The IRS issued final regulations Tuesday on the prevailing wage and apprenticeship requirements related to the increased tax credits available for clean energy incentives.
The Inflation Reduction Act provides increased credit or deduction amounts for businesses, including project developers, who satisfy prevailing wage and apprenticeship (PWA) requirements regarding the construction, alteration or repair of certain clean energy facilities or properties, projects or equipment. Taxpayers can generally increase the base amount of the credit or deduction fivefold if PWA requirements are met.
The regulations will be officially published in the Federal Register on June 25.
To be eligible for the increased tax credit, taxpayers are generally required to:
- Ensure that laborers and mechanics employed in the construction, alteration or repair of the facility or property, project or equipment are paid wages at rates not less than applicable prevailing wage rates.
- Meet certain requirements related to employing qualified apprentices from registered apprenticeship programs.
- Meet specific recordkeeping and reporting requirements.
- The PWA requirements apply to all contractors and subcontractors of the taxpayer who employ laborers and mechanics in construction, alteration or repair work. However, taxpayers claiming the increased credit or deduction are solely responsible for ensuring that the PWA requirements are satisfied.
“The increased credit or deduction for taxpayers meeting prevailing wage and apprenticeship requirements creates opportunities for both workers and employers,” IRS Commissioner Danny Werfel said.
“The IRS is committed to ensuring that taxpayers claiming the clean energy credits comply with all of the applicable prevailing wage and apprenticeship requirements,” Werfel said. “The additional resources the IRS has received are making a difference for our efforts to ramp up taxpayer service and enforcement, and we will continue to build on these improvements.”
For a list of applicable PWA Clean Energy Tax Incentives, go here.
The IRS also released Publication 5983, IRA Prevailing Wage and Apprenticeship Requirements Fact Sheet updated Publication 5855, IRA Prevailing Wage & Registered Apprenticeship Overview and the Prevailing wage and apprenticeship frequently asked questions.
