08 June 2026 District Court vacates IRS notice that eliminated safe harbor for determining beginning of construction for wind and solar projects On June 6, 2026, the U.S. District Court for the District of Columbia, in Oregon Environmental Council v. IRS, vacated and sent back to the IRS for further consideration IRS Notice 2025-42, which restricted how clean energy developers can qualify for tax credits for wind and solar projects. The notice generally eliminated the "5% safe harbor" test for certain solar and wind projects, leaving the "physical work" test as the only way to establish that any such project has begun construction (see Tax Alert 2025-1709). The district court held that the IRS acted arbitrarily and capriciously because it failed to adequately explain this significant policy change and did not properly consider reliance on prior guidance. A Tax Alert is forthcoming.
Document ID: 2026-1218 | ||
