Software
Your team manages compliance in NexusIQ.
- NexusIQ platform access
- Document and issue tracking
- Compliance reporting tools
Domestic Content Compliance
Document the domestic content behind your bonus credit.
Empact combines NexusIQ™, its AI-native compliance platform, with managed compliance services to review supplier records, identify gaps and document the domestic content calculation.
The bonus depends on what your records support.
Supplier claims alone do not establish that a project meets the domestic content requirements. The record needs to support how products are classified, where manufacturing occurred and how the domestic content percentage was calculated.
Domestic content is separate from Foreign Entity of Concern (FEOC) / prohibited foreign entity (PFE) requirements.
- Investment tax credit
- An additional 10 percentage points if the project meets the prevailing wage and apprenticeship (PWA) requirements or qualifies for an exception, and 2 percentage points otherwise.
- Production tax credit
- A 10% increase in the credit amount.
Two requirements. Different evidence.
Requirement 1
Steel or Iron
Covered structural steel or iron construction materials must satisfy U.S. manufacturing requirements.
Evidence
Manufacturing location records for each covered steel or iron item.
Technical detail
The rule generally requires all manufacturing processes for covered steel or iron items to occur in the United States, except metallurgical processes involving refinement of steel additives. Steel or iron used within manufactured-product components is not automatically subject to this separate structural-material rule.
Requirement 2
Manufactured Products
The domestic cost percentage must meet the threshold for your project.
Evidence
Component classifications, cost inputs and manufacturing origin records.
Technical detail
The calculation depends on product and component classification, manufacturing origin and the permitted calculation approach. The required percentage depends on the credit, technology and construction-start date.
Use the calculation approach your project supports.
Empact evaluates the project configuration and supporting records to determine whether manufacturer direct costs or an available elective safe harbor can be used.
Manufacturer Direct Costs
- Cost basis
- Manufacturer direct costs under the Adjusted Percentage Rule.
- Availability
- The standard calculation approach.
- Records needed
- Manufacturing and cost information, obtained through direct coordination with suppliers.
Elective Safe Harbor
- Cost basis
- Assigned cost percentages and classifications from IRS guidance.
- Availability
- Specified project types, subject to the relevant conditions.
- Records needed
- Records supporting product classification and domestic manufacturing origin.
The elective safe harbor simplifies specified calculation inputs. It does not remove the steel or iron requirement or the need to substantiate domestic content.
Supplier Coordination
Take supplier coordination off your team.
Empact manages supplier outreach, follows up on missing information and addresses documentation gaps.
Suppliers can submit sensitive cost information directly to Empact for review, and your team receives the findings.
Gather records
Empact gathers manufacturing, origin and cost information directly from suppliers.
Validate and calculate
Empact reviews supporting records, follows up on gaps and calculates the domestic content percentage.
Deliver findings
Your team receives the calculation, supporting report and outstanding items.
Why Empact
Highest-Quality Compliance
We review the underlying records, not just the reports.
Empact reviews the manufacturing and cost records behind the calculation, identifies gaps and validates the supporting evidence.
One Stop Compliance Shop
Every requirement behind your tax credit, one partner.
Empact works directly with contractors and suppliers and maintains the supporting records.
- PWA
- FEOC / PFE
- Beginning of Construction
- Domestic Content
- State Compliance
What you receive
- 01
Documented calculation
The project's domestic content percentage, with the calculation approach and supporting inputs.
- 02
Supporting evidence
Manufacturing, origin and cost records organized to support the analysis.
- 03
Findings and open items
Identified gaps, follow-up actions and outstanding information.
- 04
Compliance reporting
A domestic content compliance report for your team, tax counsel and authorized reviewers.
Choose the support your team needs.
Choose NexusIQ software, a hybrid engagement or fully managed compliance services based on the supplier coordination, analysis and reporting your project needs.
Empact confirms the project configuration, supplier list and calculation approach at the start of the engagement.
Hybrid
NexusIQ plus Empact specialists.
- NexusIQ platform access
- Empact specialist support
- Shared compliance coordination
Fully Managed
Empact runs the compliance process.
- Underlying record review
- Contractor and supplier coordination
- Issue resolution and reporting
Frequently Asked Questions
It increases investment or production tax credits for projects that meet the domestic content requirements. The investment tax credit bonus is 10 percentage points if the project meets the PWA requirements or qualifies for an exception, and 2 percentage points otherwise. The production tax credit bonus increases the credit amount by 10%.
Not by itself. The analysis depends on the relevant product classifications, manufacturing processes and supporting calculation. Empact reviews supplier documentation and follows up on information needed to support the analysis.
No. It provides assigned cost percentages and classifications for specified project types, subject to conditions. Records are still needed to support the manufacturing origin and classifications used in the calculation.
No. Domestic content evaluates U.S. manufacturing requirements for a bonus credit. FEOC / PFE restrictions involve separate foreign entity and material assistance rules. Some supplier records support both reviews, but meeting one set of requirements does not establish compliance with the other.
No. Empact provides the analysis and supporting compliance report within the engagement scope. The taxpayer remains responsible for the required IRS certification and tax filing.
Records must be retained for as long as their contents may be material to administering federal tax law. The required period is not simply the five-year investment tax credit recapture period. Coordinate the retention schedule with your tax advisors and the agreed service scope.
Timing depends on project complexity, supplier responsiveness and the completeness of the records. Empact establishes the scope and reporting schedule at the start of the engagement.
More questions? Visit our FAQ.
Know what supports your domestic content claim.
Discuss your supplier records, calculation approach and reporting needs with Empact.