The Knight Watch – Prohibited Foreign Entity Rules in the One Big Beautiful Bill Act

Tax attorneys Nicole Elliott, Elizabeth Crouse and Leif Anderson co-authored an article for TAXES – The Tax Magazine analyzing the One Big Beautiful Bill Act's (OBBB) new Prohibited Foreign Entity Rules and their impact on clean energy and advanced manufacturing credits. The authors explain how taxpayers claiming the investment tax credit (ITC), production tax credit (PTC) and advanced manufacturing tax credit must assess whether they are Specified Foreign Entities or Foreign-Influenced Entities, navigate a new Payment Rule tied to "effective control" and comply with material assistance thresholds that increasingly limit inputs from prohibited foreign entities. With U.S. Department of Treasury and Internal Revenue Service (IRS) guidance still pending, the authors outline practical steps for due diligence, supplier vetting and planning to preserve eligibility beginning in 2026.

READ: The Knight Watch – Prohibited Foreign Entity Rules in the One Big Beautiful Bill Act