President Trump signed an executive order Monday directing the Treasury Department to pull the plug on regulatory and other guidance projects relating to clean energy tax credit provisions under the Inflation Reduction Act that were revised by the One Big Beautiful Bill (P.L. 119-21).
The order specifically instructs Treasury to “terminate the clean electricity production and investment tax credits for wind and solar facilities” — under Code Sec. 45Y and Code Sec. 48E, respectively — and implement the enhanced Foreign Entity of Concern restrictions signed into law with other tax provisions of the budget reconciliation bill enacted July 4.
New and revised guidance should implement and enforce the “beginning of construction” policies, per the order, “including by preventing the artificial acceleration or manipulation of eligibility and by restricting the use of broad safe harbors unless a substantial portion of a subject facility has been built.”
Treasury and the Department of the Interior are to submit a report to President Trump within 45 days with an update on the gameplan for carrying out the order.
According to the White House, the administration seeks to “rapidly eliminate the market distortions and costs imposed on taxpayers” by the energy credit regimes enacted during the President Biden’s term. Trump’s order adds that the U.S. must also “end taxpayer support for unaffordable and unreliable ‘green’ energy sources and supply chains built in, and controlled by, foreign adversaries.”
The reconciliation bill accelerates the phase-outs of the Section 45Y and 48E credits for wind and solar, which will be unavailable as of 2028 due a “placed-in-service” deadline that only applies to those industries. Thus, wind and solar facilities must begin construction within the next year to be eligible, or be placed in service by December 31, 2027. “Prohibited foreign entities” described in the bill also may not claim the wind and solar clean electricity incentives.
The order states that revised guidance projects should “eliminate preferential treatment for wind and solar facilities compared to reliable, dispatchable energy sources.” Whether the IRS plans fulfill these instructions by the given 45-day cutoff is uncertain.
The IRS did not immediately respond to Checkpoint’s request for comment by press time.
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