inverters would therefore have a trade defense and no corresponding defense under the order. A developer that has mapped supplier exposure against one standard should not assume the analysis applies under the other.

 

AUDIENCE

Who Bears Which Consequence

The consequences are not evenly distributed. In most cases, only two or three of the six tests apply to a given participant.

Participant Tests That Apply to Them Consequence
Component Manufacturers
MACR; FCC; §232 proclamation
Duty enters the §45X cost base directly and reduces the ratio where it is imposed on PFE-sourced material. For inverter makers, the same computation controls market access through the FCC carve-out, so a certification furnished to support a customer’s credit position is now also the representation on which that customer’s equipment authorization depends. Polysilicon, ingot, and wafer producers face the §48D deadline of December 31, 2026, and the January 20, 2029, onshoring commitment date.
Developers and Sponsors
All six
Duty raises landed cost, which increases §48E basis and simultaneously enlarges the domestic content denominator. Projects not yet under construction face a material assistance threshold keyed to the construction year. Installed inverters and storage are within the executive order’s equipment list, which covers equipment acquired or installed before its date, and a pre-existing supply contract supports certification under the §232 proclamation while supplying no defense under the order.
Tax Equity and Credit Purchasers
MACR; EO §2(b)
A removal order triggers ITC recapture, and on a §6418 transfer, that liability follows the credit to the buyer rather than staying with the developer whose equipment was removed. Every other recapture trigger is an act or omission of the seller; this one is a third-party act on an unknown timetable, and it covers equipment lawful when installed. Diligence should cover the covered-equipment representation, the material assistance methodology and workpapers, and independent confirmation of the construction start year.
Lenders
MACR; EO §2(b)
Collateral value depends on credits that can be disallowed by a computation the borrower does not fully control or recaptured by an order no party controls. A material assistance analysis, with the methodology disclosed, is becoming a standard closing deliverable, alongside supplier change-of-status notification covenants and consent rights over mid-construction sourcing changes.
Data Center and Large-Load Developers
EO §5(b)
Uninterruptible power supply systems, backup generators, and industrial control systems all appear in the executive order’s equipment list.[12] Whether the order applies to them depends on a qualifier at the front of the list rather than on the list itself.

 

A&M Observation — §5(b) defines bulk-power system electric equipment as “items used in bulk-power system substations, control rooms, or power generating stations,” followed by the enumeration. The location qualifier appears to limit everything that follows it. Equipment sited at a load, rather than in a substation, control room, or generating station, would not be subject to it, and §5(a) separately excludes facilities used in the local distribution of electric energy.[13]

On that reading, a data center’s own uninterruptible power supply and backup generation are outside the order, while a co-located generating facility serving the same campus is a power generating station and its equipment is within it.[14] The distinction depends on siting rather than on function, and DOE has not addressed it. Question A2 of the request for information asks what objective characteristics should apply to uninterruptible power systems supporting critical infrastructure, which suggests the boundary is not settled.[15] Developers with behind-the-meter generation or storage, and those claiming credits on it, have the clearest interest in the answer and the shortest window in which to say so.

 

CREDIT BASE

§232 Duties, Basis and the Domestic Content Percentage

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:

Specific duty — MIP shortfall of $0.10/W on 100,000,000 W
$10,000,000
Additional 15% ad valorem on entered value of $28,000,000
$4,200,000
Additional capitalized cost
$14,200,000
Incremental §48E credit at 30% with prevailing wage and apprenticeship (PWA) requirements satisfied
$4,260,000
Incremental §48E credit at 50% (PWA, energy community, domestic content)
$7,100,000
Net after-credit cost of the duty, at 30%/50%
$9.94M/$7.10M

 

A&M Observation — Where the election between §48E and §45Y remains open, the proclamation moves the comparison toward §48E by an amount equal to the applicable credit rate multiplied by the duty. A §45Y project, on the same facts absorbs the full duty with no credit offset. This runs contrary to the general expectation that a tariff is simply an added cost and may be material in an import-heavy portfolio where the election is frequently made on production assumptions alone.

