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New prohibited-foreign-entity rules create three compliance buckets; supplier certifications and archived guidance may help, attorneys say
Summary
Lawyers for Good Government summarized HR1's three PFE rule categories—entity-level, payment and material-assistance rules—urging early supplier certifications, careful review of municipal debt exposures, and documentation because Treasury/IRS guidance remains incomplete.
In a webinar for developers and public entities, Lawyers for Good Government attorneys outlined the three central compliance areas created by HR1's prohibited foreign entity (PFE) provisions and steps claimants can take while Treasury and IRS publish detailed guidance.
Senior tax attorney Camille Benninghoff said the statute establishes three buckets: entity-level rules (ownership and foreign influence tests), payment rules (whether prior payments or contracts give a specified foreign entity "effective control" of a facility) and material-assistance rules (the sourcing of components used to make the facility). "China is gonna be the big one…
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