Khanna, Bost Urge IRS and CBP to Strengthen Enforcement Against Chinese Solar Products Improperly Claiming U.S. Manufacturing Tax Credits

WASHINGTON – Today, Representative Ro Khanna (D-CA-17), Ranking Member of the House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party, and Representative Mike Bost (R-IL-12) led a bipartisan letter to U.S. Customs and Border Protection (CBP) Commissioner Rodney Scott and Internal Revenue Service (IRS) Chief Executive Officer Frank Bisignano urging them to immediately address unfairly traded solar products in the United States originating from the People’s Republic of China (PRC) and to prevent fraudulent claims of tax credits intended to support American solar energy manufactures.

The lawmakers warn that some companies are importing nearly finished solar cells originally from the PRC and mislabeling them to avoid paying duties that help level the playing field for American manufacturers. The group also warns that, after completing only the final finishing steps in the U.S., these companies may be fraudulently claiming tax credits intended for American producers and marketing their products as American made. 

The letter explains that these imported cells, called "blue wafers," have already undergone the key manufacturing process that makes them solar cells under longstanding U.S. trade rules. As a result, the lawmakers argue that these products should be treated as imported solar cells for customs purposes and should not qualify for the Section 45X Advanced Manufacturing Production Credit.

“Nearly finished solar cells made in countries currently subject to antidumping and countervailing duty (AD/CVD) orders are being purposefully misclassified as ‘wafers’ to avoid these duties,” the lawmakers state in their letter. “This duty evasion and tax fraud is harming U.S. energy manufacturers and placing them at a clear competitive disadvantage.”

“SEMA Coalition members have invested billions of dollars and created thousands of high-quality American manufacturing jobs to build a domestic solar cell industry. Allowing Chinese-owned and controlled companies to evade our trade laws while claiming tax credits for the partial transformation of products largely manufactured overseas undermines those investments and Congress’ objective of ending U.S. dependence on foreign supply chains. We thank Ranking Member Khanna and Representatives Bost, Harrigan, and Kaptur for calling on CBP and the IRS to address this matter,” said Rob Gardner, Vice President, Congressional and Regulatory Affairs, SEMA Coalition. 

The letter specifically requests:

• The CBP properly identify and assess duties on these misclassified imports;
• The IRS assess documentary proof of domestic cell manufacturing for Section 45X credits; and
• Both CBP and IRS issue public-facing sub-regulatory guidance to ensure importers and developers understand that use of blue wafers to evade U.S. trade law or evade U.S. tax law is not permitted.

Ranking Member Khanna and Representative Bost were joined by Representatives Pat Harrigan (R-NC-10) and Marcy Kaptur (D-OH-09).

Read the full letter here.