Termination and Restrictions on Clean Electricity Production Credit
Section 70512 · Sec. 70512 ·
What this chapter is about
This part ends a clean power credit for wind and solar put in use after 2027. It also shuts firms tied to certain foreign governments out of the credit. It sets rising limits on parts sourced from those firms. Overstating those figures draws a penalty.
The document says “shall not”Who acts: Secretary of the TreasuryHow: statuteSec. 70512 in the PDF
What the document says
“This section shall not apply with respect to any applicable facility placed in service after December 31, 2027.”
The section amends section 45Y(d) of the Internal Revenue Code of 1986 to make the phase out subject to a new paragraph, fixes the applicable year at calendar year 2032, and adds a termination under which the section does not apply to a facility placed in service after December 31, 2027 that uses wind or solar energy to produce electricity, judged without regard to any construction start date requirement in section 45.
What the document actually says
“This section shall not apply with respect to any applicable facility placed in service after December 31, 2027.”
That sentence, in plain words
The credit does not reach a covered plant put to use after December 31, 2027.
What this is about
A covered plant is one that runs on wind or sun. The test turns on when it starts running. Other kinds of plant are not touched here.
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The document says “shall not”Who acts: Secretary of the TreasuryHow: statuteSec. 70512 in the PDF
What the document says
“The term `qualified facility' shall not include any facility for which construction begins after December 31, 2025, if the construction of such facility includes any material assistance from a prohibited foreign entity (as defined in section 7701(a)(52)).”
The section adds a new subparagraph (E) to section 45Y(b)(1) of the Internal Revenue Code of 1986 taking out of the term qualified facility any facility whose construction begins after December 31, 2025 where the construction includes material assistance from a prohibited foreign entity as defined in section 7701(a)(52).
What the document actually says
“The term `qualified facility' shall not include any facility for which construction begins after December 31, 2025, if the construction of such facility includes any material assistance from a prohibited foreign entity (as defined in section 7701(a)(52)).”
That sentence, in plain words
A plant does not count if two things hold. Work on it starts after December 31, 2025. It drew help from a barred foreign body.
What this is about
The help must be of a kind the law calls material. The next rules set how that is measured. A plant that fails this gets no credit.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
The document says “shall not”Who acts: Secretary of the TreasuryHow: statuteSec. 70512 in the PDF
What the document says
“No credit shall be determined under subsection (a) for any taxable year if the taxpayer is--”
The section adds a new paragraph (13) to section 45Y(g) of the Internal Revenue Code of 1986 barring the credit for a taxable year where the taxpayer is a specified foreign entity as defined in section 7701(a)(51)(B) or a foreign-influenced entity as defined in section 7701(a)(51)(D) read without clause (i)(II). Where the effective control test in that clause applies for a year, no credit is given for that year if the finding relates to a qualified facility.
What the document actually says
“No credit shall be determined under subsection (a) for any taxable year if the taxpayer is--”
That sentence, in plain words
No credit is given for a tax year. That holds if the taxpayer is one of the two kinds named below.
What this is about
One is a named foreign body. The other is a body under foreign sway. A third rule covers control of the plant itself.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
“The term `prohibited foreign entity' means a specified foreign entity or a foreign-influenced entity.”
The section adds a new paragraph (51) to section 7701(a) of the Internal Revenue Code of 1986 defining a prohibited foreign entity as a specified foreign entity or a foreign-influenced entity, tested as of the last day of the taxable year, except that for the first taxable year after enactment certain specified foreign entities are tested as of the first day. A specified foreign entity includes a foreign entity of concern under named subparagraphs of section 9901(8) of the National Defense Authorization Act for Fiscal Year 2021, an entity identified as a Chinese military company operating in the United States, and others the paragraph lists.
What the document actually says
“The term `prohibited foreign entity' means a specified foreign entity or a foreign-influenced entity.”
That sentence, in plain words
The term covers two kinds of body. One is a named foreign body. The other is a body under foreign sway.
What this is about
The test is run on the last day of the tax year. In the first year some are tested on the first day. The named bodies come from a defense law.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
“The term `material assistance from a prohibited foreign entity' means--”
The section adds a new paragraph (52) to section 7701(a) of the Internal Revenue Code of 1986 defining material assistance from a prohibited foreign entity as a material assistance cost ratio below the threshold percentage for the facility or component. For a qualified facility the threshold is 40 percent where construction begins in calendar year 2026, 45 percent in 2027, 50 percent in 2028, 55 percent in 2029, and 60 percent after December 31, 2029, with separate thresholds for facilities producing eligible components.
What the document actually says
“The term `material assistance from a prohibited foreign entity' means--”
That sentence, in plain words
The term covers a cost ratio that falls below a set line. The two cases that follow say which line.
What this is about
The line rises year by year. It starts at 40 percent for work begun in 2026. It reaches 60 percent for work begun after 2029.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
The document says “shall”Who acts: Secretary of the TreasuryHow: statuteSec. 70512 in the PDF
What the document says
“the Secretary shall consider studies published on or before the date of enactment of this clause which demonstrate a net lifecycle greenhouse gas emissions rate which is not greater than zero using widely accepted lifecycle assessment concepts”
The section adds a new clause (iii) to section 45Y(b)(2)(C) of the Internal Revenue Code of 1986 requiring the Secretary, in setting greenhouse gas emissions rates for types or categories of facilities, to consider studies published on or before enactment that show a net lifecycle rate no greater than zero using widely accepted lifecycle assessment concepts such as those in International Organization for Standardization standards.