 

The Domestic Content Percentage

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.

A&M Observation — The guidance does not address customs duties, and the first question is whether duty enters the computation at all. Manufactured product cost is the manufacturer’s direct cost under Treas. Reg. §1.263A-1(e)(2)(i). A duty paid by the developer as importer of record is not a cost of the manufacturer, which supports exclusion even though the duty is capitalized into basis.[27] Including it is the conservative position and matches the material assistance cost ratio, which uses the taxpayer’s own direct costs. Take one position across both computations and document it.

The safe harbor election avoids the question because assigned cost percentages are indifferent to duty,[28] and Notice 2026-15 permits the same tables for material assistance purposes, so one election insulates both computations.[29] The election applies to the whole project,[30] and where the tables understate actual domestic content, often the case for power conversion equipment, it can cost more than it saves. A project within a few points of its threshold should re-run the numbers on post-duty pricing before signing the supply agreement.

 

MATERIAL ASSISTANCE

The Same Duties Reduce the MACR

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.

Credit/Component 2026 2027 2028 2029 2030+
Qualified facilities (§45Y/§48E), by construction year
40%
45%
50%
55%
60%
Energy storage technology (§45Y/§48E), by construction year
55%
60%
65%
70%
75%
Solar energy components (§45X), by year of sale
50%
60%
70%
80%
85%
Wind energy components (§45X), by year of sale
85%
90%
—
—
—
Inverters under §45X(c)(2)(B)–(G), by year of sale
50%
55%
60%
65%
70%
Qualifying battery components (§45X), by year of sale
60%
65%
70%
80%
85%
Applicable critical minerals (§45X), by year of sale
0%
0%
0%
0%
25% in 2030[32]

 

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.

A&M Observation — The proclamation’s stated purpose is to reduce dependence on foreign polysilicon, and the credit rules pursue the same objective. For a manufacturer still working through the procurement process, the two measures operate against one another in the interim: the duty raises the cost of the PFE-sourced input and, in doing so, lowers the ratio the manufacturer must satisfy to claim the credit that would help fund the transition away from it.

The effect is most acute for §45X taxpayers, whose cost base excludes labor and whose thresholds climb steeply. A solar energy component sold in 2029 must clear 80%, and one sold after 2029 must clear 85%; an inverter must clear 70% after 2029. A manufacturer modeling a 2027 or 2028 ratio on pre-duty landed costs will overstate the result.

Two responses are available. The Cost Percentage Safe Harbor uses assigned percentages rather than actual costs and is therefore unaffected by duty.[36] Separately, the existing contract election excludes from the ratio, entirely, the cost of any product or component acquired under a binding written contract entered into before June 16, 2025, subject to the placed in service and construction timing conditions.[37] Where the election is available, it removes both the underlying cost and the duty on it from the computation.

 

RECAPTURE

Removal Orders and ITC Recapture

§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]

A&M Observation — No provision of §50(a) appears to except a disposition compelled by government order, and no guidance addresses the question. A taxpayer ordered to remove equipment would be in the position of having satisfied every credit requirement at placement in service and losing the credit for a subsequent act it could not prevent. A clarification or confirmation on this point would be welcome, whether in DOE’s implementing rules or from Treasury.

Until the implementing rules identify Covered Foreign Entities and covered equipment, the exposure cannot be quantified, which argues for allocating it in documentation now rather than waiting. Credit purchase agreements currently in negotiation should address whether the covered-equipment representation covers the order’s §5(b) equipment list and which party bears recapture arising from a removal order. Transferees should note that this is a recapture trigger outside the seller’s control, which distinguishes it from every existing trigger and may warrant a specific indemnity rather than reliance on a general one.

 

MARKET ACCESS

The FCC §45X Carve-Out

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]

A&M Observation — The determination does not define “eligible,” and the term can be read two ways. It appears the better reading requires satisfaction of the material assistance limitation because a component that fails the MACR is not an eligible component and there would be nothing remaining for it to be eligible for. The alternative reading, under which the carve-out covers any inverter of a type listed in §45X that is produced domestically, would permit an inverter with substantial PFE content to leave the Covered List entirely and would displace the 65% content test the same determination left in place for every other inverter.

