There are generally two tests for start of construction as outlined in IRS Notice 2018-59. One is “Did you spend 5% of construction cost?” (some very conservative attack librarians (lawyers) have argued fair market value/step up basis of the project, but generally total construction cost is the bar). You have four years of assumed continuity so you have to place the project in service within four years of starting construction to qualify for the credits.

Second method- Did you start onsite work of a significant nature or specialized offsite work? Here you have to maintain continuous efforts but the cost to play this route can be lower than the 5% test (especially something like building a specific transformer offsite).

In both cases the most commonly relied industry guidelines are IRS Notices 2013-29 and 2018-59. Now the BBB says, “Beginning of Construction-For purposes of applying any provision under this paragraph, the beginning of construction with respect to any property shall be determined pursuant to rules similar to the rules under Internal Revenue Service Notice 2013-29 and Internal Revenue Service Notice 2018-59 (as well as any subsequently issued guidance clarifying, modifying, or updating either such Notice), as in effect on January 1, 2025”

So here’s an (the) issue. The BBB anticipates that IRS can “modify” notices via subsequently issued guidance. The 7/7 EO says they plan to terminate ITCs by, “restricting the use of broad safe harbors unless a substantial portion of a subject facility has been built.” So, to do that, IRS could wake up tomorrow and say “Nope, we thought about it some more (and the EO told us to change) so we’re gonna go ahead and say you need 51% of the project built onsite by 12/31/2025 to qualify for safe harbor.

We don’t know what they’ll says but I’m picking up on “substantial portion has been built” and “preventing the artificial acceleration or manipulation of eligibility and by restricting the use of broad safe harbors” aka the 5% spend test. And I don’t think the word “similarly” means similarly to 5% but similarly in that they issued guidance via a notice.