1) Mar 23 -- Internal Revenue Service (IRS), Treasury notice of proposed rulemaking.
This document contains proposed regulations to implement the advanced manufacturing investment credit established by the CHIPS Act of 2022 to incentivize the manufacture of semiconductors and semiconductor manufacturing equipment within the United States. The regulations address the credit's eligibility requirements, an election that eligible taxpayers may make to be treated as making a payment of tax (including an overpayment of tax), or for an eligible partnership or S corporation to receive an elective payment, instead of claiming a credit, and a special 10-year credit recapture rule that applies if there is a significant transaction involving the material expansion of semiconductor manufacturing capacity in a foreign country of concern. This document also requests comments on the proposed regulations, including the definition of the term “semiconductor.” These proposed regulations affect taxpayers that claim the advanced manufacturing investment credit or instead make an elective payment election. Written or electronic comments and requests for a public hearing must be received by May 22, 2023.
Correction FRN: https://www.federalregister.gov/d/2023-07987
published April 17, 2023
2) Mar 21 [press release] -- Treasury Department Mobilizes Semiconductor Supply Chain Investment Incentives with Key CHIPS Investment Tax Credit Guidance
Proposed Rules Aim to Bolster Semiconductor Supply Chain Resilience and Spur Job Growth by Providing Clarity and Certainty to Taxpayers
WASHINGTON — The U.S. Department of the Treasury and the Internal Revenue Service (IRS) today is releasing a notice of proposed rulemaking for the Advanced Manufacturing Investment Credit (CHIPS ITC) established by the CHIPS Act of 2022. By providing clear guidance for qualifying taxpayers to utilize the CHIPS ITC, Treasury is mobilizing key tax incentives for investments in facilities that manufacture semiconductors or semiconductor manufacturing equipment – helping to spur American job growth and bolster U.S. economic prosperity and national security.
Today’s proposed regulations support the CHIPS ITC’s mission of strengthening the resilience of the semiconductor supply chain and creating jobs by incentivizing manufacturing investments in semiconductor facilities across the United States. Treasury and the IRS are outlining detailed proposed rules that ensure the investment tax credit is appropriately tailored to the economic and technological realities of the semiconductor industry in order to cement U.S. leadership in critical semiconductor manufacturing. The proposed regulations also provide information on how to claim the credit. . . .
The proposed regulations also define key terms for the credit, which is generally equal to 25% of an eligible taxpayer’s qualified investment in a facility with the primary purpose of manufacturing semiconductors or semiconductor manufacturing equipment and are integral to the operation of the facility. The credit is generally available for qualified property that began construction after enactment of the CHIPS Act (August 9, 2022) and placed in service after December 31, 2022.
Today’s proposed regulations also provide detailed rules to safeguard our national security. The CHIPS and Science Act prohibits foreign entities of concern from claiming the tax credit.
The statute also included a requirement that generally claws back the full value of the credit claimed in all prior years if within 10 years of claiming the credit a taxpayer (or affiliates) engages in a significant transaction that materially expands the semiconductor manufacturing capacity of the taxpayer in a foreign country of concern. The proposed regulations define what constitutes a foreign entity of concern and under what circumstances the IRS would claw back the credit.
The CHIPS ITC, along with the $39 billion in CHIPS for America funding administered by the U.S. Department of Commerce, is an integral part of the suite of incentives to achieve our Administration’s economic and national security goals.
The Department of Commerce today is releasing proposed regulations on the national security safeguards for its CHIPS for America funding. Treasury and Commerce have coordinated closely to make sure these incentives – including the national security guardrails – work together to advance the Biden Administration’s economic and national security goals.
Press release: https://home.treasury.gov/news/press-releases/jy1353