taxnews.ey.comPrint

12 February 2026

IRS provides guidance on prohibited foreign entity restrictions for certain energy credits

The IRS on February 12, 2026, in Notice 2026-15 (Notice), issued interim guidance for determining if certain electricity-producing facilities, energy storage technologies, or their eligible components are receiving material assistance from a prohibited foreign entity (PFE), which would make them ineligible for IRC Section 45X, 45Y or 48E credits. The Notice also provides details on how taxpayers may use the interim safe harbors provided in the OBBBA to determine the material assistance cost ratio and states the IRS intends to issue further regulations on the definition of a PFE and the material assistance rules. A Tax Alert is forthcoming.

* * * * * * * * * *
Published by NTD’s Tax Technical Knowledge Services group; Chris DeZinno, legal editor

Document ID: 2026-0420

 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 1996 – 2026, Ernst & Young LLP

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

EY US Tax News Update Master Agreement | EY Privacy Statement