Four Simple Ways Banyan Supports New FEOC Guidance
Clean energy owners, developers, and financiers have been wary to move forward on important, ambitious projects that would benefit their respective stakeholders because of a lack of clarity around what changes would be unveiled by the IRS in the Foreign Entity of Concern (FEOC) guidelines. Thankfully, these guidelines were finally announced in February 2026, paving the way for stalled projects to move forward and meet important infrastructure demand, but with the caveat that new limitations exist for the use of foreign equipment and minerals in U.S.-based plants. The guidelines affect projects on which construction starts in 2026, and potentially for agreements signed on or after July 4, 2025.
From Regulatory Uncertainty to Real-Time Compliance
With China’s significant role in clean energy production, U.S.-based clean infrastructure owners, developers and financiers will need to be more vigilant than ever about the origin of their supply chain, and provide greater transparency and reporting to mitigate the risk of tax credit clawbacks. By leveraging automated, real-time software, Banyan Infrastructure streamlines this oversight - helping you develop and finance project pipelines while ensuring continuous adherence to FEOC guidelines.
- Material Assistance Cost Ratio (MACR)
- The MACR is a precise mathematical formula used to determine if a project incorporates too much material or equipment from prohibited foreign entities (PFE) to qualify for a tax credit. For 2026, solar and wind projects must verify at least 40% of non-PFE material, while energy storage projects face a steeper 55% threshold. Banyan’s automated reporting questionnaires transform how critical material data is collected, eliminating tracking complexity to deliver the rigorous documentation and insights essential for total project transparency.
- Supplier Certifications
- The IRS now allows taxpayers to rely on supplier certifications, but they must be signed under penalties of perjury and attached to tax returns. Banyan’s External Stakeholder Portal can help companies digitize this critical data by collecting and storing one source of data via questionnaires, which allows you to attach various documents and input information. The software provides a permanent, time-stamped audit trail that demonstrates the developer or fund did its due diligence in its supply chain sourcing.
- Granular "Qualified Facility" Tracking
- Compliance is no longer measured at the company level, but rather calculated for each "qualified facility" (e.g., every individual battery system or circuit facility). As a result, a single project might have dozens of independently operable segments. If one facility fails the MACR, the project loses the tax credit, even if the rest of the project is compliant. Banyan Infrastructure provides a precise level of granularity across complicated projects and portfolios. For example, you can click into a single wind turbine's cost data to verify FEOC compliance instantly, even across a multi-million-dollar portfolio with multiple projects. Banyan creates a hierarchy that includes unlimited projects and financings, with individual data collection rolled up into one report. By automatically organizing and preserving every timestamp and documentation, Banyan’s structured capital workflows transform standard compliance into defensible proof - providing an audit trail should credits ever be challenged.Leaner teams are adopting "bottom-up" underwriting approaches to stay competitive in high-barrier markets like the Northeast and Southwest.
- Integration with Domestic Content Safe Harbors.
- The new guidelines allow taxpayers to use existing Notice 2025-08 tables for "assigned cost percentages" to simplify FEOC calculations. Developers must cross-reference multiple IRS tables (Domestic Content + FEOC) to find the "safe harbor" value for every component from trackers to inverters. Banyan supports this by automatically assigning engineering audits to trusted counterparties to streamline the process and save time. It keeps a record of the engineering audits once they are complete, and creates a standardized process so that important steps are not missed. Banyan automates communications with your specific suppliers and counterparties so they can submit critical information on your behalf. Finally, it organizes projects into a clear, reportable hierarchy and keeps that information as the “system of record” that can protect you against future audits.
Laws can be complicated, but maintaining an auditable history of documents, submissions, and compliance activity should not be. With Banyan Infrastructure, FEOC compliance shifts from a complex regulatory hurdle into a seamless, audit-ready workflow that protects your project's bottom line. By turning documentation into a strategic asset, we enable your team to deploy capital faster and smarter - eliminating the risk of being blindsided by disqualification.
To help you navigate these requirements, we have developed a comprehensive FEOC implementation checklist* for your team to download and use today. This resource provides a step-by-step framework to ensure your internal processes remain fully aligned with the latest federal guidelines. Download the checklist.
Connect with one of our resident experts to find out how to maintain tax credits while complying with new FEOC guidelines.