New IRS Guidance Clarifies Material Assistance FEOC Requirements

The Internal Revenue Service ("IRS") has released long-awaited guidance on the "prohibited foreign entities" or "FEOC" requirements for certain federal clean energy tax credits. The guidance, Notice 2026-15, primarily addresses how to calculate the "material assistance cost ratio" or "MACR" for purposes of claiming certain clean energy tax credits (the "MACR guidance"). The MACR is the ratio of clean energy facility equipment costs that can be attributed to prohibited foreign entities ("PFEs"), which must not exceed certain statutory thresholds, lest the facility lose access to energy tax credits to which the MACR requirements apply.

Despite clarifying how to calculate "material assistance" from a PFE, the MACR guidance is silent on many other critical aspects of the PFE requirements—issues that have prompted questions from energy industry stakeholders ever since the enactment of the "One Big Beautiful Bill Act" (the "OBBBA"). Most notably, the MACR guidance