Guidance to Apply Interim Safe Harbors for Purposes of Determining a Taxpayer’s Material Assistance from a Prohibited Foreign Entity; Other Prohibited Foreign Entity Guidance (Notice 2026-15)

Lawyers for Good Government (L4GG), a nonprofit organization, submitted comments regarding the proposed regulations for prohibited foreign entity (PFE) restrictions. They advocate for specific clarifications and safe harbors to ensure that "Elective Pay" entities (such as state and local governments and nonprofits) can navigate the new compliance requirements without undue burden or retroactive application.

The American Public Power Association (APPA) is urging the Treasury and IRS to provide specific guidance on the new foreign-entity-of-concerns rules to ensure energy projects and nuclear tax credits are not unnecessarily blocked. They advocate for treating publicly offered debt as not issued to specified foreign entities and for applying the debt test prospectively to debt issued during the taxable year.

The commenter, writing as an individual, supports the proposed regulations but urges the IRS and Treasury to ensure they do not create administrative barriers for "Elective Pay" entities, such as local governments and non-profits. They advocate for narrow definitions of "effective control," reliance on original debt issuance rather than secondary markets, and the creation of clear safe harbor tables and a compliance clearinghouse for manufacturers.