If the first reading is correct, a material assistance computation performed for credit purposes decides whether an inverter can use that route, leaving the 65% domestic content test as the alternative. Notice 2026-15 permits three methods, and its own examples show one safe harbor passing while another fails on identical facts.[44] Methodology selection would therefore have consequences well beyond the credit.

Two further points follow. The §45X MACR is computed by year of sale against a threshold rising from 50% in 2026 to 70% in 2030, and neither the determination nor the FCC’s process addresses what happens to an authorization when a model that qualified in one year fails in a later one. Separately, a supplier’s material assistance certification, furnished to support a customer’s credit position under the Certification Safe Harbor, now also supports that customer’s market access. Certifications are signed under penalties of perjury, are subject to a §6695B penalty for false certification, and must be retained for six years.[45] Supply agreements executed before August 20, 2026, will not have allocated that additional exposure.

 

OPPORTUNITY

§48D on Ingot and Wafer Capacity, and the December 31, 2026, Deadline

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]

A&M Observation — The three measures apply to the same investment from three directions: §48D funds the plant, §45X funds the output, and the minimum import price establishes a floor under the revenue that output will earn. A domestic ingot and wafer producer that begins construction before year end captures all three. One that begins construction on January 2, 2027, captures two.

The §48D window is the binding constraint. The five percent test requires payment or incurrence of a real fraction of facility cost, so equipment orders and site work must move now; engineering studies and permitting establish nothing on their own. Costs a contractor incurs under a binding written contract before the property is delivered to the taxpayer are deemed incurred by the taxpayer when the contractor incurs them, which is the practical route to five percent before year end.[53] A company that has been modeling a 2027 start on the assumption that the §232 measures make the economics work should be told that the tariff protection takes effect December 4, 2026, and the largest credit closes twenty-seven days later.

The prohibited foreign entity rules apply throughout. A facility that qualifies for §48D and produces components that fail the material assistance cost ratio loses the §45X credit on that output entirely, so the supply chain analysis belongs in the investment decision rather than after it.

 

PROCUREMENT

Fourth-Quarter Procurement and Two Anti-Stockpiling Provisions

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]

A&M Observation — A large equipment order placed shortly before a deadline, delivered and stored rather than installed, is ordinary procurement and safe harbor planning. It is also difficult to distinguish, on its face, from the conduct clause (11) directs Commerce to identify and that (D)(v) directs Treasury to write rules against. A taxpayer accelerating fourth-quarter procurement is exposed to two anti-abuse provisions, administered by two agencies, aimed at the same behavior, with no definition of stockpiling under either. Commerce’s criteria compare an importer’s volumes to its own history, which a developer with irregular procurement can trip without stockpiling.

A purchase supported by a binding written contract, an identified project pipeline, and delivery schedules tied to construction sequencing should be defensible under both. A purchase with no identified project behind it would be considerably harder to characterize. The recommendation is documentary rather than structural: contemporaneous, project-level support for the quantity ordered, generated when the order is placed, will serve an inquiry under clause (11), whatever Treasury issues under (D)(v), and any construction-year position the taxpayer takes. A module purchase made before December 4, 2026, may also support the five percent safe harbor for beginning of construction, but that is a separate rationale and should be documented as one.

 

