Currents Ep335: New IRS Guidance on FEOC and 45Z Tax Credits
Feb 19, 2026
Keith Martin, partner at Norton Rose Fulbright and project finance and tax specialist, breaks down new IRS guidance on FIAC rules and proposed Section 45Z clean fuel tax credit regs. He explains how prohibited foreign content is calculated and why supplier certificates matter. He also outlines transferability changes and what may shape market participation.
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FIAC Focuses On Three Key Restrictions
- The FIAC rules impose three restrictions aimed at limiting Chinese involvement in renewable projects, including equipment, ownership/management, and contract control.
- The recent 95-page Treasury guidance mainly answers the math question of how to calculate prohibited Chinese equipment.
Use Tables To Calculate Prohibited Equipment
- Use existing domestic-content tables to calculate "material assistance" and isolate listed parts for the Chinese-equipment test.
- Exclude nonlisted items like main power transformers from the prohibited-equipment calculation to simplify compliance.
Supplier Certificates Ease Transactions
- Suppliers' certificates that they are not "prohibited foreign entities" will put equipment in the "good" column for calculations.
- The guidance helps transactions but does not resolve all financing and tax-credit purchase uncertainties yet.