What the document actually says
“the Secretary shall consider studies published on or before the date of enactment of this clause which demonstrate a net lifecycle greenhouse gas emissions rate which is not greater than zero using widely accepted lifecycle assessment concepts”
That sentence, in plain words
The Secretary must weigh studies already out. They must show a net rate of zero or less. They must use methods that are widely used.
What this is about
Lifecycle means the whole span of a plant. The study must be published by the day this law passed. One named standards body is given as an example.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
“for purposes of any qualified facility which is an advanced nuclear facility, a metropolitan statistical area which has (or, at any time during the period beginning after December 31, 2009, had) 0.17 percent or greater direct employment related to the advancement of nuclear power”
The section adds a new clause (iv) to section 45(b)(11)(B) of the Internal Revenue Code of 1986 bringing within the term, for an advanced nuclear facility, a metropolitan statistical area with at least 0.17 percent direct employment related to the advancement of nuclear power at any time after December 31, 2009, including employment at an advanced nuclear facility, in advanced nuclear research and development, in nuclear fuel cycle work such as mining, enrichment, manufacture, storage, disposal or recycling, and in making or assembling components for such a facility.
What the document actually says
“for purposes of any qualified facility which is an advanced nuclear facility, a metropolitan statistical area which has (or, at any time during the period beginning after December 31, 2009, had) 0.17 percent or greater direct employment related to the advancement of nuclear power”
That sentence, in plain words
An area counts where nuclear work makes up 0.17 percent or more of jobs. It counts if that was true at any time after December 31, 2009.
What this is about
The rule applies to advanced nuclear plants. Four kinds of nuclear job are named. They cover plants, research, fuel work and parts.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
The document says “shall”Who acts: Secretary of the TreasuryHow: statuteSec. 70512 in the PDF
What the document says
“in subparagraphs (A) and (B), by substituting `1 percent' for `10 percent' each place it appears, and”
The section adds a new subsection (m) to section 6662 of the Internal Revenue Code of 1986 so that where an applicable energy credit is disallowed, the substantial understatement test is applied by reading 1 percent for 10 percent and without regard to subparagraph (C). A disallowance of an applicable energy credit means the disallowance of a credit under section 45X, 45Y or 48E for overstating the material assistance cost ratio. A conforming change extends the rule to excessive payments under section 6417.
What the document actually says
“in subparagraphs (A) and (B), by substituting `1 percent' for `10 percent' each place it appears, and”
That sentence, in plain words
One percent takes the place of ten percent. That swap is made in two spots.
What this is about
The figure sets when a shortfall counts as large. A lower figure makes a fine easier to trigger. It applies where an energy credit is refused.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
The document says “shall”Who acts: Secretary of the TreasuryHow: statuteSec. 70512 in the PDF
What the document says
“then such person shall pay a penalty in the amount determined under subsection (b).”
The section adds a new section 6695B to part I of subchapter B of chapter 68 of the Internal Revenue Code of 1986 imposing a penalty where a person gives a certification under section 7701(a)(52)(D), knows or should know it will be used in a determination, knows or should know it is inaccurate or false about whether the property was produced by a prohibited foreign entity or about the direct costs stated, and that inaccuracy causes an energy credit to be disallowed and an understatement of income tax above the lesser of 5 percent of the tax required to be shown and $100,000.
What the document actually says
“then such person shall pay a penalty in the amount determined under subsection (b).”
That sentence, in plain words
The person must pay a penalty. Its size is set by the next rule.
What this is about
The person must have known the paper was wrong. The error must have cost the government tax. The shortfall must top 5 percent of the tax or $100,000.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
The document says “shall apply”Who acts: Secretary of the TreasuryHow: statuteSec. 70512 in the PDF
What the document says
“Except as provided in paragraphs (2), (3), and (4), the amendments made by this section shall apply to taxable years beginning after the date of enactment of this Act.”
The section applies its amendments to taxable years beginning after enactment, except that the material assistance rule applies to facilities whose construction begins after December 31, 2025, the supplier certification penalty applies to certifications provided after that date, and the wind and solar termination applies to facilities whose construction begins more than 12 months after enactment.
What the document actually says
“Except as provided in paragraphs (2), (3), and (4), the amendments made by this section shall apply to taxable years beginning after the date of enactment of this Act.”
That sentence, in plain words
The changes start with tax years that begin after this law passed. Three parts are treated apart.
What this is about
The foreign help rule reaches work begun after 2025. The supplier penalty reaches papers given after that date. The wind and solar end date reaches work begun a year after this law.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
Each distinct thing the section does: end the credit for wind and solar facilities and fix the applicable year, bar a facility built with material assistance from a prohibited foreign entity, bar the credit for a specified foreign entity or a foreign-influenced entity, define a prohibited foreign entity and a specified foreign entity, define material assistance and set the rising threshold percentages, add existing studies to the emissions rate test, widen the nuclear energy community rule, cut the substantial understatement threshold where an energy credit is disallowed, create a supplier certification penalty, and fix the effective dates.
The long lists of entities within the definition of a specified foreign entity, the full threshold table for facilities producing eligible components, the details of the certification and safe harbor rules, and the conforming and clerical amendments, which are carried in summaries.
The section works by amending sections 45, 45Y, 6417, 6662 and 7701 of the Internal Revenue Code of 1986 and points to the National Defense Authorization Act for Fiscal Year 2021, none of which is indexed here.