DILIGENCE

Common Foot Faults

  • Running one foreign-entity screen across all six tests.
    PFE status, “foreign-produced” under the executive order, “domestic end product” under the FCC standard, country of origin for §232 purposes, and the domestic cost percentage are separate determinations. A supplier may pass one and fail another, and domestic content and material assistance can give opposite answers on the same component.
  • Modeling the MACR on pre-duty landed costs.
    Tariffs enter direct material costs for §45X purposes. A computation run on pricing before December 4, 2026, will overstate the ratio for any taxpayer importing PFE-sourced material.
  • Applying one §45X threshold schedule across component types.
    The statute sets separate schedules for solar energy components, wind energy components, inverters, qualifying battery components, and applicable critical minerals. A solar component sold in 2029 faces 80%, while an inverter sold the same year faces 65%.
  • Treating a known PFE input as a proportionate reduction.
    Knowledge, actual or constructive, taints the full direct cost of the product rather than a share of it.
  • Treating a pre-order supply contract as protective under the executive order.
    Clause (2)(a) of the proclamation protects fixed-term contracts entered into before August 6, 2026. §2(d) of the order expressly does not.
  • Assuming an FCC authorization is permanent.
    Where authorization rests on §45X eligibility, and eligibility rests on a MACR computed annually against a rising threshold, the basis for authorization may not persist across years.
  • Omitting the removal-order scenario from transfer diligence.
    Existing recapture representations address events within the seller’s control. A §2(b) order is not one.
  • Overlooking the certification chain.
    A supplier certification furnished under the Certification Safe Harbor now supports both a credit position and a customer’s market access, and remains subject to the knows-or-has-reason-to-know standard.

OPEN ITEMS

What Remains Open

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.

NEXT STEPS

Recommended Actions

  1. Re-run MACR models on pricing after December 4, 2026, by component type. For §45X taxpayers importing PFE-sourced material, compare the actual cost method against the Cost Percentage Safe Harbor, which is unaffected by duty, and confirm the correct threshold schedule for each component sold.
  2. Re-run the domestic content percentage on post-duty pricing for any project within a few points of its threshold, and evaluate the safe harbor election on the revised numbers before executing the supply agreement.
  3. Move any domestic ingot or wafer investment decision forward. The §48D credit at 35%, monetizable by elective payment, closes to facilities beginning construction after December 31, 2026. Establishing construction under the five percent test requires payments or incurred costs before year end.
  4. Identify binding written contracts entered into before June 16, 2025, and evaluate the existing contract election, which removes qualifying costs, and the duty on them, from the ratio entirely.
  5. Address removal-order recapture in credit purchase agreements now in negotiation. Specify whether the covered-equipment representation covers the order’s §5(b) list and which party bears the exposure.
  6. Revisit the §48E versus §45Y election for import-heavy projects where the election remains open, incorporating the duty’s effect on the credit base.
  7. File comments in docket DOE-HQ-2026-1123 by October 9, 2026. Definition of “initiated” and publication of prequalification criteria alongside the implementing rules are the two items with the clearest commercial consequence.
  8. Review inverter supply agreements executed before August 20, 2026, for certification language that now has market-access consequences.
  9. Document fourth-quarter procurement at the project level contemporaneously, supporting both the beginning of construction position and any inquiry under clause (11).
  10. Confirm beginning of construction status independently. A 2025 construction start removes a project from the material assistance rules entirely, which raises the stakes on a diligence item that already existed.

HOW WE CAN HELP

Working the Six Tests

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.

