Treasury Issues Initial Guidance To Determine Material Assistance To Implement The OBBBA's Foreign Entity Of Concern Provisions

On February 12, 2026, the Department of Treasury and Internal Revenue Service (collectively Treasury) issued Notice 2026-15 to provide interim guidance for determining if a project or component received "material assistance" from a Prohibited Foreign Entity (PFE) under the One Big Beautiful Bill Act's (OBBBA) Foreign Entity of Concern (FEOC) provisions that would make the project or component ineligible for a tax credit.

Last year, the OBBBA made significant changes by applying FEOC restrictions to the clean energy tax credits enacted under the Inflation Reduction Act (IRA) in 2022. These FEOC restrictions are intended to prevent any entity that is deemed to be controlled or influenced by a covered nation (including China, Russia, Iran, and North Korea) from claiming or benefitting from credits for a qualified facility or energy storage technology (collectively project) under section 45Y or 48E or credits for producing an eligible component under section 45X.