Bloomberg Tax Quotes Brandon Morris on CHIPS Act Tax Credit Rules

For its article “Treasury Issue Proposed Semiconductor Chips Tax Credit Rules,” Bloomberg Tax quoted Akin Gump tax partner Brandon Morris. The article looks at proposed rules, implementing the CHIPS Act, issued by the Internal Revenue Service today that define who will be eligible for the tax credit for research and manufacturing of semiconductor chips.

Bloomberg notes that the rules make clear who is and who isn’t eligible for the tax credit, specifying that research and packaging facilities may qualify for the tax credit, but facilities that manufacture materials or chemicals supplied for the manufacturing of semiconductors or equipment will not qualify.

Said Morris, “That’s probably the most dramatic carve-out in these regulations.” He continued, “It’s going to make it less conducive to build these kinds of facilities within the U.S. that fall outside the credit because you simply no longer have that very generous credit to incentivize that additional development.”

On the topic of taxpayers who are on the borderline of the eligibility requirements, he said that they will be “very anxious” to find out where the final rules stand, adding, “If you think that you fall somewhere between something that’s explicitly excluded, and something that is included, then you’re going to want that certainty before making a large capital investment.”

More generally, on the guidance’s ability to help taxpayers navigate the credit, Morris said it would be very valuable, noting, “It will take some time to digest, especially some of the more technical provisions in the regulation, and including some in which the IRS has specifically requested further taxpayer comments on.”