  • Material assistance modeling and substantiation
    We build the MACR on post-duty pricing under the actual direct cost method and against the Cost Percentage Safe Harbor, by component type and by year of sale or construction year, and identify where the two diverge. That includes the existing contract election for binding contracts predating June 16, 2025, supplier certification packages meeting the employer identification number, penalties of perjury, and six-year retention requirements, and a documented knows-or-has-reason-to-know file for any supplier where the question is live.
  • Domestic content
    We re-run the domestic cost percentage on post-duty pricing for projects near a threshold, price the safe harbor election against actual costs now that duty is in the denominator, and confirm the steel and iron requirement separately. The two computations draw on the same tables and ask opposite questions, so we run them together.
  • Foreign entity screening, twice
    The prohibited foreign entity tests at §7701(a)(52) depend on ownership, debt, control, and effective control. The Covered Foreign Entity definition in the executive order depends on arms embargo and ITAR sanctions status. We run both against the supplier base and report where a name clears one and not the other, rather than delivering a single screen that answers neither question completely.
  • §232 classification and minimum import price certification
    Annex I and II coverage, country of origin analysis, and the certification strategy at entry: whether to document the first arm’s-length sale at or above the floor, rely on the pre-August 6, 2026, fixed-term contract route, or accept the specific tariff. We also assess foreign trade zone and drawback consequences and the exposure that a defective certification creates for the importer and every affiliate.
  • §48D before December 31, 2026
    Qualified investment scoping for an ingot or wafer facility, the choice between the physical work test and the five percent safe harbor under Treas. Reg. §1.48D-5, contractor-incurred cost structuring to satisfy the five percent test before year end, elective payment mechanics, and the §45X position on the resulting output so a qualifying facility does not produce disqualified components.
  • Credit transfer, financing and diligence
    Covered-equipment representations, allocation of removal-order recapture, and the scope of the indemnity that addresses it, independent confirmation of the construction start year, and review of material assistance methodology and workpapers. For lenders, the closing deliverable set, and the supplier change-of-status and sourcing-consent covenants that support it.
  • Market access for inverter manufacturers
    Where a model’s FCC position rests on §45X eligibility rather than the 65% Buy American content route, the credit computation and the authorization rest on the same facts. We assess both routes, the conditional approval path at the Department of War or Homeland Security, and the certification language in supply agreements executed before August 20, 2026, that now has market-access consequences.
  • Regulatory comment
    We can assist in drafting comments as requested in docket DOE-HQ-2026-1123 by October 9, 2026, on the meaning of “initiated,” the location qualifier that opens §5(b), and publication of prequalification criteria alongside the implementing rules.

TIMELINE

Key Dates

Date Event
July 28, 2026
Foreign-produced power inverters added to the FCC Covered List; models authorized before this date are unaffected.
Aug. 6, 2026
Proclamation 11052 issued; cutoff for the fixed-term contract certification under clause (2)(a).
Aug. 20, 2026
Covered List entry modified; §45X carve-out added.
Aug. 26, 2026
Executive order issued; prohibition applies to transactions initiated after this date.
Sept. 9, 2026
DOE request for information published, 91 FR 57322; 36 questions on the scope of covered equipment, Covered Foreign Entities, mitigation, and prequalification.
Sept. 22, 2026
Commerce temporary final rule restricting polysilicon stockpiling takes effect; waiver applications open through Dec. 3, 2026.
Oct. 9, 2026
Comments due on the DOE request for information, docket DOE-HQ-2026-1123 or BulkPowerEO@doe.gov, the last scheduled opportunity to shape the scope of the prohibition before the implementing rules.
Dec. 4, 2026
Minimum import prices and the additional 15% ad valorem duty take effect.
Dec. 24, 2026
DOE implementing rules due (120 days from the order).
Dec. 31, 2026
§48D begin-construction deadline; Treasury must issue PFE-specific safe harbor tables.
Feb. 22, 2027
Federal Acquisition Regulation (FAR) revision recommendations due (180 days from the order).
Jan. 20, 2029
Construction start required under an approved onshoring plan.

 

REFERENCE

The Actions in Detail

Readers familiar with the three actions can skip to the notes, which contain the detail and the citations.

The FCC Covered List and equipment authorization

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]

The §232 proclamation and the minimum import price program

§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 bulk-power system executive order

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]

A&M Observation — The order bases its foreign-entity test on the ITAR arms embargo and sanctions list rather than on the prohibited foreign entity definitions used for tax purposes. The two are not coextensive. A supplier may be a prohibited foreign entity under §7701(a)(52) without being subject to an arms embargo, and a Covered Foreign Entity determination may apply to a supplier that presents no material assistance issue. A taxpayer that has built a single foreign-entity screen for credit purposes should not assume it answers the question DOE will ask.

 

DOE’s request for information

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 prohibited foreign entity rules

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]

FOR MORE INFORMATION

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

Contact Us

Steven Schmoll – Senior Director, National Tax Office

Contact Us

Louis Conde – Senior Director, Global Trade

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Chase Duncan – Senior Associate, Global Trade

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[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.

[44]Notice 2026-15.

[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).

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