On December 1, 2023, Treasury released a proposed rule to clarify the IRC section 30D new clean vehicle tax credit, modified and expanded by IRA section 13401. The proposed rule clarifies the IRA’s foreign entity of concern (FEOC) requirements, providing guidance on the eligibility of vehicles containing critical minerals and manufactured or assembled battery components from such foreign entities. The IRA placed restrictions on the clean vehicle tax credit for vehicles including critical minerals and components sourced in FEOCs starting in 2024. The proposed rules would require manufacturers to conduct due diligence that complies with industry standards of tracing for battery materials. Treasury’s Revenue Procedure provides additional rules for manufacturers of new clean vehicles to comply with reporting, certification, and attestation requirements for the excluded entity restriction.
In conjunction with Treasury’s guidance, DOE released proposed guidance defining FEOCs.